About allowances

Allowances and premium payments will likely be in the news over the coming days. That’s because the Department of Public Enterprise and Reform (DPER) is set to announce the outcome of a review of the payments across the public service at the end of February.

The review was announced in late December, when all departments were given until the end of January 2012 to report on the allowances they pay – and make a business case for those they believe should continue to be paid to staff as they are hired, promoted or assigned to new duties.

The stated objective of the review is to facilitate a 10% reduction in spending on allowances and premium payments by 2014. The cost of allowances and premium payments will fall as public service staff numbers continue to decline, but not by enough to meet this target.

The review is not supposed to end all allowances and premium payments. The letter from the DPER secretary general, which announced the review, said the Minister believed that allowances which reflect “work of additional value” or the “arduous nature or unsocial hours” of certain duties and posts remain “valid, appropriate and cost effective.”

But it said other payments might have been overtaken by developments in qualifications, duties, skills and “normal flexibilities now expected or required in public service employment.”

Some will cease

Since the end of January 2012, new entrants to the public service have not received any allowances or premium payments paid to existing staff, pending the outcome of the review. The same goes for staff promoted, newly assigned or transferred into work areas where allowances exist.

The review is expected to lead to the permanent cessation of some allowances for new entrants, promoted staff or those assigned or transferred in to new work areas. Unions have been told that the review will identify three types of allowance or premium payment:

  • Allowances that will discontinue because the business case was not made or was deemed too weak
  • Those that will continue because the DPER accepts the business case made
  • Those for which more information is required from departmental management before a final decision is made.

Unions have also been told that any changes will respect the Croke Park agreement and that there will be full consultation with staff representatives at central and sectoral level. In a letter to ICTU’s Public Services Committee last year, officials stressed that “any initiatives which would arise should be advanced in compliance with the terms of the Croke Park Agreement and having regard to the primary commitments given by the Government under the agreement.”

Why are there allowances in the first place?

Almost all public servants are on pay scales that reflect the agreed rate for the job, minus the 2010 pay cuts and the so-called ‘pension levy’, which together have reduced pay by an average of around 14%.

Where allowances or premium payments are paid on top of these rates, they were usually introduced – sometimes many years ago – to reflect additional skills, qualifications or responsibilities over and above the normal requirements of the job.

In other cases, large groups of staff with a relatively small number of grades, have seen allowances introduced over the years to reflect the wide range of duties and specialisms within that group.

In some cases, allowances are themselves used by management to avoid costs. For instance, ‘acting up’ allowances are sometimes paid to staff who take on the duties and responsibilities of a vacant higher grade post. This has been used as an alternative to promotion, which would result in a higher salary and pension commitment.

Impact on low paid

By definition, the abolition of any allowance or premium payment will mean loss of earnings for the staff concerned. The new entrants who are the main target of these changes have already seen their pay cut by 10% – on top of the average 14% reduction imposed through pay cuts and the so-called ‘pension levy’. In other words, they are being paid some 24% below the 2009 pay rates.

IMPACT believes that it’s especially important that any changes protect lower paid staff whose wage structure leaves them highly dependent on overtime, allowances or premiums.

Overtime payments

Last year the Government also announced its intention to reduce spending on overtime payments by 10% in 2012. This follows a reduction of 5% in spending on overtime, which was achieved in the first year of the Croke Park agreement (the year up to June 2011). This was achieved, without a cut in overtime rates themselves, through reforms like changes to rostering arrangements and the length of the working day in a range of public service organisations.