Croke Park agreement: IMPACT welcomes €1.5 billion in recurring savings but warns against complacency

Ireland’s largest public service union IMPACT today welcomed confirmation that the Croke Park agreement had delivered almost €1.5 billion in recurring annual savings in its first two years, but warned there was no room for complacency over public service reform.

The second annual report of the Croke Park national implementation body, published today, identified a total of €891 million in annualised payroll and non-pay savings delivered in the second year of the four-year agreement. This is in addition to savings of €597 million achieved in the first year, giving a total of €1.49 billion over two years.

IMPACT general secretary Shay Cody said it was now impossible for critics to argue with any credibility that the agreement was not delivering. “€1.5 billion of recurring savings is a substantial contribution by public servants, who have also suffered an average 14% pay cut since 2009. Today’s report shows we’re ahead of Government and troika targets on public sector staffing and payroll savings. It also gives examples of reforms delivered, including significant changes to working practices, some of which – like reduced dependence on overtime and other premium payments – are themselves cost-reducing,” he said.

But Mr Cody warned against complacency. “We are on target to reduce the public service pay bill by €3.3 billion a year. But it has not been easy and it will not get easier, not least because the economic challenges facing Ireland are not abating and could well worsen. As well as delivering savings and reforms, the agreement’s staff protections have also been effective, so workers should not fear the report’s call for accelerated delivery of reforms.”

Noting that public service staffing had fallen by 17,300 in the first two years of the agreement, Mr Cody called for a more flexible approach to the public service recruitment moratorium to ensure that key services are prioritised and maintained as the public service pay bill continues to fall.  “We should take courage from the achievements and develop a more imaginative approach to the operation of the recruitment embargo.  With a further reduction of 9,500 staff targeted between now and the end of 2015, we need to address and resolve fears about service quality and continuity,” he said.

In its report, the implementation body said the annual public service pay bill was expected to fall by €3.3 billion, after allowing for increased pension costs, between 2009 and 2015. It said the Croke Park agreement continued to be “an effective enabler for the implementation of critical reform and change across the public service,” which has “succeeded in delivering significant exchequer pay bill savings and non-pay administrative efficiency savings.” However, it warned that the sustainability of the Croke Park agreement “will be measured against its ability to accelerate the pace of change across the public service and its potential for extracting further pay and non-pay administrative efficiency savings.”

The figure of €810 million of payroll savings in the first two years of the agreement takes account of a potential cost of €129 million, which could arise if the ceiling for new recruitment – to fill posts vacated by retirements in the period up to March 2012 – is reached. Non-payroll savings of €370 million were achieved in the second year of the agreement which, when added to €308 million in the first year, gives a total of €678 million over two years.

The Croke Park implementation body, which reports to the Minister for Public Expenditure and Reform, is made up of public service management and staff representatives. Its independent chairperson is PJ Fitzpatrick. Consultants Grant Thornton carried out verification of the savings in four sample projects. Shay Cody is a member of the body.