The expenditure reduction measures adopted by Government to restore our economic sovereignty, including pay and pension reductions applied to serving and former public servants, have been directed at ensuring that the reduction in the public service pay and pensions bill makes a proportionate contribution to the significant fiscal consolidation efforts required to meet our international commitments.
Rather than basing reductions on a comparison to the pay of other employees in Ireland or other countries, the measures introduced have been based on meeting the Government's priority to restore Ireland to a sound fiscal footing. The Financial Emergency Measures Acts 2009 to 2013, allied with a large scale reform programme facilitated by the Public Service and Haddington Road Agreements, have delivered a significant reduction in the cost of the Exchequer Pay Bill, from a peak in 2009 of €17.5bn (gross) to an estimated €13.6bn (net of PRD) in 2014, effecting a saving of €3.9bn, and of over 10% in the number of public servants from 320,000 in 2008 to an estimated 287,000 in 2014 at the same time as demands on public services are increasing.
This has contributed significantly to a reduction from a deficit of over 30% in 2010 to a targeted deficit for 2014 of 4.8% and has delivered stability to the economy while delivering more services with less money through reform and change.
While any increase in taxation is likely to have a negative short-run impact on economic output, this must be balanced against the need to restore Ireland to a sound fiscal footing. This, in turn, will aid the restoration of confidence in the Irish economy and allow for sustainable economic growth over the medium term.
