Pay lobbyists urged to reflect reality

The Public Sector Pay Commission has been warned not to “make matters worse” by ignoring external economic factors in its upcoming salary agreement deliberations.

Pay lobbyists urged to reflect reality

Next month, the commission is due to begin talks on a successor to the Lansdowne Road Agreement.

Any new agreement must only commit to pay rises in line with movement in the private sector, and should be conditional on the performance of the economy and tax revenues, and guard against economic risks posed by Brexit, corporate tax reform, and other uncertainties, Davy Stockbrokers have warned.

They also said the value of pensions should be included in any comparison of public- and private-sector pay.

Newly published research by Davy shows that average public-sector salaries — at €47,400 — are almost 40% higher than those in the private sector, with that gap not taking into account differing pension entitlements.

Average public-sector earnings grew by 50% between 2000 and 2007, though workers were already paid 13% more than their private-sector counterparts.

“We don’t believe it is possible to bridge the pay gap in the short-term, but we believe that the starting point should be to not make matters worse by awarding increases exceeding those in the private sector, or that fail to take account of external factors,” said Davy’s chief economist, Conall Mac Coille.

However, he added: “Ours is a dispassionate piece of research that takes no account of the validity of individual relativity claims across the public sector.

“It may be that some public-sector workers warrant higher increases than others and that is for others to evaluate.

“Our core view is that overall public-sector pay and benefits are unsustainably higher than the private sector and upcoming pay talks should not exacerbate that.”

Davy Stockbrokers said that illustrative of the underlying recovery in public-sector wages is the overall size of the public-sector pay bill, which is expected to rise to €20.6bn in 2017, a level last seen in 2008.

This, it said, is despite total employment in the public sector having reduced from its 2008 peak of 427,300 to 368,100 today.

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