Summary of progress on savings and reform under the Croke Park agreement
The first annual report of the Croke Park implementation body, published in June 2011, said that the agreement had directly led to annual savings of over €680 million in its first year. This was made up
- €289 million in payroll savings (compared to a target of €223 million) arising from reduced staffing, cuts in overtime costs, and various efficiencies
- €308 million in non-payroll savings arising from greater efficiencies, work reorganisation and better use of resources including property rationalisation, improved procurement practices, and reduced purchasing costs
- Almost €86 million savings from cost-avoidance initiatives.
Like its June 2011 report, the national implementation body’s Summary of Progress, April-September 2011 gave details of additional reforms achieved and underway. It confirmed that progress is accelerating. Its next annual report is due in June 2012.
Public service staff numbers fell by over 5,500 between April and September 2011 and concrete progress was also made on leave standardisation, rationalisation of services and agencies, redeployment, shared service initiatives, and many other local and national cost-saving reform initiatives. Public service payroll costs had fallen by 15.5% from their 2009 peak by the end of 2011.
The savings so far achieved under Croke Park have exceeded the Government’s targets. This has been acknowledged in the progress reports of the IMF-ECB-European Commission ‘troika’. The Croke Park implementation body’s second annual report, due in June, will again quantify the savings achieved under the agreement.
Again, the staff reductions achieved under Croke Park have exceeded the targets set, leading to substantial savings in the public service pay bill. Public service numbers fell by 16,000 in the two years up to mid-2011, generating annual savings of €900 million. This trend has continued in the second half of 2011 and is likely to accelerate in the first quarter of 2012, bringing substantial additional savings.
Contrary to the impression given in some media reports, the biggest proportion of staffing cuts has occurred in management and administration grades. For example, the number of health service management and administrative staff is down by over 7.4%, the reduction in the number of civil service principal officers is three times the average reduction, and there has been a reduction of around 2,000 ‘promotional’ posts in primary and post-primary schools. You will already be aware of the exacting new targets for staff reductions announced by the Government at the end of last year.
The staff redeployment measures agreed under Croke Park have allowed thousands of staff to be redeployed ‘many of them across functional boundaries ‘ to ensure that priority service areas are least affected by these substantial staffing reductions.
Ireland’s international reputation
The Croke Park agreement has helped restore Ireland’s international reputation by exceeding its targets for reductions in public service spending and staffing. It has further enhanced our reputation by achieving this without disruption to services through industrial action or the threat of industrial action. This was acknowledged in an October report by the OECD, which said the Croke Park agreement “has contributed to social cohesion by providing a collectively agreed basis for reform in the [public] sector.”
Public service pay and pensions
You will be aware that public service gross pay was cut by an average 14% (through direct pay cuts and the introduction of the so-called
(pension levy) before the Croke Park agreement came into force. Pay for new entrants has been reduced by an additional 10%, which means that new entrants to the public service are being paid almost a quarter less than in 2008.
Public servants are PAYE workers and they pay taxes and charges like everyone else. This means that, on top of substantial pay cuts, they will continue to bear the full impact of the increased taxes and charges imposed in recent and future budgets.
A recent OECD review found that Irish public service pay is on a par with OECD and EU averages when local purchasing power is taken into account (relative purchasing power is routinely used in international comparisons of pay in both the public and private sectors). It found that, far from being out of step with other countries as is frequently alleged, the relative purchasing power of Irish public servants is about average except for a very small number of senior grades.
While recent political attention has rightly focussed on indefensible and unsustainable pension packages for a very few senior public servants, an answer to a recent Dáil question revealed that 78% of civil service pensioners receive annual pensions of €30,000 or less. Most of these pensioners are not entitled to receive a social welfare pension.
There have been calls for a ‘freeze’ in public service increments. IMPACT believes such a move would save far less than has been claimed and that it would hit those on low pay (especially young workers with mortgages) while leaving most higher paid public servants untouched. You can read more about this HERE.
Public service reform
The Croke Park agreement demands a number of specific sectoral and cross-sectoral reforms. Some of these are designed to save money directly. Others are tools to manage and prioritise services as staff numbers fall. Reforms so far delivered include reduced leave, extended working hours, rationalisation of agencies, centralised and shared services, staff relocation and staff redeployment. Examples of some of national and local reforms completed and underway in various parts of the public service are available on the Croke Park National Implementation Body’s website. The Health Sector Implementation Body also has a useful website which, among other things, carries details of reforms delivered â€“ including by region.
No political party (and few, if any, independent TDs) campaigned on a platform of abandoning the Croke Park agreement in the last general election. This was welcome then, as now, because the massive cost reductions underway in our public services could not be managed and delivered without the Croke Park agreement.
Reductions in public expenditure and staffing are difficult for those who use public services, as well as for public servants themselves. We are currently about half way through a difficult reduction in public service numbers from over 320,000 to less than 280,000. The Croke Park agreement acknowledges that this cannot be done without substantial reforms in the workplace and in the delivery of public services, and public servants and their unions are working daily to deliver those reforms.