The flashpoint with unions came as Coalition tensions over Enterprise Minister Richard Bruton’s move to reform wage-setting mechanisms for low-paid private sector employees intensified.
Growing backbench anger on the issue is expected to see Tánaiste Eamon Gilmore take the unprecedented step of asking Mr Bruton to explain himself to a meeting of the parliamentary Labour Party.
The stark pay cut threat from Public Sector Reform Minister Brendan Howlin came as the first review of Croke Park insisted more “urgent and accelerated” action to reduce costs was needed, though the agreement was making “solid and measurable progress”.
Mr Howlin said the seriousness of the situation called for radical action.
“If we don’t get the savings voluntarily, then we have to resort again to pay cuts. In view of the severe fiscal constraints we face, the reality is that further significant cuts in expenditure, coupled with further substantial reductions in the numbers employed in the public service, are unavoidable.”
However, he claimed forcing through pay cuts was “a place we don’t want to go to, but we have to have the savings, it’s as simple, as compelling, as that”.
Some 16,400 workers have left the public sector in the past three years and the Programme for Government set out a reduction of 21,000 jobs between 2010-2014, with another 4,000 going in 2015.
Savings of €289m in wages have been made under the one-year-old Croke Park deal, with overtime costs down 5.2%.
The health service bore the brunt of cuts, with €238m saved by a 4,180 reduction in staff.
A further €308m was generated in non-pay areas such as property management, and another €85.7m in general costs was avoided, the report stated.
The CPSU called for the cuts in public sector workers’ pay to be restored, but Mr Howlin ruled this out.
Chambers Ireland deputy chief executive Seán Murphy said the public sector pay bill needed tougher attention.
Labour backbench anger at Mr Bruton’s move was pronounced at a parliamentary party meeting yesterday, where the leadership came under renewed pressure over the issue.
A Labour spokesperson said the Tánaiste was in favour of ministers from the two Coalition parties speaking to each other’s TDs.
Mr Bruton’s spokesperson said no request to speak to Labour TDs had been made so far.
By Mary Regan
ANYONE under the age of 50 will have to work until they are at least 68 to get a state pension under changes voted through the Dáil last night.
Retirement age will increase by one year to 66 from 2014 under the Social Welfare Provisions Bill, which also includes the reversal of the minimum wage cut.
In January 2014 about 11,000 workers who could look forward to receiving the contributory state pension will have to work for another year.
In 2021, the state pension age will be set at 67 and in 2028 it will be set at 68.
Minister for Social Protection Joan Burton said lifestyles are changing and older people are more active than they were 10 years ago. “People are in better health and more engaged and interested in staying active,” she said.
But Socialist leader Joe Higgins said while anyone who wishes to stay on working should be allowed to do so, it should be voluntary and people who chose to retire at 65 should not lose out on their state pension.