Enda Kenny (Mayo, Fine Gael)
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Question 1: To ask the Taoiseach the costs which accrued to his Department in respect of the payment of the benchmarking pay awards; and if he will make a statement on the matter. [29485/08]

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 2: To ask the Taoiseach the cost of benchmarking as it affects his Department; and if he will make a statement on the matter. [37596/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 1 and 2 together.

There have been two reports from the public service benchmarking body. The increases recommended in the first report of the body in June 2002 were implemented in my Department as follows — 25% of the recommended increase was paid in June 2003 with effect from 1 December 2001. The total cost to December 2003 was approximately €405,000; 50% of the recommended increase was paid from 1 January 2004, at an approximate cost of €491,000 for that year; and the final 25% of the recommended increase was paid from 1 June 2005, at an approximate cost of €150,000 for that year. The annual cost of full implementation is approximately €900,000.

The second report of the public service benchmarking body in December 2007 recommended an increase of 1.1% for the grade of principal officer. No other increase was recommended in respect of general Civil Service grades. The proposed Towards 2016 transitional agreement, which was recently ratified by ICTU and IBEC, provides for the payment of this increase from 1 September 2008. No payment has been made to date by my Department in respect of this recommendation.

The estimated annual cost of this award to my Department is €26,000. Pay increases recommended by the public service benchmarking body are conditional on delivery of real and verifiable outputs in terms of modernisation and flexibility.

Enda Kenny (Mayo, Fine Gael)
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Is it the Taoiseach's view that the country can afford the national pay agreement as outlined?

Brian Cowen (Laois-Offaly, Fianna Fail)
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Yes. It is important that if the agreement is ratified by all the parties to it, we should proceed with it and take into account the situation as it develops. I do not believe it is right to negotiate a deal last month and seek to say it does not apply this month.

Pádraic McCormack (Galway West, Fine Gael)
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The Taoiseach is changing his mind every day.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I was criticised by the Deputy's finance spokesperson last August. He is on the record as criticising me for not having completed a pay deal in August. He made another statement in September welcoming the fact that the pay deal had been completed in September.

Enda Kenny (Mayo, Fine Gael)
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We are still in a position where we have no recapitalisation of banks and there is tightening of credit to small businesses. The situation since July and September has deteriorated quite radically with 10,000 people a month losing their jobs, mostly in the private sector. Can I take it that it is the Taoiseach's intention to see that the pay deal goes ahead as agreed? It will cost €800 million next year and €1.2 billion the following year and the Taoiseach is of the opinion that the economy can afford this at a time when we are in serious difficulties on the other side.

It is now six years since I made the point while in Killarney that the benchmarking process was a brilliant opportunity to start real reform of the public service in terms of value for money. As a politician and as the leader of the country, is the Taoiseach happy that the taxpayers were given clear and distinct results and responses regarding efficiency and better levels of service as a result of the benchmarking moneys that were paid out? The Taoiseach said that the cost of benchmarking in his own Department was €26,000. What increased efficiency is available now from the Department of the Taoiseach as a result of the benchmarking awards?

Brian Cowen (Laois-Offaly, Fianna Fail)
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In answer to the first part of the question regarding the cost of the pay award, the Government has also made a decision for next year which sees a 4% savings on payroll costs to be effected. This will ensure an additional payment is not being made out of the Exchequer on that basis in respect of any pay deal commitments that need to be dealt with next year. It is important to point out that the Government has made a number of decisions to ensure the cost of public service pay next year is controlled in a way that does not impose a further burden on the taxpayer. The €26,000 for my Department has not been paid. Pay increases recommended by the benchmarking body are conditional on the delivery of real and verifiable outputs in modernisation and flexibility. These are obviously still in hand.

Pádraic McCormack (Galway West, Fine Gael)
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Did that happen?

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Has the Taoiseach noted that the report of the benchmarking body published in January amounted to bad news for low-paid workers in the public service? Has he noted that the trade unions and others have pointed out that higher civil servants and the top echelons in State and semi-State bodies continued to be awarded high pay increases while lower paid workers were left behind? Is he aware that this process is continuing even though it has been highlighted several times?

We have a concerted onslaught on public service workers. The intention of some commentators is to lay the entire blame for all our economic woes on that sector when the reality is that the economic mess we are in is attributable to failed Government policies and the financial institutions' bad practices.

When the Taoiseach was Minister for Finance, the benchmarking body was one of his responsibilities. What role does he see that body playing now and in the future? Will he agree it should not be used in any way to erode pay in the public service, especially for low-paid workers?

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not accept the assertions made prior to the asking of the question.

Regarding the question itself, it is important to point out that the benchmarking process is a big improvement on the previous process, the analogue system of pay relativities. Under that system, when one category of worker obtained a pay award, there was an immediate knock-on effect for related pay categories across the service. That was not a sustainable or a good system.

The benchmarking arrangement is to provide for comparators between public service and private sector levels of remuneration in comparable jobs and areas of responsibility. The purpose behind the process is to ensure a talent pool of labour is available for both the public and private sector in respect of similar jobs of similar quality. The benchmarking body took into account the difference in pension provision that applies between the public and private sector. Benchmarking is a process; it is not a guarantee of an increase or decrease in salaries. It is a process of comparison. The private sector would contend that salary levels are beginning to decrease because of the competitive pressures on people in the sector.

One issue that has arisen in the comparisons between private and public sector pay levels at the higher end is that there is a growing disparity in absolute income levels between the lower and higher grades in the public service. It has been asked to what extent this strains the overall public service ethos. It has been commented on both inside and outside the House. It will have to be taken into consideration when determining terms of reference for the process in the future. However, the changed economic circumstances are such that the inflation seen with wage remuneration at the higher end of the private sector — the comparison made with the higher grades of the public sector — will not be a phenomenon that will continue.

The benchmarking process is a better process than its predecessor. It has provided a more transparent system, particularly with the second report, to compare like jobs with like in the pubic and private sectors. It has also taken into account the pension provision issue. At the same time, it has ensured we do not lose people from the public sector to the private sector or people not being interested in joining the public sector because of great disparities of income for comparable types of jobs. That is the broad policy context behind the process which I believe is right.

The issue for any future benchmarking process is to ensure we reflect on the fact some feel the disparity in absolute income levels between lower and higher salary grades in the public sector would become such that the natural cohesion and ethos of the service might be strained by use of the outside comparator principle since benchmarking was introduced.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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The Taoiseach referred to the oft cited disparity between public service and private sector pension provisions. Will he agree the Government has failed to address the other serious disparity, the denial of the right to collective bargaining and trade union representation in the private sector? Is he prepared to take the appropriate legislative address of this serious disparity and afford the right to all workers to collective bargaining and trade union recognition? Will he consider during the course of his tenure introducing legislation to address this serious disparity?

John O'Donoghue (Kerry South, Ceann Comhairle)
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It is straying from the question.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I believe in the voluntary method of negotiation that has built up where people can come to agreement and, in cases where an agreement cannot be reached, they can use industrial relations mechanisms accordingly. That is the right code of practice.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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What about the right to negotiation?

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government has introduced the minimum wage. Through its tax policies it has ensured low-paid workers have a greater level of disposable income after tax than any previous Government provided. It has taken many of them out of the tax net. Increasing job creation in the past has provided many opportunities.

Returning to the question on benchmarking, comparisons are made between the various grades in the public sector and the private sector. The private sector provides the market price for labour which can differ from occupation to occupation, depending on levels of productivity or labour intensity. The benchmarking process, while it may not be perfect as far as some are concerned, is a better system than its predecessor.

Eamon Gilmore (Dún Laoghaire, Labour)
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In the Taoiseach's reply on the pay agreement that has been concluded, I understood him to say that it is the Government's intention to honour the terms of the agreement. I would like the Taoiseach to pursue the logic of this. No money has been provided by the Government to honour the agreement's terms. On the contrary, as he has confirmed to the House, there is a requirement on Departments, State agencies and public bodies to effect a 3% cut in their payrolls. There is a pay pause in the public sector until September next year. How can the Government honour the terms of the pay agreement when it requires public bodies to effect a cut in payroll? Some public bodies may be able to achieve such a cut by reducing staff, through retirements they do not replace or letting contract staff go but I expect there will be public bodies not in that position. Are public bodies free to claim inability to pay if they cannot achieve a 3% of 4% cut in payroll in circumstances where they are required to honour the pay agreement?

One of the terms in the pay agreement that I found difficult to understand was the provision for the final phase of the pay increase in the public service. The final phase is for a month. A phase of a pay agreement for the duration of a month is highly unusual. Does it follow that a second pay pause is teed up in that agreement at the end of that month? I have never come across a pay agreement that allowed for a pay increase on the first of one month, with a subsequent pay agreement kicking in on the first of the following month. Is there a second pay pause effectively built into the concluded agreement?

I drew attention to the last benchmarking report for higher paid public servants in January. The report appears to be following the logic that higher paid public servants and chief executives of State bodies should be benchmarked against chief executives in the private sector. We are not comparing like with like. We have seen what developed in the wider private sector, where the pay of chief executives has gone way up. Some companies pay their chief executives in millions and pay their staff the minimum wage. That logic has never applied in the public sector. It caused concern that there appeared to be a tendency in the last benchmarking report to move in that direction.

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is important to point out that the benchmarking report did not take chief executive salaries of major publicly quoted companies, it took the lower quarter of a range of salaries as being a fair representation, as far as one can find equivalence in these matters, between the higher paid grades in the public sector and a comparison in the private sector that was appropriate. The benchmarking body was careful and did not bring into play the very high levels of remuneration in the private sector to which the Deputy referred. That should be said in favour of the body. It was a careful calibration of what the comparison should be. I refer to the level of responsibility that these grades provide.

There is nothing teed up in respect of the pay agreement. It is as it is, that is what was agreed and negotiated. It covers the 21-month period and sin é. There is no understanding beyond that. It will be a matter for negotiation in due course after we get this one through.

Given the context of the budgetary and fiscal challenge facing any Government in present circumstances in Ireland, with a public pay and pensions bill of €20 billion, no area of policy can be immune from having to make a contribution to trying to address the fiscal deficits that have emerged. During a previous Question Time, talking about this generally, this method we have adopted provides the maximum flexibility for Departments and agencies to effect these changes and, at the same time, meet their targets. By putting it across the full pay bill spectrum, there are many ways this can be achieved. Flexibility is accorded to bodies to achieve this in whatever way is appropriate to the circumstance, rather than simply the blunt instrument of a staff embargo from a specific date.

Regarding the question of inability to pay, I am not aware if the State has invoked an inability to pay clause, or if any agent of the State has done so.