Ten years ago, in the teeth of the great financial crisis, the then finance minister Brian Lenihan moved to cut public sector pay. Against the wishes of his then taoiseach Brian Cowen, who cherished the virtues of social partnership and industrial peace, Lenihan implemented cuts to the pay of the 300,000 public servants.
But shortly after the budget in 2009, Lenihan was successfully lobbied by some of his own top officials who cried foul over the the abolition of a bonus scheme which averaged 10% of salary for higher grade civil servants. This included some who earned between €200,000-€300,000 a year.
Lenihan’s then top official recommended that the pay cut for those top officials should be overturned. Documents, released at the time, showed that Lenihan relented to the request and signed off on the U-turn on December 22, 2009. This was despite severe cuts across the board to many other groups including some of the lowest paid in our public service. It was nest-feathering of the worst kind.
The relevant document from top officials to Mr Lenihan shows a hand-written clearance by the minister just only 24 hours after his cancer diagnosis was confirmed.
The next day, the circular memo to the staff informing them of the U-turn was sent. Lenihan accepted legal opinion from the Association of Higher Civil and Public Servants that said the performance-related bonus scheme, which the Government scrapped permanently, formed an integral part of remuneration packages. The revelations drew a stinging response from the Fine Gael opposition of the day.
Then senator Paschal Donohoe said: “This saga shows that who you know is all that matters for Fianna Fáil. If you have the ear of power you can get what you want. If you are a senior civil servant, a large builder, a banker or a state monopoly, Fianna Fáil will look after you.
Donohoe added that in no other walk of life does a bonus become guaranteed: “In typical Fianna Fáil fashion money was thrown around like confetti without any regard to how value for money could be achieved and with no regard to the taxpayer. The losers in this, as always with Fianna Fáil, are the ordinary tax payer and lower-paid public servants.”
Donohoe said the higher members in the civil service were given preferred treatment at the expense of the taxpayer and the lower paid public service workers. As we know, that young senator has come a long way and is now Lenihan’s successor as finance minister.
I raise this because this week they were at it again. Despite preaching restraint and the poor mouth to the electorate, the top civil servants feel they are not paid enough, despite earning up to €200,000 in the civil service and up to €300,000 in semi-states.
Donohoe published the latest report from the Public Service Pay Commission into pay issues among state employees and there in the middle of it was this issue about pay for the top tier of people.
As I reported the other day, the commission found that the pay for the country’s top civil servants should be reviewed given an ongoing difficulty in attracting talent — despite earning €200,000 and more a year. The commission says it is appropriate to conduct a review of remuneration of senior-level posts.
It has been revealed that the commission received submissions from various stakeholders, including, on the employer side, the Department of Public Expenditure and Reform (DPER), which controls the public purse. It was found that there is a continuing difficulty in attracting candidates for certain high-level posts due to caps on remuneration.
The salaries of some of the country’s most senior civil servants are now approaching €200,000 a year after a round of increases recently. The salary for those in the top grade of secretary general now stands at €197,117. Those in that category include Martin Fraser at the Department of the Taoiseach and Robert Watt at the Department of Public Expenditure.
Heads of semi-state organisations can earn far in excess of that with new HSE boss Paul Reid earning €350,000. What wasn’t published on that day was the actual submission from Donohoe’s own Department of Public Expenditure (DPER), which I have examined.
More often than not, DPER acts as the watchdog on the public purse and is more used to saying no to various spending requests from other departments, but it seems that when it comes to their own pay, terms and conditions, they feel they are worth it.
In its submission, all 16 pages, the department claims “there is evidence to suggest that a number of factors including the legacy of the caps and limits imposed during the financial crisis, the timing of the phased unwinding of Fempi pay reductions for senior public servants, growing complexity and public scrutiny of roles, and an emerging pay deficit with the private sector, are combining to present challenges to recruitment and retention at senior levels in the public service”.
In other words, their money needs to be increased.
“The current policy for pay determination continues to be dictated by caps and limits imposed during the crisis. The significant upward pay pressure being applied and the recruitment difficulties that have been encountered at senior levels suggest that, given the effluxion of time, the caps and limits set during the crisis may no longer be appropriate,” the submission went on.
In layman’s terms, the level of pay needs to be increased.
“Without an objective mechanism for pay determination at these levels, it will become more and more difficult to effectively manage senior leadership remuneration and provide an adequate remuneration package to attract and retain top talent. Yet this is critical to ensure that the public service benefits from the brightest and best leaders in what is an increasingly challenging operating environment.
Given the strategic importance of this leadership cadre to the delivery of efficient and effective public services, the department would welcome the commission’s views and recommendations for addressing the issues identified,” the submission continues.
In ordinary speak, it screams “give us a pay rise because we are worth it”.
Yes, these people did take pay cuts and had a pension levy imposed on them but as of this year, most of those cuts have been restored. All of this before we even mention the fact these people cannot be sacked, have guaranteed pensions, and are not exposed to the vulnerabilities experienced by those in the private sector.
At a time of when many people, many vulnerable people, have missed out because of a lack of money, the submission from the country’s top civil servants looks, at best, ill-judged but, at worst, contemptuous.
Given their proximity to their political bosses, their permanent place in the running of the country, the fact the commission appeared to support their bid and the fact that political pay is linked to civil service rates, Donohoe will find it tough to resist such pressures. One can only hope he can speak again with the voice of clarity he did when in opposition a decade ago.