I propose to take Questions Nos. 1 and 2 together.
At its meeting yesterday, as expected the public services committee of the Irish Congress of Trade Unions did not accept the Labour Relations Commission, LRC, proposals for a new public service pay and industrial relations agreement. Clearly the Government is disappointed at that outcome. It is disappointed because it believes the LRC proposals represented a fair, balanced and negotiated resolution to the stark problem that faces the country, namely, that the Government cannot afford to pay its employees as much as it now does.
The proposals would have ensured that direct pay reductions were reduced, in so far as possible, through public service-delivered productivity. By increasing productivity, it would have allowed the Government to deliver the same level of services with a smaller number of staff and fewer agency workers supplied from the private sector. Consequently, the Government could have reduced the cost of the pay bill by reducing numbers of employees in a voluntary way, while avoiding substantial reductions in the services delivered to the public.
The proposals would have contained the really big drivers of the cost of delivering modern public services, especially those which must run on an all-day and through-the-weekend basis. At the same time, they respected the important principle that those public workers who must work at unsocial or inconvenient times at nights or at weekends should receive more pay for that work. Finally, where direct pay cuts had to be applied, they would have applied only at the upper levels of pay and they were the people who have been asked to take that reduction. The core salaries of the 87% of public workers who earn less than €65,000 were to be protected. The majority of those who earned above that amount but less than €100,000 received an assurance that their pay rates would be restored after 2016.
The LRC proposals therefore went a long way towards avoiding the highly unpalatable outcomes for public servants and giving them security about their terms of employment up to 2016. However, I recognise it is unprecedented to ask public servants to sign up to an agreement that has a negative impact on their pay and conditions and it is now clear that a majority were not willing to so do. It is a matter of regret that, as has been made clear on many occasions by the Government in recent weeks, a rejection of these proposals does not change the inexorable budgetary arithmetic. To conform to its budgetary targets and to continue on its path to economic recovery, the Government must make payroll savings of €300 million this year and €1 billion by 2015. The Government will now reflect on the outcomes of the ballot and the manner in which the required savings can be achieved this year and onwards. It must consider how to do so, while ensuring the ongoing delivery of public services to the people of Ireland, who depend upon them.