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Tuesday 12 December 2017

Lenihan won't go on borrowing €6bn for salaries

Michael Brennan Political Correspondent

FINANCE Minister Brian Lenihan warned that it is not sustainable for the State to borrow up to €6bn to pay public servants' salaries this year.

In an attempt to save the faltering faltering pay deal, he said public service workers had to face up to fiscal reality -- the size of the Exchequer borrowing requirement.

"We're borrowing to pay for our day-to-day expenses as a State and these salaries are a big proportion of that. And we can't continue doing this," he said.

According to the latest Department of Finance figures, the State is having to borrow up to €6bn to ensure it has enough to cover the €20bn public sector pay and pensions bill.

A department spokesman said, given that public service pay accounted for one-third of day-to-day spending, it was fair to extrapolate that it also accounted for a third of the borrowing requirement this year (€18.8bn).

The other two-thirds of the borrowing will be used to cover social welfare payments (€6bn) and current spending (€6bn). This does not include the cost of the banking bailout.


Mr Lenihan said the Croke Park deal gave state employees the certainty of no further pay cuts or compulsory redundancies. However, he said, he was not going to start threatening any consequences if the deal was rejected.

"But I do, as Minister for Finance, have to point out certain inescapable economic realities. One of them is that the previous level of public service remuneration was unsustainable from any economic point of view," he told RTE news.

He said there were opportunities for new jobs in internationally traded services and in retro-fitting houses with energy conserving materials -- although it was conditional on the country becoming more competitive.

However, Fine Gael enterprise spokesman Leo Varadkar said the Government needed to set up a national jobs and competitiveness strategy to aid struggling retailers.

"Hundreds of retailers have been forced out of business and thousands of jobs have been lost since the start of the recession," he said.

Mr Varadkar said the Retail Ireland section of IBEC was warning that 40pc of retailers expected to lay off staff, with more than half of retailers experiencing serious problems in the recession.

Irish Independent

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