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Noonan gives public sector five months to avoid pay cut

PUBLIC sector workers and management were last night warned they have just five months to deliver key reforms -- or else face more pay cuts.

As the Government's talks with visiting IMF and EU officials concluded, the Coalition stated clearly for the first time "the Croke Park agreement hasn't delivered".

The Cabinet met last night to discuss the outcome of the negotiations with the IMF, European Commission and European Central Bank on the bailout deal.

Changes to the fine print of the bailout will have to be signed off by the three organisations' headquarters, but the Government has been given the all-clear to proceed with next month's so-called jobs budget, including:

  • Reversing the cut to the minimum wage.
  • Reducing employer's PRSI.
  • Reducing the lower rate of VAT.

However, the Coalition has not yet said where it will find the money to pay for these measures and the IMF has dictated there must be no additional spending.

Tanaiste Eamon Gilmore insisted the minimum wage change was not tied to altering labour agreements.

The opposition said the review would mean the targeting of workers in the hairdressing, contract cleaning and agriculture sectors, along with special weekend and holiday pay.

On the back of the IMF review of the performance of the country under the bailout, Finance Minister Michael Noonan became the latest cabinet minister to threaten more public sector pay cuts if reforms are not produced.

But Mr Noonan went further than his colleagues as he said if the Croke Park agreement didn't deliver savings by September, pay cuts would follow.

"We want to get the reductions through savings in the cost of services. We want to leave pay alone," he added.

Later this month, the Government will publish its plans for reducing numbers working in the public sector over the coming three years.

This will give an indication of the extent to which Croke Park reforms will have to fill the gap.

Mr Noonan ruled out any further cutbacks or tax hikes being imposed by the IMF at this stage.


He said first quarter tax was down marginally but expenditure was down as well.

"The programme is in balance in the first quarter. So there's no add-ons or anything there," he said.

Meanwhile, Public Expenditure and Reform Minister Brendan Howlin has warned that the Comprehensive Spending Review -- which is due to issue its findings by October -- will be about change and "not about protecting fiefdoms".

"That goes for Government ministers, for public service managers, and for unions," he said.

"And yes, it will go for CEOs of state agencies too. The Comprehensive Spending Review will examine the arguments for having stand-alone agencies, separate to Government."

Irish Independent