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Analysis/Comment Last Updated: Sep 19, 2012 - 10:45 AM


Irish Economy: Minister for Status Quo again targets future workers
By Michael Hennigan, Finfacts founder and editor
Sep 19, 2012 - 8:07 AM

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Brendan Howlin, officially the minister for public expenditure and reform, announces his flip-flop on public service allowances at Government Buildings, Dublin, Sept 18, 2012.
Irish Economy:
Brendan Howlin, officially the minister for public expenditure and reform, has been in office 18 months and there was never any fear that he would hit the ground running. While Ireland remains the 'best pupil in the class' to the EU-IMF bailout Troika, political spin is the only response to the jobs crisis while Howlin has been a protector of the status quo. Forty years after the battle for equal pay for women, Howlin and colleagues have sanctioned a dual workforce in the public service by protecting priviliges for existing staff including pensions linked with earnings, while reserving reduced terms for new staff. Pension reform will take 40 years to have a full impact. However, the minister may well be in superannuated bliss with severance and pension bonanzas when the full price of political cowardice is known.

So the public service will have people with the same jobs and levels of responsibility in permanent positions, but one group will not only have a pay premium, they will have a vastly superior pension scheme and top-up earners called 'allowances.'

Would the State tolerate that situation in the private sector?

It's likely that the different rights available for people doing the same work in an organisation will at some point be tested in the European Court of Justice and workers who have been judged to have suffered discrimination would be compensated.

The Irish Examiner on Tuesday said in respect of Monday's 'brave' negotiated agreement on salaries of medical consultants (both the government negotiators and the union at the opposite side of the table, shared exactly the same self interest - -  protect existing priviliges) that the "new grade of hospital consultant will be established and paid something around 30% less than incumbents... Today consultants’ salaries range from €147,000 to about €200,000. In future consultants will be employed on a salary scale between €116,000 and €121,000. This is a spectacular and overdue change but it reeks of protecting privilege and skinning those not at the negotiating table. By all means cut these table-topping salaries but it would have been far more equitable if today’s consultants faced pay cuts rather than imposing the cost of recovery squarely on the shoulders of tomorrow’s doctors."

Howlin announced on Tuesday that the Government had decided to abandon its plans to prune €75m from the €1.5bn total annual cost of public service allowances/ fixed sum expense payments, and €3.5m in savings could only be achieved. Besides the €75m initially planned, Howlin had promised savings of €150m in 2013 and another €150m in 2014 under a previous announcement.

He said that “over 1100 allowances have been notified to his Department, and over 800 business cases (some covering multiple allowances) were submitted by Departments/Offices for retention of allowances, either in the current or modified format.”

The minister said certain allowances will not be paid to new beneficiaries.  The annual cost of paying these allowances to current incumbents is in the region of €475m.

It is also patently dishonest to highlight savings on pay while ignoring rising pension costs:

Irish Economy 2012: Howlin lauds sham cost savings in Croke Park public service agreement

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