| 9.4°C Dublin

Public sector pay under new threat

PUBLIC servants face the prospect of further cuts in pay and pensions as the Government seeks €7bn in savings over the next four years.

Senior government sources have said the State's €20bn payroll was unlikely to be touched in December's Budget -- but could be slashed in successive hairshirt Budgets as it struggled to reduce the mounting debt.

It was also revealed that a programme of voluntary redundancies may be set up to cut the size of the 300,000-plus public sector workforce.

The Government has promised to unveil plans for the next four Budgets in November, when it will detail where the €7bn savings will come from.

It has committed not to cut public sector workers' pay and pensions or to impose compulsory redundancies in return for the unions' co-operation with major reforms under the terms of the Croke Park deal.

However, it can walk away from the agreement by invoking a so-called 'get out of jail' clause, which says the deal depends on "no currently unforeseen budgetary deterioration".

Such a move would cause enormous anger among the public sector unions, whose members have already suffered an average 14pc reduction in salaries due to the pension levy and the last Budget's pay cut.

A highly placed source said: "The threat to the deal is not as dramatic as invoking the clause at 3pm tomorrow and we still need to give the deal a chance -- but I'm not sure if it will survive beyond 2011."

Government frustration with the deal that was designed to ensure industrial peace and better public services is growing.

Irish Independent