Dáil Éireann Debate, Thursday - 20 January 2022
5. Deputy Richard Boyd Barrett asked the Minister for Public Expenditure and Reform if he is planning to review public sector pay in view of the current inflation rate of 5.3%; if he has had discussions with the Minister for Finance as to the way that private sector workers could also be compensated for the effect that this rate of inflation is having on the cost of living for workers nationally; and if he will make a statement on the matter. [2458/22]
View answerThe €1,000 bonus for front-line healthcare workers is richly deserved, while the additional bank holiday is something that will be welcomed widely. These gains will be somewhat hollow, however, if the cost of living and the rate of inflation continue at the current level. In effect, that will mean that workers, pensioners and social welfare recipients are in fact seeing real income cuts. What does the Minister intend to do to ensure that workers do not lose out because of the rise in inflation?
Public service pay has been governed by a system of collective agreements since the Croke Park agreement was negotiated in 2010. These collective agreements have helped to ensure that public pay is managed in a sustainable, affordable and orderly manner. These agreements have also enabled significant reform of public services and changes to work practices. The current public service agreement is Building Momentum - A New Public Service Agreement 2021-2022. It is weighted towards those on lower incomes, with headline increases of approximately 5% for the lowest-paid public servants.
These groups will also benefit more from other measures in the agreement, including the overtime rates and premia payment adjustments that are provided for. The agreement provides a general round increase in annualised basic salary for all public servants of 1% or €500, whichever is greater, on October 2021, which has been implemented; the equivalent of a 1% increase in annualised basic salaries to be used as a sectoral bargaining fund in accordance with chapter 2 of the agreement, which will take place on 1 February 2022; and a general round increase in annualised basic salaries for all public servants of 1% or €500, whichever is greater, which will benefit those on lower incomes the most, on 1 October this year.
The Government is determined to ensure the current pay agreement is honoured in full. In this regard, an independent body was established to examine the additional hours worked by public servants under the Haddington Road agreement. We have just been discussing that issue. The recommendations of the body have now been submitted to my Department and I anticipate that the full report will be submitted at the end of this month.
As the Deputy will be aware, Building Momentum is a two-year agreement which is due to expire at the end of the current year. Government and public service staff representatives will be due to enter into discussions on the potential for a successor agreement later this year. I expect that the issues to which the Deputy has rightly referred will very much feature and be considered in those discussions.
Given the day that is in it, I will refer to the pandemic bonus. As well as the richly-deserved €1,000 for front-line healthcare workers, carers and those working with disability should benefit. I shout out particularly for retail workers in supermarkets. They put themselves at very serious risk and literally kept us alive during the pandemic. The Minister should consider them.
On the wider issue, workers are only getting 1% pay increases annually under a deal negotiated before inflation started to rise. Inflation is now at 5.3% and is projected to be 4% next year. In the round, workers are losing income. They are enduring pay cuts. The rate of inflation does not take into account the stratospheric increase in the cost of accommodation and rents. The Minister has not said a word about private sector workers or that part of my question which urged him to engage with the Minister for Finance on their pay situation.
On the pandemic recognition payment, I hear what the Deputy has to say. We discussed this earlier. The challenge for the Government is this. The Deputy mentioned retail workers. There are up to 300,000 retail workers in Ireland. There are about 120,000 carers in receipt of the carer's support grant. The Deputy can do the maths. If we add that to the cost of what the Government has committed to, we are getting to north of half a billion euro very quickly. That is the reality that the Government has to face in making a decision on this issue. We absolutely recognise the invaluable role all of those people played.
Turning to the issue at hand, I acknowledge that the inflationary pressures are real and they are hurting people. They are affecting people. The Government is acutely conscious of that. The measures we brought in during the budget have only just kicked in, in the main. They include over €1 billion in respect of income tax and social welfare improvements. They will certainly help.
I have dealt with the issue in respect of public pay. It is about a 5% increase for those at the lower end of the public pay spectrum. Of course the Minister for Finance and I discuss these issues on an ongoing basis. We expect that the level of inflation will moderate and subside over the period ahead. That is no consolation to people right now. We believe the Government's measures will help people who are struggling with inflation at this time.
I will just say that the Dunnes Stores workers have shown the way. They are traditionally low-paid workers who kept us going at the front line. They put in a pay claim and got 10%. That is what they deserve. Especially after Covid, retail workers and lower paid workers should be getting pay increases in that order. The Government should actively try to facilitate that.
Last night the Parliamentary Budget Office pointed out to us the State contributory pension - I presume it is the same for the non-contributory pension - and all social welfare payments are actually losing out. In real terms, people are going to be 2% less well off as a result of inflation, unless we index-link their increases. Similarly with public sector workers if the pay increase is 1% and inflation is five times that, workers are losing out. The Government has a responsibility if it is serious about rewarding workers for hardships during Covid to do something to compensate workers for the rising cost of living.
I have acknowledged that the price pressures are impacting on people negatively. It is not just energy prices although the headline inflation rate has been driven up substantially by energy prices. We are also seeing it coming through in rising food prices in our supermarkets. Of course that is a concern. However, we have to look at what the Government is doing in the round. I spoke about the public sector pay improvements. We are seeing wage improvements across the private sector as well. When we add to that what the Government has done in the context of the budget with more than €1 billion provided by way of social welfare improvements and taxation reductions, as well as what we are doing and planning to do much further in the area of retrofitting, which will greatly assist people in reducing their energy costs and which will make the whole system much more sustainable. I look forward to the implementation of the credit the Government has committed to as well in respect of electricity costs. We are doing a lot. The Government always keeps these issues under review.
