Fresh public sector recruitment ban may be needed, minister told

Briefing note to Michael McGrath highlights need for spending curbs
Fresh public sector recruitment ban may be needed, minister told

Public Expenditure Minister Michael McGrath warned of need for cutbacks. Photo: Julien Behal

The Government may have to consider introducing a fresh staff recruitment ban and freezing promotions in the public sector because of the recession caused by Covid-19, it can be revealed.

In briefing documents prepared for new Public Expenditure Minister Michael McGrath, obtained by the Irish Examiner, it is made clear some of the stark choices facing him as he grapples with the €30bn deficit.

Mr McGrath has been told that given the “urgent need” to manage Exchequer expenditure, there are a number of options that could be considered to reduce demand on the Exchequer in the short-term, including:

* A moratorium on recruitment other than for key front line areas for a period of 12 months

* Introduction of an Employment Control Framework (ECF) with all recruitment supported by workforce plans

“Under an ECF, Departments would be required to remain within current employee ceilings and be required to reallocate or reorganise staffing in order to maintain business continuity and service delivery,” the document states. 

Options could include maintaining numbers at current levels where retiring or departing staff are replaced on a “one-out, one-in” replacement mechanism. This does not generate savings, rather it maintains current costs.

In addition, if staff numbers are not managed adequately, or if the Government was to accede to demands for additional staff numbers in certain areas – e.g. gardaí, nurses – the expenditure pressures would be intensified, Mr McGrath was told.

Mr McGrath has also been warned that government spending under Finance Minister Paschal Donohoe in the past three years has been higher than expected, citing “weaknesses in budgetary discipline” in areas.

“Over the past three years, we have already seen expenditure growth rising at a faster-than-planned rate, in response to both political and public demands for policy action, and weaknesses in budgetary discipline in certain areas,” the documents state.

At the end of June when Mr McGrath took office, officials estimated the additional costs arising from the Covid-19 crisis was up to €12 billion, with further upward additional pressure, in particular relating to health.

Officials warned that the additional expenditure pressures of €1.5 billion noted above would bring overall expenditure to almost €84 billion, an increase of almost €13.5 billion on REV 2020 and €5.5 billion above the SPU projections.

Officials warned that the July stimulus plan, announced two weeks ago, “would need to be temporary and targeted at measures that can support a more rapid return to work in significantly impacted sectors and to move people more rapidly off PUP to employment (WSS supported employment or not).” 

Mr McGrath was also warned that there will be a specific challenge in Budget 2021 in assessing the extent to which funding will be required to support ongoing Covid-19 measures.

“The fiscal projections in the SPU included an additional amount of €1.5 billion in relation to additional income supports. In addition, there will be pressures persisting in 2021, in particular in Health, that will need to be addressed in the 2021 Budget Estimates,” they warned.

In relation to the potential to pay for a new public service pay deal later this year, officials said that in the normal course, negotiations on a successor would take place shortly.

“This was the pre-Covid-19 emergency position and in light of the impact of the current emergency on the public finances, the timeline and options for any talks/measures in relation to public service pay will have to be carefully considered,” they argue, suggesting a deal may not be possible.

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