Pay commission to say public pay cuts should by unwound gradually

Pension reform should be matter for negotiation, says report

The report of the Public Service Pay Commission, recommending the gradual unwinding of public sector pay cuts, is likely to be presented to Cabinet today by Minister for Public Expenditure Paschal Donohoe.

The report was commissioned by the Government last year to pave the way for talks with public sector unions on a new national pay agreement which are expected to begin in coming weeks.

The trade unions have made it clear at their conferences in recent weeks that they expect a series of substantial pay increases for 300,000 public sector employees. However, Ministers are nervous about escalating pay demands in the face of the threat posed by Brexit and the demands for investment in expanding services in health and education.

The report has not been distributed in advance by Mr Donohoe, and Ministers have not been made aware of its contents. However, sources told The Irish Times that the report will recommend the recession era pay cuts – the "Fempi" cuts (Financial Emergency Measures in the Public Interest) – should be unwound gradually as part of a wider pay agreement. As such, the recommendations will dovetail with existing Government policy.



On pensions, the report is expected to put the net value of the public sector pension at between 12-18 per cent of salary – lower than has been previously suggested in some exercises but higher than the estimates of public sector unions.

It is expected to say that agreeing a value of the public service pension should be part of the process of negotiation between employers and the unions.

The commission’s report is expected to be published on Tuesday once it has been accepted by Cabinet at its morning meeting.

After that it will inform talks on a new public sector pay agreement to replace the Lansdowne Road Agreement, which are expected to begin this month.

Government sources say that once the report is accepted by Government, an invitation will be issued to the Irish Congress of Trade Unions to enter talks on a new agreement. The talks will begin before the end of the month, and will be scheduled to conclude in June to allow balloting on the agreement to be complete before the budget, which takes place in mid-October.

Among the issues expected to feature in the talks are plans for major reforms to public service pensions, including potentially converting the existing pension levy into a greater staff contribution towards pensions.

Pension levy

At present most staff pay about 5 per cent on average under the pension levy, which generates more than €600 million for the exchequer. Public sector pensioners enjoy significantly greater benefits than most private sector employees, with guaranteed pensions of 50 per cent of final salary plus a 150 per cent tax-free lump sum for public servants retiring with a full 40 years service. However, many pensioners retire with less than full service.

The talks will also take account that about 15 per cent of public servants, recruited since 2013, have less generous pensions based on career, rather than final, earnings.

It is understood that the Department of Public Expenditure is prepared to offer public servants wage increases of about 6 per cent over three years. Additional pay rises could also emerge from local bargaining arrangements.

Pat Leahy

Pat Leahy

Pat Leahy is Political Editor of The Irish Times