Bloomberg News

Irish Public Pay Cuts Backed by Government, Union Chiefs

February 25, 2013

Ireland’s government and leaders of its largest labor unions backed pay cuts for public-sector workers aimed at shaving 1 billion euros ($1.3 billion) off spending to rein in one of the euro area’s largest deficits.

Public-sector workers earning more than 65,000 euros a year face reductions of at least 5.5 percent under the proposals, Bernard Harbor, spokesman for the Irish Congress of Trade Unions’ public-services committee, said by phone. The reductions increase to 10 percent for state employees earning more than 185,000 euros, he said.

The measures put forward today by the Dublin-based Labour Relations Commission, an independent arbitrator, “constitute a fair and balanced agenda to repair our public finances,” Public Expenditure Minister Brendan Howlin said in a statement. “It is now a matter for each union to table proposals to their own membership.”

Ireland has faced pressure from its international creditors to shave its public-sector costs further even after the pay bill fell almost 18 percent to 14.4 billion euros between 2009 and 2012, according to government data. Most of the reductions have been through job cuts, as pay was protected by a 2010 accord.

Deficit Forecast

The government, which received a 67.5 billion-euro international bailout in 2010, last year completed three- quarters of the 33.4 billion euros of budget cuts planned to run for eight years through 2015. Still, its deficit is set be the highest in the euro area this year, at 7.3 percent of gross domestic product, the European Commission said on Feb. 22.

The commission said last month that it and other members of Ireland’s bailout troika reiterated to authorities in Dublin in October “that reductions in allowances and salary scales for some workers could be considered in a way to better align pay rates” with other countries.

While the LRC proposals don’t represent an accord between the government and unions, they’re a “proposal for agreement” that labor leaders have “agreed to present to their members,” Jack O’Connor, general president of SIPTU, the largest union, said in an interview with state-owned RTE Radio.

The talks “have resulted in better protections for public servants than across-the-board pay cuts or other measures that could have been imposed by the government,” the umbrella Irish Congress of Trade Unions said in a statement. The proposals rule out compulsory redundancies, it said.

Longer working hours and some freezes on pay increases are also included in the proposals, said ICTU’s Harbor.

‘Industrial Battle’

Union members need to decide whether the LRC proposals would be better than a “government-legislated pay adjustment” or what could be achieved “through a protracted industrial battle,” O’Connor said.

While public-sector workers haven’t staged a mass strike since 2009, four unions -- the Irish Nurses and Midwives Organization, Unite, the Irish Medical Organization and the Civil Public and Services Union -- withdrew from the talks overnight.

“The accumulative impact” of the government’s “bottom line was too punishing,” INMO General Secretary Liam Doran told RTE.

The new pay accord would run between July 2013 and June 2016, according to the Department of Public Expenditure and Reform.

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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