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Government must cut tax, not hike up public sector pay

Average weekly earnings in the public sector were just under €919 in the second quarter of 2014, according to the latest earnings figures from the CSO.

This compares with average weekly private sector pay of just €622.

This means that the average public sector worker is paid 48pc more every week than his or her private sector counterpart.

The CSO figures were published against a background of mounting unrest in the public sector, with trade unions now agitating for the restoration of pay cuts imposed under the Haddington Road agreements.

The unions are seeking to scrap the public sector pension levy introduced in 2009, under which an average of 7.5pc is deducted from the pay of public sector workers.

Public Expenditure Minister Brendan Howlin (below) has hinted that at least some of the cutbacks could be reversed.

Sure with tax revenue running €550m ahead of target in the first seven months of the year and the economy growing once again can't the Government afford to reverse the public sector pay cuts?


No it can't, and even if it could it shouldn't.

The huge gap that has opened up between public and private sector pay has created a two-tier labour market.

A well-paid, privileged group enjoys complete security of employment and bullet-proof pensions.

Meanwhile the rest of us try to scratch a living in the hire-and-fire private sector - where only a half of workers have made any provision for their retirement.

This two-tier labour market is not sustainable.

One of the key strengths that allowed this country to come through the crisis caused by the bursting of the economic bubble in 2008 was a sense of shared purpose, that somehow we were all in it together.

We endured almost €30bn of tax increases and public spending cuts between 2008 and 2014 with barely a whimper, something that would have been considered impossible before the crisis struck.

There were no riots in the streets. Ireland most emphatically was not Greece.

When the time came in February 2011 the Irish people delivered their judgement with their votes not with bricks or bottles.

Unfortunately the huge gap between public and private sector pay poses a potentially lethal threat to this shared sense of national purpose.

Any move to restore the public sector pay cuts and scrap the pension levy would further reinforce Ireland's already unsustainable two-tier labour market.


Instead of further widening the yawning gap between public and private sector pay the Government must take steps to narrow it as quickly as possible.

It is only by doing this that a very damaging split between public and private sector workers, which could have far-reaching political and social consequences, can be avoided.

The next step is straightforward.

Finance Minister Michael Noonan should therefore use any spare cash to cut taxes for all workers on Budget Day.