I propose to take Questions Nos. 88, 89, 100 and 101 together.
When publishing the Review of Remuneration Practices and Frameworks at the Covered Institutions, on 12 March 2013, I indicated that the Government had formed the view that with the remaining covered institutions still incurring losses it was an inescapable conclusion that the cost base of the institutions needs to be reduced further. This is essential if they are to return to profitability, be in a position to support the economy and repay the State’s investment through a return to private ownership.
On behalf of the Government, I have now directed the banks to come up with plans as to how they intend to address this issue in a manner that can help meet the State’s objectives. I expect the value of those plans to mean a saving of 6% - 10% of total remuneration costs, through reductions in payroll and pension benefits, new working arrangements and structures that deliver efficiency gains.
This point is reinforced in the correspondence supplied by the Deputies where it is asserted that even a target reduction of 6% to 10% in remuneration will not by itself impact significantly on losses now occurring at the covered institutions. If appropriate action is not taken on this front in a timely manner then bank workers will be facing much more unpalatable measures than now proposed. Tackling the cost base is of course only one of many goals that need to be achieved but combined with other measures will deliver the required results.
I would point out in this context that redundancies at the covered institutions have been achieved to date on a voluntary basis on negotiated terms. The effect on employee entitlements arising out of the liquidation of IBRC will serve as a sharp reminder to all sides of the fraught environment in which the banks and the country are operating
I, and the Government, acknowledge that the sacrifices and changes made by bank employees to date at all levels and recognise that this has been achieved without major industrial unrest in what is a critically important sector. However, it can never be forgotten by management and employees of these banks – both past and present – that without enormous cost to Irish taxpayers these institutions would not have survived and that this needs to be borne in mind during future discussions. If remuneration costs are to be reduced with the aim of a return to profitability then sacrifices at all employee levels will be required.
