FOUR-YEAR PLAN:A MAJOR tightening of the rules around unemployment benefit and a pay freeze for State pensioners until 2015 are two of the elements in the deal agreed by Ireland with the EU and the International Monetary Fund (IMF) that go beyond the terms outlined in the National Recovery Plan.
All “unplanned revenues” must also be used for “debt reduction” as part of the rescue programme.
This means that revenues from the sale of State assets – which could include the ESB, Bord Gáis, our airports and ports – will have to be used to reduce our debts to the EU and IMF.
The Government will also have to agree the terms of reference of an independent review of registered employment agreements and employment regulation orders with the European Commission.
In its four-year plan, the Government said that a review of these agreements would be undertaken by the Minister for Enterprise and completed within three months.
The EU’s insistence that it now be involved in this review is seen as highly significant.
These agreements cover agriculture, catering, construction and electrical contracting and involve rates well above the national minimum wage.
The agreements are much prized by trade unions but are regarded by employers as significant barriers to job creation.
Higher income taxes, a €1-an-hour cut in the national minimum wage, reduced pension reliefs, lower entry pay rates for public servants, and changes to the way the legal profession and GPs are regulated also feature in the deal.
But these measures were already flagged in the Government’s four-year plan, which was published last Wednesday.
In terms of social protection expenditure, the programme states that savings will be made “through enhanced control measures, structural reform . . . a fall in the live register and, if necessary, further rate reductions”.
It said reform of the benefit system would be implemented to “incentivise early exit from unemployment”.
Ireland has agreed to “streamline” the adminstration of payments, and to “reduce the overlapping of competencies among different departments”. There will also be “enhanced” conditions applied on work and training availability. Three reforms of activation policies were outlined.
This will involve “improved job profiling and increased engagement”, the programme states.
In addition, there is to be more effective monitoring of jobseekers’ activities, with regular “evidence-based reports”.
And sanctions will be applied to “beneficiaries not complying with job-search conditionality and recommendations for participation in labour market programmes”.
This indicates that the Government will crack down on dole fraud while also requiring those in receipt of payments to demonstrate that they are actually actively seeking work.
The Government is targeting savings of €2.8 billion in social protection measures over the course of the four-year plan.
For pensioners, meanwhile, the “nominal value of the State pension will not be increased over the period of the plan”, the programme said.
The value of the State pension payment has almost doubled since 2000, ahead of the cost of living.
The age at which people will qualify for the State pension is also being raised – to 66 years in 2014; to 67 in 2021; and to 68 in 2028. These changes were flagged last week by the Government.
All of the taxation measures listed yesterday also formed part of the recovery plan.
These were a lowering of income tax bands and credits; a reduction in pension reliefs and general tax breaks; increases in excise duties and the carbon tax; a site valuation tax; and changes to capital gains and acquistions taxes. But there was no mention of water charges in yesterday’s announcement.
Public sector pension payments will be reduced by an average 4 per cent while new entrants to the public service will earn 10 per cent less. All of this suggests that the the EU and IMF had significant influence in the drafting of the Government’s plan, which aims for a €15 billion budgetary adjustment over the four years.
In terms of competition reforms, the programme involves the establishment of an independent regulator for the legal profession.
Restrictions on the number of GPs qualifying will also be lifted. And all GPs will be allowed to treat public patients while existing curbs on advertising will be lifted.
The EU and IMF also want the Government to ensure that the recent elimination of the 50 per cent mark-up for medicines under the Drugs Payments Scheme is enforced.
Judges will be “empowered” to impose fines and other sanctions in competition cases to improve compliance with our laws.
The cap on the size of retail premises is also to be examined.
