I thank Members for facilitating this Bill. This Bill is a key enabler for the new public service pay agreement, Building Momentum, and allows for a range of reforming pay matters, including implementation of aspects of Sláintecare. It continues the process of unwinding and repealing financial emergency measures in the public interest, FEMPI, legislation. As such, it builds on changes that began with the Lansdowne Road agreement in 2015 and the Financial Emergency Measures in the Public Interest Act of 2015, and continued with the Public Service Pay and Pensions Act 2017 and the public service stability agreement of 2018 to 2020.
The Bill will allow implementation of the pay increases provided for by Building Momentum. Before dealing with the specific provisions of the Bill, I note that in December 2020 negotiations concluded on a new public service pay agreement, entitled Building Momentum, which will apply for the next two years. This agreement was accepted by my colleagues in Cabinet and ratified by the public services committee of the Irish Congress of Trade Unions, ICTU, on 23 February. That decision by ICTU is welcome as it will deliver stability for the Government, public service users and public servants over the lifetime of the agreement.
We will all agree that the public service has stepped up to the challenge of the Covid-19 crisis and delivered a world-class response. Public servants have been quick to adapt and re-adjust the way in which services are delivered so as to minimise the negative impact of the pandemic on the public. It is important that this agreement recognises the value of the work of our public servants during this pandemic and provides for affordable increases with pay adjustments weighted towards those on lower incomes. This is balanced by ensuring that the Government continues to exercise a prudent approach to the overall management of our public finances.
The economic sustainability of this agreement is based on a pay pause for the majority of 2021 and modest but reasonable pay increases in 2022, when we expect a strengthening economy and labour market recovery as the vaccine roll-out takes effect. The agreement provides for general pay increases of 1% in October 2021 and October 2022, or €500, whichever is greater. I am also allocating a sectoral fund amounting to 1% of basic pay to resolve any outstanding issues such as those that resulted in industrial action in the period of previous agreements.
The agreement is weighted towards those at lower incomes with an increase of approximately 5% for the lowest paid public servants. These groups will also benefit more from other measures in the agreement, including changes to overtime rates and premium payment adjustments. The pay adjustments provided for by the agreement are phased, with implementation commencing later in 2021. In that regard, the agreement is fair, affordable and sustainable, and recognises the economic challenges facing the country. Most important, the agreement provides certainty on pay and industrial peace over the next two challenging years. A key element of the deal, one which taxpayers expect and the unions have now agreed, is that industrial peace will be maintained and that there be no additional cost-increasing claims.
The agreement sets out a reform agenda that seeks to embed the agility demonstrated during Covid into enhanced public service delivery in the future. These include harnessing the capacity of technology and remote working across public services. It takes a new sectoral approach which recognises that different areas may have unique and innovative approaches to providing service delivery. A key element of this is that each sector will produce and publish reform plans that will demonstrate delivery every year. Crucially, payment of the 1% sectoral fund will be conditional on the delivery of actual reforms.
There will be scope to extend opening hours of public-facing services, so when people need to see someone to access a public service, it will be at a time which is convenient for them. Learning from experience in the Covid-19 pandemic, mechanisms will be agreed where staff will move quickly to different parts of the public service to deliver a response to critical or urgent demands.
As noted, the Bill will also enable progress on a range of pay reform matters. I will touch briefly on two of these: Sláintecare and the seagoing commitment scheme in the Naval Service. A key objective of the Sláintecare implementation process is to remove consultant private practice from public hospitals. Central to implementation of this reform is a move to public-only consultant contracts and to tailor such contracts to align with wider Sláintecare reforms. Taking that into account, all future consultant appointments will be to a new Sláintecare public-only consultant contract from a date to be decided shortly. The Sláintecare contract will have no provision for private practice and will be available to all existing consultants. The offer will be informed by a process of consultation with key stakeholders. The new contract, noting the significant reforms involved, is to be offered at an increased pay level.
The seagoing commitment scheme is one of a number of measures advanced in 2020 to support recruitment and retention in the Naval Service. It provides for a €5,000 payment for each 12 months of seagoing service. Naval personnel of able rating and above with at least three years' service of enlisted rank of able rating and above and of officer ranks are eligible.
These measures, which support reform, recruitment and retention in particular areas of our public service, cannot be progressed to payment under existing FEMPI Acts.
This underscores the need for the amending legislation.
In summary terms, the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 provided that no change could be made in the pay of a public servant without legislative amendment, a court order or a determination that there is a legal entitlement to a pay increase. While it is possible to set a pay rate for a new grade or post, it is not possible to change the pay of an existing public servant in a post. The Bill provides for amendment of the restrictions on increases to public service pay introduced by the Act of 2009. This will allow the Government to provide for changes to remuneration and greater flexibility in the allocation of available resources to public service pay requirements. In the short term it will allow implementation of the pay increases provided for by Building Momentum - A New Public Service Agreement 2021-2022, the new public-only Sláintecare consultant contract and seagoing service commitment scheme.
I will turn to the details of the legislation. The Bill amends or repeals sections 4 and 5 of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 and section 12A of the Ministers and Secretaries (Amendment) Act 2011. This means the Bill provides for amendment of the restrictions on increases to public service pay introduced by the Financial Emergency Measures in the Public Interest (No. 2) Act 2009. It provides that, in addition to changes to pay arising from an Act of the Oireachtas, an order of a court or a determination that there is a legal entitlement to a pay increase, increases in the pay or allowances of public servants may be sanctioned. It amends the Ministers and Secretaries (Amendment) Act 2011 to ensure that where a contract of employment is amended in accordance with amended provisions of the Act of 2009 no further ministerial sanction is required under that Act.
I will break the Bill down by section. Section 1 sets out a definition of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 as the "Act of 2009". Section 2 amends section 4 of the Act of 2009 to provide that in addition to changes to pay arising from an Act of the Oireachtas, an order of the civil courts, an order of the Labour Court or a determination that there is a legal entitlement to a pay increase, increases in the pay or allowances of public servants may be sanctioned. Section 3 amends section 5 of the Act of 2009 to provide for retrospective application, up to the date on which this proposed Bill is enacted, of a provision allowing for amendment of contracts of employment to increase pay. Section 4 amends section 16A of the Ministers and Secretaries (Amendment) Act 2011 to ensure that where a contract of employment is amended in accordance with section 4 of the Act of 2009, as amended by this proposed legislation, no further ministerial sanction is required under the Ministers and Secretaries (Amendment) Act 2011. Section 5 provides that the Short Title of the proposed legislation is the Public Service Pay Act 2020.
Concluding the repeal of the financial emergency legislation is an important milestone in the history of the State. Underpinning this achievement and the new public service pay agreement is the strong performance of the economy. The economy is expected to recover next year. Indeed, in 2022 the economy is expected to grow by approximately 4.3 % as outlined in the forecasts of the Central Bank, the Irish Fiscal Advisory Council and the OECD. These institutions forecast GDP growth of 4.6%, 4.1% and 4.3%, respectively.
Labour market conditions are also expected to improve next year with employment growth of 3.2% and 3.6% projected by the Central Bank and the Irish Fiscal Advisory Council for 2022. As a result of the growth in employment the unemployment rate is projected to decline to 7.8% or 6.7% in 2022. These would be well below the record levels recorded in 2020.
Our approach is about balancing the need for pay restraint, stability and certainty in the delivery of public services with the need to support ongoing public service reform. Key areas of our public services have experienced and responded to challenging demands over the past year. The Bill allows for implementation of reasonable pay increases and provides a means of using pay, where appropriate, to support the wider public service reform agenda. On that basis I commend the Bill to the House. I look forward to hearing the views of everyone in the House.