High earners in public sector to bear brunt of pay cuts

Tue, Dec 8, 2009, 00:00

PAY CUTS for the country’s 315,000 public servants will be staggered according to salary, from just below 4 per cent for the lowest earners to 15 to 20 per cent for the highest earners, when the budget is announced tomorrow.

Indicative figures confirmed by Government show that while the overall cut in the pay bill will be between 5 per cent and 6 per cent, the cut for higher-paid public sector employees, especially those earning over €100,000, will be considerably higher than that.

Those at principal officer level in the Civil Service can expect cuts in the region of 7.5 per cent, with managers at similar levels in semi-State companies, State agencies and the HSE facing similar deductions in salary. Some 15,300 public servants earned €100,000 or higher in 2007, the latest full year for which figures are available.

The majority of civil servants are at lower grades and their salaries will be reduced at rates from just below 5 per cent to over 6 per cent.

The recently-completed report of the Review Body on Higher Remuneration assesses the appropriate benchmark for the top 1,600 public sector employees and its recommendations will also be incorporated into the budget. It recommends a minimum of an 8 per cent reduction in salary for high earners and a maximum of 20 per cent, the latter to be applied to the Taoiseach, whose salary will drop €57,117 from €285,583 to €228,466.

The deductions will be less dramatic for other high earners. The 8 per cent reduction will apply to county managers and to assistant secretaries of Government departments, whose salaries will fall from €150,000 to €138,000. The CEOs of middle-ranking non-commercial State bodies will face deductions of about €10,000, bringing their annual pay down from €129,700 to €119,400. The salaries of national directors, level two, at the HSE, will fall €12,400 from €155,00 to €142,000.

Government Ministers other than the Taoiseach, the secretaries general of Government departments, and the heads of the country’s top universities will face deductions of 15 per cent. The new ministerial salaries will be €191,417; that of a secretary general will be €242,540 (some €20,000 higher than the Taoiseach), and that of university heads will be €202,117. The salaries of judges will remain unchanged because of a provision in the Constitution that prohibits their salaries from being lowered.

There were firm indications last night that there will be few changes announced in the tax section of the budget speech, other than the heavily trailed introduction of a carbon tax. That will lead to increases in fuel prices such as 5 cent for a litre of petrol and about 50 cent for a bale of briquettes.

While the possibility of a levy for those earning over €150,000 was mooted, the Cabinet is believed to have turned it down on the basis it would hamper Ireland’s ability to attract high-calibre investment.

Fine Gael’s enterprise spokesman Leo Varadkar yesterday said that the “torrent” of leaks from the Government could not disguise the complete absence of a stimulus package to create new jobs.

“All we are getting from the Government is a torrent of leaked cutbacks, failed negotiations and book-keeping exercises,” he said.

The Labour Party’s spokeswoman on social affairs Róisín Shortall contended that there had been a deliberate strategy of leaking the details in advance to prepare public opinion for the bad news.

Saying the strategy would not work, she said: “I am concerned that many of the planned measures will leave people in a desperate situation and provoke unparalleled public anger.”

In his comments on the pre-budget outlook last month, Minister for Finance Brian Lenihan also indicated that he was not going to use the budget as a vehicle for widening the tax net, although he said that it was an issue that would be addressed in future.

At present, more than 50 per cent of earners are outside the tax net. Only those earning above €18,300 pay PAYE. However, in a departure in last year’s budget, Mr Lenihan imposed the new 2 per cent income levy on all workers earning above €15,028.

The Government hopes that the absence of new taxes coupled with the fall in the consumer price index will act as a stimulus to increase consumer spending.