Brian Cowen (Laois-Offaly, Fianna Fail)

The public service pay bill is the biggest single element in public expenditure, accounting for approximately half of all current expenditure. Every 1% increase in the public service pay bill costs approximately €180 million. The total cost of meeting the public service pay commitments arising from the current pay agreement under Towards 2016 will come to approximately €1.7 billion. This pay agreement expires at the end of September 2008 in the public service, but at various earlier dates in the private sector.

In preparing for any forthcoming negotiations on arrangements to follow the current pay agreement under Towards 2016, it is important that expectations are kept in line with the economic realities we face. In particular, regard must be had to the need to maintain and improve our competitiveness and, in the case of the public service, of the need to maintain budgetary discipline. The national partnership agreements have served us well over the past decade and I hope that this well-tested approach can once again be relied upon in helping us to meet the emerging challenges we must face as a small open economy.

The more recent national partnership agreements, the Programme for Prosperity and Fairness, Sustaining Progress and Towards 2016, have put in place a better framework for dealing with public service pay. It provides a system under which the pay of public servants can be reviewed periodically on the basis of fair comparison with pay rates across the economy. There is an equal set of ground rules that apply to every public service union. As I said on many occasions, Government policy on public service pay is that the public service should be in a position to attract its fair share of good quality staff at all levels. It should neither lead the market nor trail it.

The other key feature of the framework which the agreements have put in place in respect of public service pay is the conditionality and verification provisions associated with pay increases. Payment of any pay increases in the public service is contingent on co-operation with a robust agenda of measures to improve the effectiveness, efficiency and user-friendliness of our public services and to the maintenance of industrial peace. Payment of any increase under the agreement is subject to verification of co-operation with flexibility and ongoing change, including co-operation with the implementation of the agenda for modernisation.

Additional information not given on the floor of the House.

The report of the public service benchmarking body on the second benchmarking review of the pay of most public service grades is expected to be received around the end of the year. The question of the implementation of the outcome of the benchmarking processes will be discussed by the parties in the context of discussions on whatever arrangements on pay and conditions are to be put in place on the expiry of the current pay agreement.

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