Wednesday, 27 February 2013

Questions (40)

Robert Troy


40. Deputy Robert Troy asked the Minister for Public Expenditure and Reform his views on whether there should be reductions in salaries for high-earning officials in the commercial semi-State sector; and if he will make a statement on the matter. [10408/13]

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Written answers (Question to Public)

As the Deputy will be aware, I have no statutory role in relation to the remuneration of staff below Chief Executive Officer (CEO) level in the commercial State sector.

The Government supports a strong policy of pay restraint in the public sector and the Deputy will also be aware that in June, 2011 the Government took two significant steps in relation to the payment arrangements of CEOs in Commercial State Bodies. In the first instance we introduced salary reductions along with a general salary ceiling of €250,000 per annum to all newly appointed CEOs in Commercial State Companies. In the second instance we sought voluntary reductions in the salary levels of those already serving CEOs with salaries in excess of €250,000 per annum.

The salary ceiling of €250,000 per annum for newly appointed CEOs was arrived at through a combination of an across-the board 10% reduction and an additional reduction equivalent to that applied to public servants under the terms of the Financial Emergency Measures in the Public Interest (No 2) Act 2009. In the interests of achieving fairness and balance, salary reductions were also applied in respect of newly appointed CEOs of commercial State companies with salary maxima below the ceiling of €250,000 per annum. This has had the effect of reducing the salary levels of all newly appointed CEOs in a proportionate manner while maintaining the established weightings between the Commercial State Companies.

The sole exception to this arrangement is in respect of the more recently appointed CEO of the ESB for whom a salary of €318,083 per annum was approved and which is proportionate to the reductions imposed generally under the formula applied. However, it is important to note that in this particular and exceptional case the CEO concerned has agreed to a reduced salary of €295,000 per annum. Furthermore, it is Government policy that, in general, newly appointed CEOs are to be placed on the minimum point of the relevant salary range as opposed to the practice of assigning such personnel to around the mid range of such salary scales under an established pay formula for this purpose.

The position in respect of CEOs who were already serving in June 2011 is that, for contractual reasons the imposition of reduced salary rates could not be unilaterally imposed by Government. However, incumbent CEOs in the Commercial State Companies with a salary in excess of the general salary ceiling of €250,000 per annum were requested to make a voluntary waiver of salary of 15%, or to waive a lesser amount if the application of the full 15% reduction would have brought their salary below the €250,000 salary ceiling.

All of the relevant incumbent CEOs whose salaries were, at the time of this request, in excess of €250,000 per annum agreed to the application of the waivers.

The system of Performance Related Award Schemes for the CEOs of Commercial State Companies has been discontinued for all serving and recent appointees to such positions.

While I have no statutory role in relation to the remuneration of staff below CEO level in Commercial State Companies, I have written to the relevant Ministers about this matter asking that they write to the Chairs of the Commercial State Companies under their aegis to request that they ensure that cognisance is taken of Government policy on pay within the public sector when considering the remuneration of all future appointments of staff within those organisations and, specifically, that they ensure that 2nd tier management remuneration is set at levels that allow for reasonable headroom between this tier and the revised levels of salary which will apply to CEO posts.