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Wednesday 24 January 2018

Commission will have to grasp reality

Cranes dot the Dublin skyline during the construction boom of the Celtic Tiger era. Stock picture
Cranes dot the Dublin skyline during the construction boom of the Celtic Tiger era. Stock picture

Conall MacCoille

Social partnership became synonymous with excessive increases in public expenditure during the Celtic Tiger period. The public sector pay bill more than doubled from €8.9bn in 2000, to €21.1bn by 2008.

The 2002 benchmarking exercise will go down as the nadir of the social partnership era. Despite little evidence public sector wages had been 'left behind' by the private sector, the Public Service Benchmarking Body awarded an 8.9pc rise in average pay. Average public sector earnings grew from €31,800 to €48,000 - a 50pc increase from 2000 to 2007.

Inevitably the financial crisis led to a correction in pay rates, including the pension levy, worth 7pc of pay on average, and a straight pay cut of 6pc implemented in 2009. In 2013, public sector workers earning over €65,000 received a further 6pc cut.

However, despite these cuts, average pay in the public sector in 2016 was €47,400, just 4.2pc below the 2009 peak of €49,500.

These figures highlight the positive impact of increments and various reliefs and allowances on public sector pay levels. Incomes have not fallen as sharply as the headline reductions under the Financial Emergency Measures in the Public Interest (FEMPI) acts. 'Pay restoration' calls need to be seen in light of these facts.

The bigger issue the Public Sector Pay Commission will have to grasp is that public sector pay levels in Ireland are 40pc higher than in the private sector. Our view is that only half of this gap can be explained away by differences in education, qualifications and roles within the public sector.

Studies by the ECB and European Commission have found Ireland's public-private sector pay gap is unusually large. Add in the value of defined benefit pensions and the gap between public and private sector remuneration becomes larger still.

Irish Independent

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