The Government is not in a position to fully reverse cuts made to public sector pay in the wake of the crash, the secretary general of the Department of Public Expenditure and Reform has warned.
With public sector pay talks scheduled to begin later this year, Robert Watt said it would take several more years of sustained economic growth before the €3.6 billion taken out of the State's public service pay bill since 2009 could be reinstated.
His comments put the Government on a collision course with public sector unions, who are demanding a full reversal of the pay cuts made during the economic crisis.
Pension levy and pay cuts “save us about €3 billion so it’ll take a long time before there’s the full restoration,” Mr Watt said.
He said Minister for Public Expenditure and Reform Brendan Howlin had made clear he will engage with unions, but discussions would have to reflect the health of public finances and affordability.
He was speaking at the launch of the Government’s latest progress report on public service reform, which showed current spending is down 9.4 per cent on its pre-recessionary peak, while capital spending is down over 50 per cent.
However, Government spending, outside of the core areas of health, education and social protection, has been slashed by more than 25 per cent since the start of the financial crisis.
“Obviously the Government has decided to prioritise key areas but outside of those key areas there’s been a fairly significant downsizing of the State,” Mr Watt said.
His department’s report shows overall staffing levels across the public service have been reduced by 10 per cent, from 320,400 in 2008 to 289,600, while 171 state bodies have been rationalised.
“Reform is not just for a period when the public finances are under stress,” Mr Watt said, noting that demographic pressures placed an ever-increasing in demand on the sector, which necessitated an ongoing reform agenda.
The outsourcing of certain public services to private sector, like the Government’s new JobPath initiative for the unemployed and the call centre for the local property tax, would continue to play a key role in streamlining of the State, he said.
Mr Watt said the removal of underperforming civil servants remained a significant challenge. In his opinion, the Government may have to eventually adopt a policiy of buying people out of contracts similar to the private sector. Since 2009, he noted, 12,000 civil servants have been redeployed, which had been crucial to the reducing spending.
The report also noted “significant Government savings” were being forged through a new centralised model for public procurement.
It also inducated the new public services card had been issued to 1,217,000 people, 25 per cent of the population
“Public Service Reform is an essential element of our overall strategy for recovery and it underpins Ireland’s success in emerging from the recession. As this report illustrates, the extent of the reform programme at a central, cross-cutting level is considerable ,” Mr Howlin said.
The report was published on the same day as the lobbying bill, which introduces a register of lobbying activities in a bid to improve transparency in governmental decision-making, passed through the Oireachtas.
