IMPACT trade union rejects the comments made today by Minister for Transport Leo Varadkar, in which he suggested a deferral of pay increments to public sector workers. Far from being a ‘grey area’ as described by the minister, IMPACT is very clear that any deferral, suspension or freeze of increments would be a de facto pay cut.
The Croke Park agreement, which has seen public service workers deliver €1.5 billion in annualised savings, prohibits any further cuts to public service pay.
IMPACT has opposed previous calls for an increments freeze because it would affect younger and lower paid workers most. This is because they tend to have less service and work in grades with long incremental scales.
A freeze on increments, which would see €50 million taken out of the economy, also has the potential to further reduce domestic demand. Workers on lower salaries generally spend more of their income and any capacity for discretionary spending would therefore be lost.
Declining domestic demand has been identified as one of the single biggest obstacles to Ireland’s economic recovery, and the minister’s suggestion would certainly exacerbate the current problem of weakened demand.
While still no measures have been taken to tax the wealthiest earners in Irish society to increase exchequer income, it comes as no surprise to IMPACT members that speculation about the next budget has rounded again on public servants. This is despite the enormous savings delivered by their hard work under the terms of the Croke Park agreement, in addition to an average pay cut of 14% and further cuts for new entrants pay of 10%.
Lower paid and younger workers would be most affected by increments change
Because senior grades in the public sector have few or no increments in their pay scales, they would be unlikely to be affected by any suspension of increments. Departmental secretaries and deputy secretaries have single point scales and, therefore, no increments. Principal officers have just six increments; assistant principals seven.
Further down the grades executive officers have 11-point scales and clerical officers have 13. This means that lower paid public sector workers have much further to travel before reaching the top of their salary scale.
The cost of increments
IMPACT estimates that he exchequer would save just €50 million if public service increments were frozen in 2012, a quarter of the €200 million cited by Minister Varadkar in his comments today.
IMPACT’s estimate is based on Minister for Public Expenditure and Reform Brendan Howlin’s response to a Dáil question in January, in which he estimated the full-year cost of increments (excluding local authorities) at no more than €180 million per annum and less than half that sum in 2012.
The €50 million figure is calculated by taking the Minister’s estimate (€180 million) and adding an estimated €20 million for local authorities, who represent roughly 10% of public service staffing. The figure was then halved (as indicated by the Minister in his Dáil answer) because annual increments are not all paid for the full year because staff get increments on the anniversary of their starting work.
This totals €100 million. Taking account of tax, pension levies, USC and other deductions that are made from any increment paid, this figure is halved. The resulting €50 million does not take account of a likely additional fall in VAT and excise.