State salaries doubled in decade, says top banker

A senior Central Bank executive today weighed into the deepening dispute on public-private pay, claiming the salaries of state employees doubled this decade.

With Siptu on strike footing over wage cuts, the bank’s assistant director general Tom O’Connell said the public sector has enjoyed massive pay rises.

“On the public pay side that also doubled and in fact if you go back to 1996 both public pay and welfare tripled so you have to bear that in mind,” Mr O’Connell said.

The banker also claimed welfare payments had doubled from 2001-07 as the country enjoyed almost full employment.

A Siptu spokesman at the union’s centenary conference in Tralee dismissed the economics and hit back: “No wonder the finances are in such a mess.”

Siptu said their study into public-private pay between 1998 and 2008 put state employees less than 1% ahead over this period.

The union, and Impact, have already warned of campaigns to thwart public sector pay cuts with Congress calling for a national day of action as the war of words intensifies.

The Irish Nurses Organisation also announced a nationwide ballot for industrial action.

Mr McConnell made the remarks as the Central Bank published its latest economic review warning Ireland’s recovery from recession will lag behind most of our economic rivals.

The bank revised up its forecasts for 2008 by a modest half per cent to about 9% with experts suggesting the worst of the downturn may have passed.

The report said 2010 could see the beginning of growth again as long as trading conditions are good.

The Central Bank said this could lead to a moderate and balanced expansion before modest and sustainable growth in 2011.

The bank warned that unemployment, already suffering with 440,000 on the dole, will increase to about 14% next year.

“Reflecting weak labour demand, wages will tend to fall in the private sector,” the report said.

“This should help to reverse some of the substantial deterioration in competitiveness relative to our main trading partners that has occurred since the early years of this decade.”

It warned the Government should be looking to cut spending in the Budget.

“Taking account of recent tax rate increases, and the fall in many consumer prices over the past year, this may be possible with greater reliance on expenditure,” it said.