Croke Park savings reach almost €1.5 billion a year

Wednesday 13th June 2012

Efficiencies and reforms worth almost €1.5 billion a year have been achieved in the first two years of the Croke Park agreement. The second annual report of the Croke Park national implementation body, published today, describes these as ‘sustainable savings,’ meaning that they will recur each year into the future.

The report 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.

Total payroll savings of €810 million over two years were achieved after allowing for 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.

These substantial payroll savings mean the State is on course to reduce the annual pay bill by €3.3 billion, after allowing for expected additional pension costs, between 2009 and 2015.

On top of this, 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 report found that the number of public servants had fallen by 11,530 in the agreement’s second year and by a total of 17,300 in the two years to March 2012. Overall public sector employment now stands at 292,000, down almost 9% since 2008.

The largest number of staff reductions has been in health, where employment is down 7.4%, or over 8,000, since the end of 2008. However, the biggest percentage reductions have been in local authorities (18.4%), non-commercial state agencies (17.5%) and defence (15.2%).

The savings have been achieved as demand for many public services has increased dramatically. For example:

  • The number of medical card holders is up 500,000 compared to 2007
  • Higher education student numbers are up almost 15% since 2009, while staffing has fallen by over 7%
  • A 13% increase in social welfare applications in 2011 was accompanied by an 11% reduction in processing times between 2009 and 2011
  • Hospital in-patient discharges were more than 14,000 above target last year and the number of day cases increased by 19% between 2009 and 2011.
  • The number of prisoners in custody is up 23% since 2008 while staffing has decreased by 8%
  • The number of tax audits conducted is up 55% since 2008 while staffing is down 13%.

The implementation body said the Croke Park agreement “continues 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.”

Its report notes a significant increase in the numbers of public servants being redeployed to fill essential vacancies and maintain priority services as staff numbers fall. Over 4,500 health service staff were redeployed in the last year, along with 950 primary teachers, 200 secondary teachers and over 1,000 defence force personnel.

The report lists public service-wide reforms including the introduction of standardised leave arrangements and says legislation to introduce a new single public service pension scheme and the review of public service allowances are “at an advanced stage.” It says a manager has been externally recruited to drive shared services across all sectors and a separate ‘commercial delivery manager’ post has recently been advertised.

The report also gives examples of productivity reforms in education, health, the civil service, local authorities, and the defence and the justice sectors, which includes prisons and An Garda Síochána.

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.

Read the second annual report of the Croke Park implementation body, including a summary of main findings, HERE.

Read the first annual report of the Croke Park implementation body HERE.