Public sector to avoid budget pay cuts

PUBLIC sector workers will not be targeted for further pay cuts in the forthcoming budget.

Finance Minister Brian Lenihan has told the Irish Congress of Trade Unions that the Government “intends to comply” with the terms of the Croke Park agreement on public sector pay and pensions.

Under the deal, ratified earlier this year, public servants are guaranteed no further pay cuts and no compulsory redundancies up to 2014 provided they co-operate with reforms of the public service that would produce savings.

Speculation had increased in recent days that the Government would seek to revisit or renege on the deal because the hole in the public finances had worsened since it was agreed.

But Mr Lenihan ruled out this possibility in a private meeting with ICTU officials on Monday, details of which emerged last night.

It’s understood he told the unions the reforms envisaged in the deal would have to be implemented speedily to produce the required savings.

A Department of Finance spokesman confirmed there would be no cuts to “the rates” of public sector pay.

“But obviously you can make changes to public sector pay through work practices, which is what Croke Park is all about.”

However, the department does not know how much savings can be achieved. The spokesman said such a figure would not emerge until proposals by individual departments are analysed in the run-up to the budget.

But the decision to leave pay rates untouched will make the budget an even more difficult process for the Government, which has confirmed it will seek more than the €3 billion of cutbacks originally envisaged.

Questioned by Fine Gael leader Enda Kenny in the Dáil whether the revised target would exceed €4bn, Taoiseach Brian Cowen said the Cabinet had yet to decide on the exact amount.

Nonetheless, Fine Gael agreed the cutbacks would have to at least exceed €3bn and the deficit would have to be reduced to 3% of GDP by 2014 in line with EU requirements. But the party said it would make its own decisions on where the cutbacks should occur, and would not agree another Tallaght Strategy with the “discredited” Coalition.

“Fine Gael believes that the adjustment needs to be front-loaded but only to the point where it delivers lower international interest rates on Government borrowing, at the cost of the minimum impact on growth,” the party frontbench stated.

“This will be a difficult judgment call but Fine Gael will make an independent decision and will not be bound by the Government’s targets which they intend setting in November.”

The Government will next month publish a four-year strategy outlining how much each of the next four budgets should cut to achieve the 2014 target.

A Government spokesman last night confirmed the secretary-general of the Department of Finance would write to the Opposition parties offering to “facilitate them with factual information on economic and budgetary matters” in the run-up to the publication of that strategy.

Public servants have already seen two substantial reductions to their salaries – through a direct pay cut in last December’s budget and the imposition of a pension levy earlier in 2009.

But Senator Eoghan Harris last week told the Seanad the Exchequer crisis would only be resolved if the public sector pay bill, which he termed the “elephant in the room”, was further reduced.


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