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Donohoe gets blueprint for price of public sector peace



Public Expenditure Minister Paschal Donohoe Photo: Tom Burke

Public Expenditure Minister Paschal Donohoe Photo: Tom Burke

Public Expenditure Minister Paschal Donohoe Photo: Tom Burke

A major new report to advise the Government on its strategy at public sector pay talks has been criticised for dodging a number of key issues on wages and conditions.

The Public Service Pay Commission has offered Expenditure Minister Paschal Donohoe a blueprint for buying industrial peace, with pay hikes and protection of final pensions.

Mr Donohoe is likely to agree to pay rises, which have been slated at around 2pc per year, as part of the new deal to extend the Lansdowne Road Agreement. The public sector pay bill is worth over a third of Government spending, and stands at €16.4bn, so a 1pc pay rise would cost €164m.

Many public sector workers are also expected to face an increased employee contribution to retain lucrative pension benefits worth between 12pc and 18pc of salary.

But the commission fails to tackle the key issue of job security enjoyed by public servants - noting that it "has value" but failing to specify what that is.

The commission said it had not identified "any satisfactory scientific evidence which could reasonably be used for assigning a specific monetary value to security of tenure in Ireland".

Business groups also criticised it for failing to provide more specific figures on the gap between public sector and private sector pay.

It concluded that "methodological differences in data" make it difficult to draw definitive conclusions on international earnings comparisons.

However, it said that pay trends in the wider economy meant there is justification for a new pay deal, noting that private sector pay went up by 2pc last year.

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Mr Donohoe is expected to use the report as the pathway to a deal at talks due to begin shortly. He said it would not be the opening of an "ATM", and that he expects the negotiation process to be "very challenging", adding that it will affect over 300,000 public servants.


"The demands upon available resources in the State are very, very, very large," Mr Donohoe said. He is expected to issue an invitation to unions to talks on a new deal within days.

It is expected that a deal may be brokered in early June, to give unions time to ballot their members.

But business groups warned that the differences in pensions between the private and public sector must not go unaddressed.

The Small Firms' Association warned that the gap of up to 18pc between public and private sector workers' pensions must be reflected at the talks.

The commission does recommend that workers on gold-plated benefits pay a higher contribution towards their retirements.

This would include 23,000 staff, including gardaí, politicians and judges, on lucrative schemes whose benefits accrue at a faster rate than most public servants. It suggested this should be done by converting a pension levy - worth an average 5pc of wages - into a higher contribution on top of existing contributions.

However, acting director of the Small Firms' Association Linda Barry said this additional contribution would not go far enough. "Right now it's not sustainable. It has to be remembered that the private sector funds the bill," she said. "Employees and businesses pay through increased taxes. Instead of providing more nurses, and better roads and broadband, they are sucked into this unsustainable pension bill."

She said job security is so beneficial it had to be part of any negotiation. "I did expect it to be more conclusive," she said.

The chief executive of business representative body Ibec, Danny McCoy, said the conversion of the levy into a higher contribution would be a "start".

However, he said cuts to pension benefits should also be considered to make the pensions bill sustainable for taxpayers.