Brendan Howlin (Wexford, Labour)

As Minister for Public Expenditure and Reform, I am extremely conscious of the fiscal crisis facing Ireland and the loss of economic sovereignty which has resulted from the economic mismanagement of the country in previous years. We continue to work in consultation and partnership with the troika in implementing the EU-IMF programme which provides an agreed but difficult fiscal path for the Government and the people. The public service pay bill is an important constituent element of the programme on which a substantial part of the burden of adjustment must fall.

While comparisons of public service pay rates across countries are not widespread, it is the case that the best available figures, those published by the OECD as part of its Government at a Glance 2010 report, do not show Irish public service pay rates to be significantly out of line with those in other OECD countries across a broad range of disciplines on a purchasing power parity basis. Furthermore, the statistics on which the OECD based its report predate the pay reductions applied to all public servants, on a progressive basis, under the Financial Emergency Measures in the Public Interest (No. 2) Act 2010. The pay reductions applied to higher paid public servants under that legislation were based on the recommendations of the review group on higher remuneration in the public sector which conducted a cross-country comparative exercise on pay rates for certain senior grades. On foot of this, the then Government cut the pay of the highest paid public servants by between 8% and 20%. A further reduction of 10% was applied to the pay rates of new recruits at entry level across the entire public service from 1 January last year. Furthermore, to help ensure pay expectations for higher paid public servants are set appropriately and having regard to the resources available to the State, the Government has accepted my proposal to apply a pay ceiling in respect of new appointments at the highest levels in the public service and new appointments at CEO level in the commercial semi-State sector. This will bring the pay levels of senior public servants into line with those which the Government has accepted for itself.

Additional information not given on the floor of the House.

The Government aims to reduce the overall cost of paying public servants to deliver public services by €3.5 billion by 2015, or some 20% over the seven year period from the peak in 2008. That will be achieved through substantially reduced numbers, as well as through the pay cuts applied in 2010 and the ongoing pension-related deduction. The reductions in the public service pay bill remain on target and have not proved an impediment to our discussions or negotiations with the troika, a fact acknowledged by it last week on the completion of its review.

I welcome debate on these important matters but such debate should be honest and transparent. For those questioning public service pay policy, this requires them to put forward their policy alternatives for consideration. These alternatives must have regard to those working within the public service who are called upon to deliver more services, in difficult circumstances, in an environment in which resources have never been so stretched and who are themselves taxpayers, mortgage holders and participants in the wider economy.

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