Brian Cowen (Laois-Offaly, Fianna Fail)

People must understand that if we are borrowing €400 million a week, that is an unsustainable position and we will put at risk jobs in all sectors of the economy, including the public service, unless we take remedial action.

On the question of pay rates, savings of €1 billion have to be applied for 2010 arising from decisions we had to make in the budget on the pay issue. I emphasise that the Government has applied the pay reductions in a progressive way, unlike what the Deputy said. As with all the adjustments to the cost of public service pay, it has meant that lower paid public servants have suffered less of a net loss proportionately than those on the higher paid grades. A Civil Service clerical officer on the mid-point of the scale will have suffered a net loss over the course of the three budgets since autumn 2008 of approximately 11.7% of pay. The loss is still significant but should be compared to the net loss of those on higher paid grades. In the same period an assistant secretary has suffered a net loss of more than 24% of pay and a deputy secretary a net loss of more than 27% of pay. The highest paid civil servants - level 1 Secretaries General - who volunteered to take an additional pay reduction have seen their net pay reduce by more than one third. Therefore, it is not correct to say that there has not been a progressive proportionate hit on pay, according as one goes up the scales of salaries and remuneration.

It must also be pointed out with regard to assistant secretaries and equivalent grades that their pay was found by the Review Body on Higher Remuneration in the Public Sector not to be out of line with comparable grades in the eurozone. Applying the full reduction recommended by the body would have meant an effective average reduction of 18% in the remuneration package of an assistant secretary and 22% in that of a deputy secretary, both of which are greater than the reductions applied to other public servants, including Secretaries General. The Minister for Finance considered this to be inappropriate and decided that a different arrangement should apply to certain Civil Service and related grades in which the scheme of performance-related awards has been terminated. In all, approximately 600 employees in the public service are affected. The Minister therefore decided that the reduction for the grades of assistant and deputy secretary and related grades should comprise both the reduction in the salary scale and the termination of the award scheme, which is an effective reduction of 11.8% for assistant secretaries and 14% for deputy secretaries. Those are the full facts.

Given that most public servants earn around €50,000 or less, in order to achieve the necessary savings it was not possible to exclude any group from the pay cut. However, the rates by which pay is being cut are progressive, with the lowest paid affected least. Reductions in remuneration range from 5% for the lower paid to 8% in the case of salaries up to €125,000. Salaries above that level are adjusted in line with the recommendations of the review body; in those cases the entire salary will be reduced by 8% for salaries of €125,000 to €165,000, 12% for salaries of €165,000 to €200,000, and 15% for salaries of €200,000 or more. The salary of the Secretary General of my Department has been reduced by 20%.

This pay cut applies to all public servants in every area of the public service, including the Civil Service, local government, the health and education sectors, the Garda Síochána, the Defence Forces, non-commercial semi-State bodies and political office holders. Exceptions are being considered in view of this. Those are the full facts. There is an idea that the cuts are not progressive, but when everything is taken into account they are progressive.

With regard to the possibility of industrial relations problems, I do not believe industrial action will serve any purpose. The response of the unions is a matter for the unions themselves. I would like to see them come back to the issues that need to be considered sooner rather than later. We need to consider non-pay issues as a means of ensuring that we are in a position, in due course, to maintain salary levels as they are at the moment. The decisions we had to take in December are in place and are now part of the situation.

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