Dáil Éireann Debate, Thursday - 24 November 2016
14. Deputy Clare Daly asked the Minister for Public Expenditure and Reform the reason pay restoration has to date focused on high earners rather than lower earners; and his plans to redress this matter through new pay restoration negotiations. [36364/16]
View answerIn relation to the unwinding of Financial Emergency Measures in the Public Interest (FEMPI) measures for low earners, the Deputy will be aware that the application of the FEMPI pay reductions were extremely progressive, with pay reductions ranging from 5% at lower pay levels to 29% at higher pay levels.
Again the measures applied under the phased unwinding of the FEMPI reductions through the LRA were also progressive - it provided the greatest benefit at the fastest pace to lower paid public servants by:
- exclusively targeting those earning under €65,000 for increases in pay - ranging from €1,500 for those earning €20,000 to €1,000 for those earning €60,000.
- utilising increases in the exemption threshold of the Pension Related Deduction (PRD) to maximise the benefit to low paid workers. All statutory deductions other than tax are made before PRD is taken from salary, therefore, a reduction of an amount in PRD will benefit the employee to that amount, less PAYE. For a person on the lower 20% tax rate, a €100 reduction in PRD gives a benefit of €80.
Consequently the percentage benefit of the commitments in the Lansdowne Road Agreement is clearly weighted to lower paid public servants - those on €20,000 will benefit by 8.1% of gross salary.
As a result public servants earning under €24,000 will be fully restored under the LRA, while those earning under €30,000 will have approx 80% of their FEMPI reductions unwound. In contrast, public servants who are earning €70,000 will receive 32% of their FEMPI reduction or those earning €120,000 will receive 28% of the FEMPI reduction that was applied to their remuneration.
Any further FEMPI adjustment measures post the Lansdowne Road Agreement will be collectively negotiated with the relevant union interests at the appropriate time and will have to be sustainable and affordable.
