Saturday 20 January 2018

Public sector cost will soon outstrip boomtime levels

Oonagh Buckley. Photo: Mark Condren
Oonagh Buckley. Photo: Mark Condren

Anne-Marie Walsh

The size and cost of the public service workforce is on course to surpass the boomtime peak next year - even without new pay rises.

Senior Department of Finance officials have outlined a tight budget for further wage increases that means its workers will be lucky to get a 1pc pay rise next year.

A presentation to unions on the first day of talks on a new public sector pay deal, seen by the Irish Independent, said staff numbers are on course to exceed a peak of 320,000 that was reached in 2008, next year.

They warned the number of public servants is set to rise by 9pc by the end of this year and will "need to be controlled" to allow for an affordable pay rise.

Officials at the talks on an extension to the Lansdowne Road Agreement revealed the €16.5bn pay bill has soared by €2.1bn, or almost 15pc, since 2014.

They said costs rose by another €150m when the Government agreed to ease a pension levy imposed during the economic crisis.

They said there is less than €200m available for new spending next year when the impact of measures in this year's budget - including social welfare increases - is accounted for.

And pay rises for public servants will compete with other priorities including commitments to increase the health budget by 3pc, social protection and housing.

The €200m available limits the scope for pay rises as a 1pc hike for the full year would eat into the Government coffers to the tune of €164m.

Read more: Weak Government is giving in to union wage demands, says leading economist

However, the budget for the three subsequent years is €1bn a year, which may leave more room for increases then.

The Government officials highlighted the risks posed by Brexit and severe pressures on the public purse due to growth in the State workforce since the recession ended.

They said growth in the pay bill has outstripped growth in all Government expenditure between 2014 and this year. Funding higher numbers of State pension recipients and hiring extra teachers to deal with class sizes would have to be prioritised. They said "some measure" of the impact of Brexit had been taken into account.

However, they said there may be "sectoral and geographical funding needs" over the next few years to deal with the impact of the British withdrawal from the EU on trade.

Demands for increased productivity and reform were also outlined at the talks. The Government is looking for more outsourcing and changes to Saturday premium payments as part of any deal. There is also a desire to improve performance management and accountability in the public service.

Management are also looking to increase the geographic limit for redeployment without compensation from 45km to 60km, while more open recruitment from the private sector has also been raised.

Meanwhile, the Director General of the Workplace Relations Commission, Oonagh Buckley, indicated that pay and pensions will dominate the agenda at the talks.

Irish Independent

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