Stephen Donnelly (Wicklow, Independent)
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Question 50: To ask the Minister for Public Expenditure and Reform his views on the fairness and sustainability of higher-end public sector wages in the context of recent reports showing them to be significantly above their European equivalents and reports that the perception that Irish higher-end public sector workers are significantly higher paid than their counterparts in other EU countries is an impediment to advancing negotiations with the Troika. [4176/12]

Brendan Howlin (Wexford, Labour)
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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.

Stephen Donnelly (Wicklow, Independent)
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There were two parts to my question. Does the Minister believe it is fair that higher paid public sector workers are paid significantly more than their private sector counterparts and their European counterparts?

Brendan Howlin (Wexford, Labour)
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Is that a fact?

Stephen Donnelly (Wicklow, Independent)
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Does he believe it is an impediment to debt restructuring? His answer said that they are not paid more, because the OECD report states that they are not paid more in some areas. The OECD report very clearly states that at the higher end - the Minister should read the report he is quoting - they are paid more. The ECB report, which came out just a few weeks ago, stated that the per hour public sector premium is 42%. The ESRI came out with a report a few months ago which showed that when pensions are included, the premium is 25%. All of the data clearly and unambiguously states that at the higher end, our public sector workers are paid significantly more. To give an example from an area in which I have worked, our medical consultants are paid about twice what they are paid in the UK, twice what they are paid in Germany, and more than twice what they are paid in France. Higher public servants are paid significantly more, so the Minister's assertion that they are not is simply not true. In fairness, I think he knows that.

I asked the second part of the question about this being an impediment to debt restructuring for two reasons. First, I heard an anecdote from one of our own MEPs who stated that senior French civil servants were incredulous that we were sending out officials to negotiate debt write downs who were paid twice what they are paid to run a country which is a fraction the size of one of their provinces. When the Technical Group met the troika last week, they stated repeatedly that it was very interesting that we are quite rightly looking for debt write downs, yet many of those looking for them are some of the best paid civil servants in Europe.

I would like the Minister to address the two issues. I ask him please not to restate that they are not paid more. All of the data shows that they are paid more. My question is this. Is it fair that they are paid more? On the basis of his involvement in the troika negotiations, does the Minister believe it is an impediment to us getting a debt write down, as the troika has suggested?

Brendan Howlin (Wexford, Labour)
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It is always difficult when the Deputy has prepared his answer before he hears my answer, as he has prepared his rebuttal.

Stephen Donnelly (Wicklow, Independent)
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Can the Minister answer directly?

Michael Kitt (Galway East, Fianna Fail)
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Order, please.

Brendan Howlin (Wexford, Labour)
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I have given the Deputy the data as I have it in front of me. When we went into Government, I believed that the highest levels of the public service were paid too much. That is why in our first act, we set a new pay ceiling for the Taoiseach, for Ministers and for Ministers of State, which was significantly lower than the remuneration of our predecessors. We then set that ceiling across the public service. A couple of years ago, a Secretary General in My Department would have been earning €285,000. He is now earning €200,000. The €85,000 cut is an extraordinary reduction, and we have applied that across the board.

I am as anxious as anybody in this House to deal with this. We cannot take the ground from under people and tell them that their income will be halved overnight, given that they have contractual arrangements. The Deputy knows that we have constitutional property rights in this State. We have done it in a remarkably efficient way over the past 12 months. The Deputy is right that we have more to do.

As a former health Minister, I have looked at the issue of medical consultants' pay. We are finding great difficulty in recruiting medical consultants in Ireland. If our pay rates were so generous in comparison to the UK, there would be a queue out the door, but there is not. We have not been able to recruit medical consultants, particularly outside the major urban centres. I agree with the Deputy that they are paid too much. We need more transparency in respect of their public and private pay. All of this is a work in progress, and if the Deputy looks objectively at what we have achieved in 12 months, he will see that we have radically transformed the platform in which more progress can be made.

Stephen Donnelly (Wicklow, Independent)
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I accept that the Government has made progress. My concern is with the Croke Park agreement. We have heard much back and forth on this. The Government has taken a position which is that in order to reduce the pay bill significantly, we are going to fire, retire or down-size. Regardless of the mechanism used, we will have fewer workers. What we will not do is pay less. At a time when we are trying to keep people off the live register it seems to be a strange absolutist commitment not to touch wages. The only way the wage bill will be reduced is through having fewer workers. This does not seem to be very sensible.

During the troika negotiations has the Minister come across, as the Technical Group did last week, higher end public sector pay - accepting the changes and progress being made - being an impediment to write-downs?

Brendan Howlin (Wexford, Labour)
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I will answer the last question first because it is very important and the answer to which is no. I have dealt with the troika on the issue of public pay policy and its members have no difficulty with the policy of the Government as long as we achieve the extra payroll savings set out, with which they are in agreement.

I have dealt with the issue of top level pay. Let us consider what has happened. There has been a pay reduction of 9% at clerical officer level; a teacher has experienced a reduction of 12%; a staff nurse, 10.5%; and a garda, 11%; while a middle ranking civil servant has had a pay cut of 12.5%. These reductions are on top of the levies paid and everything else. One should not dismiss the pain the public sector has endured.

Stephen Donnelly (Wicklow, Independent)
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I am not.

Michael Kitt (Galway East, Fianna Fail)
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The Minister is speaking.

Brendan Howlin (Wexford, Labour)
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With regard to the top level-----

Mary Lou McDonald (Dublin Central, Sinn Fein)
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They are only on €200,000; God help them.

Brendan Howlin (Wexford, Labour)
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-----I have indicated that in some instances there has been a cut of more than 30%. On a voluntary basis, one senior public servant who has asked not to be named has taken a cut of more than 50% to meet the pay norms set because some of the pay norms set in advance of our entering government were unacceptable. We have moved remarkably, but we cannot look on public servants as an amorphous group to be squeezed to solve all of our problems. We have an agreement, namely, the Croke Park agreement, under which we are bringing about objectively significant and radical reforms. It will take time for them to be bedded down. If we want them to be embraced and not resisted by working to rule and strikes, we need a two-sided agreement. For the Government's part, we have stated that for as long as there is full engagement with the radical reform agenda, redeployment and the other measures we want to take, we will not cut pay further. This is the two-sided agreement which will serve the interests of the State.