Irish Economy
Irish Public Service Reform: Pay bill fell €289m in past year but offset by pension bill rise of 14.3%; Deficit in 2011 at €18bn
By Finfacts Team
Jun 15, 2011 - 2:01 PM

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Irish Public Service Reform: A report on the progress of the Croke Park Agreement over the past 12  months shows a net savings on the pay bill of €289m but the additional cost of pensions, including lump sum payments. The expected budget deficit in 2011 is €18bn

The annual pensions bill was €2.23bn in 2010.

The Public Service Agreement 2010-2014 (Croke Park Agreement)  provides for an annual review focusing on the sustainable savings generated from the implementation of the Agreement and of the agreements in each sector of the public service. This is the first such Review and was undertaken by the Implementation body which is charged with driving the delivery of the commitments under the Agreement. The review covers the 12-month period to the end of March 2011.

The Implementation body was established in July 2010 and P.J. Fitzpatrick was appointed as non-executive chairman. Membership of the body comprises of representatives of public service management and the Public Service Committee of the Irish Congress of Trade Unions. The Secretariat is located in the Department of Public Expenditure and Reform.

The review details the progress of public service organisations in implementing their Action Plans under the Agreement and reviews the level of sustainable savings to the public service paybill and highlights the kinds of other non-pay savings that are being achieved.

The body established that estimated sustainable paybill savings in the order of €289m had been achieved during the review period. The saving was driven primarily by a 5,349 reduction in staff numbers but also other factors such as reductions in overtime costs (down 5.2%) and paybill savings accruing from changed work practices, rationalisation etc. which are detailed in the report.

The value of the reported non-pay savings detailed in the report (which are not exhaustive) is some €308m.

The total reduction in the number of public servants during the 12 months under review was 5,349.

Based on estimated pay rates, the elimination of the 'bank hour' is given a value of around €5.5m.

However, these type of savings do not cut the pay bill.

The body engaged independent external auditors, MKO Partners Ltd., following a tendering process, to undertake independent verification of reported savings for a sample of three projects. A copy of their report is also available on the Department’s website.

Finfacts article, July 2010: Irish public sector pay/pensions to rise 16% in period 2005-2010; Pay up 11%: Pensions up 66%; Pensioner numbers rise 43% to 103,400

The Minister for Public Expenditure and Reform, Brendan Howlin T.D. said: “I welcome the conclusions of the Implementation body that there has been solid and measurable progress to date on the implementation of the Croke Park Agreement and that public servants are engaging positively with the efforts to significantly reduce staff numbers, reconfigure services and reform work practices.

I am pleased that the body has found that sustainable paybill savings of €289m have been achieved.

Nevertheless, in view of the severe fiscal constraints we face, the reality is that further significant cuts in expenditure, coupled with further substantial reductions in the numbers employed in the public service, are unavoidable.

At the same time, we must also ensure that services to the public are maintained and improved to the greatest extent possible. That is the core challenge now for the Agreement. A key element of the Comprehensive Review of Expenditure that is currently being undertaken by my Department is to look at the way services are being delivered and to consider new ways of achieving Government objectives in the context of public sector reform.”

The Minister added “We need to move forward quickly to build on the important progress that has been achieved to date and accelerate the delivery and implementation of urgently needed reform. I look forward to a heightened level of effort and engagement from both public service management and unions in the coming months.”

Implementation body’s First Progress Report (pdf)

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