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IBEC call for public pay increments cut

Thursday, October 11 10:43:38

Employers group, IBEC, today called for the payment of public sector pay increments to be suspended immediately and increase the number of hours civil servants work.

It said that the call comes against the backdrop of the Government's failure to achieve any significant savings to the allowances bill.

The group said that it was not credible that pay increases were being sanctioned at a time when a further E3.5 billion adjustment was needed in the upcoming Budget.

Speaking in advance of the IBEC HR Leadership Summit at the Convention Centre Dublin today, IBEC Director Brendan McGinty said: "The country simply cannot afford public sector pay rises at a time when we're spending E1 billion more than we're taking in every month. The Government has failed to make any significant reduction to the public sector allowances bill, which is costing us E1.5bn per year. Savings will need to be found elsewhere. The increments, which cost up to E200 million per year, should be suspended for the remainder of the Croke Park Agreement. This measure can be legitimately pursued by the Government under clause 1.28 of the agreement."

"Significant progress has been made during the second year of the Croke Park Agreement, notably savings of E650m in pay and E370m in non-pay between April 2011-2012 and new rosters in areas of the public service. Also, the recent Labour Court recommendation for a reduction in public sector sick leave entitlement was an important first step in addressing the high cost of sick leave across the public sector. However, a number of critical issues remain to be dealt with. The pace of change needs to increase and further changes to public sector pay and pensions cannot be ruled out.

"Another E3.5 billion adjustment in Budget 2013 is required and the bulk of this should come from reducing expenditure, not raising taxes. This is less damaging to jobs and recovery. OECD research shows that every 1pc increase in taxes on labour reduces an economy's employment rate by about 0.4pc, which in Ireland's case would mean the loss of approximately 8,000 jobs."

In addition to suspending the payment of increments, IBEC has set out a range of steps that can be taken to further cut expenditure.

"None of these measures are easy decisions for Government to take, but the alternative is further tax hikes or cuts to public services," it said.

IBEC want a general increase in working hours, which it said would present an important opportunity to improve productivity and to generate real savings in the public sector. "In the case of the health services, an extra two hours a week could equate, through a combination of productivity and savings, to up to E300m. The recent recommendation by the Labour Court setting a minimum 34 hour week for local authority staff, where some are working only 33 hours, and a 35 hour week for new entrants from 2013, simply did not go far enough."