Brian Cowen (Laois-Offaly, Fianna Fail)

The comparison made in respect of these recommendations was not comparing those who were the subject of the review body to the highest echelons of the private sector. I agree that this would be absurd. It took the lowest quarter of those in comparable positions.

The average increase recommended by the review body was 7.3%. The review ranges from a number of posts that received no increases to one post, manager of Dublin City Council, the pay of which was increased by 36.2%. For half of those covered, such as Civil Service assistant secretaries and related grades, including university professors, the increase is 5.5%. When one takes away the hyperbole that surrounded the report when it was published, the period being examined was seven years. This is a fair point to make. Looking at the substance of the recommendations, they were arrived at by comparison between public service posts to posts in the private sector with comparable levels of duties and responsibilities. These were based on the lower quartile of the private sector rates and further reduced by 15% to allow for the superior value of public service pensions relative to the private sector.

Concerning members of Government and other political office holders, the review body considered that direct comparison to the private sector was not appropriate and that the salaries of senior public servants was a more relevant comparator. In their case, therefore, the comparison to the private sector is an indirect one. As the review body points out, the overall effect of the review is that the salaries recommended are below the average level of salary for comparable posts in the private sector. The increases reflect, in a modified form, what has happened to pay in the private sector.

Regarding the argument that pay in the private sector is dependent on performance, the salary levels recommended by the review body are based on the basic fixed pay of the private sector salaries. The review body recommends performance related payments for many of the public service posts covered but the maximum possible is 20% of pay. The review body states that this is much less than the proportion of pay available for many in the private sector.

While I recognise that the findings of the review body attracted some criticism, and I am aware of the sensitivity of the issue in terms of public service and national pay policy, there has never been a time when increases for these posts were regarded as timely. The period of this review was seven years; under benchmarking, it was four or five. The question of why there should be a separate pay review for higher public servants has been determined by negotiation between management and trade unions and, where necessary, with recourse to third party adjudication by the Labour Court or the arbitration board.

Recently, the benchmarking process was established by agreement between public service employers and trade unions. The top posts in the public service are in a different position — their pay cannot be determined through the industrial relations machinery because they are the managers in that context. Standard increases under the national pay agreements are applied to these posts but the local bargaining or similar provisions of these agreements cannot in practical terms apply to these top public service manager posts because they would negotiating with themselves and we could not have that. Instead, the pay of these posts is determined by Government and adjusted on the basis of recommendations by an independent review body that is requested to carry out reviews from time to time. The last such review was conducted in September 2000.

The review body estimated the cost of the increases recommended, if they were all made, would be €16 million annually or 7.3% of the pay costs of those covered. That is a weighted average increase. The level of increase varies from group to group.

Regarding recommendations on pension arrangements, as part of the general review the body commissioned a detailed examination of the value of public service pensions for the grades covered in its remit by reference to pension arrangements in the private sector. The key finding was that the pensions of the groups covered are significantly more valuable than the pensions of the comparable groups in the private sector. The actuarial advisers put this at 15% of salary and applied a 15% discount to reflect the value of public service pensions. This is a fair reflection of the process and I hope it answers some of the questions.

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