Wednesday 13 December 2017

Warning over IMF 'exercise to benchmark pay with EU'

Anne-Marie Walsh Industry Correspondent

BAILOUT officials will find some public servants earn over 40pc more than eurozone colleagues as they assess whether new pay cuts are justified.

Senior sources have revealed that IMF and EU officials are carrying out a benchmarking exercise using data from international bodies, including the Organisation for Economic Co-operation and Development (OECD).

An IMF team leaves tomorrow but is due to return in September to decide if reforms under the Croke Park deal and cuts in public service numbers have met savings targets.

If not, they will ask the Government to act on its commitment in the €85bn bailout deal to make another "adjustment" to the €18bn pay and pensions bill, which represents a third of spending.

And a government source warned last night that the benchmarking exercise could then become real -- with "more pay cuts" in the public sector.

It came days after Communications Minister Pat Rabbitte spoke of further public sector pay cuts if the Croke Park deal does not deliver serious savings.

The IMF this week told the Coalition it believes it will miss its targets in the four-year recovery plan by a massive €5bn.

It is unclear if this will lead to an increase in the €1.2bn target for payroll savings between now and 2014 agreed in the bailout.

Sources said the bailout team, led by IMF deputy director Ajai Chopra, has already begun a benchmarking study of public wages with their counterparts in EU nations to examine pay and working conditions.

This will inform future savings decisions when it carries out a review of reforms and cuts in numbers in the public sector under the Croke Park deal next September.


A report last year by state body Forfas and the National Competitiveness Council highlighted big gaps in the wages of public servants here and abroad.

The 'Costs of Doing Business in Ireland' study found:

  • Medical consultants' remuneration is double the average across the EU-15 countries.
  • Starting salaries for primary teachers last year was 15pc above the 2007 OECD-24 average, despite the Budget pay cut.
  • The wages of teachers with 15 years' experience and those on the top-scale salary is second highest, after Luxembourg.
  • Irish nurses get the fourth highest average salary (€46,295) of the OECD members surveyed.

Former Health Minister Mary Harney admitted late last year that the Government regretted the expensive benchmarking system that gave big pay rises to public servants and politicians.

Last night a government source said: "There is no doubt the IMF and EU are carrying out benchmarking exercises on the main grades in the public service vis-a-vis pay and working conditions in the eurozone.

"The big concern is that the IMF will say 'Sorry, the Croke Park deal is not delivering, and we have to have more pay cuts'.

"We can't have unions saying some reforms are excluded from the deal that were agreed at the time, including standardisation of leave and the working week.

"The IMF will be asking if we can point to an improvement in public services and an expansion of delivery.

"We are in a crisis and they will ask how we can keep borrowing to pay our way."

The big payroll savings are expected to come from number reductions and the Department of Finance claims these are on target.

But these savings are not a simple calculation of multiplying the average €50,000 public sector wage by the numbers who depart, as the increased pressure on the pensions bill has to be factored in.

Sources said the "big ticket" savings would be the implementation of a 39-hour working week across the public sector, redeployment, non-replacement of staff and rationalising of quangos.

They also revealed the Government may consider a cap on the pay of public servants earning more than €100,000.

Irish Independent

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