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Public Sector Pay

Dáil Éireann Debate, Thursday - 16 June 2022

Thursday, 16 June 2022

Ceisteanna (91)

Seán Canney

Ceist:

91. Deputy Seán Canney asked the Minister for Public Expenditure and Reform his intentions in relation to adjusting public sector pay in view if the exceptional increases in the cost of living; and if he will make a statement on the matter. [29035/22]

Amharc ar fhreagra

Freagraí ó Béal (4 píosaí cainte)

I would like the Minister’s overview on how we will deal with public sector pay in light of the exceptional increased costs of living and also how we will deal with the overall pay structure to make sure work pays in order that people who go to work get the benefit of an income into their pockets rather than being the victims who must pay for everything.

We already had a priority question from Deputy Patricia Ryan on this issue. I will reiterate some of the key points I think are relevant.

First is the importance of having a collective agreement. We have collective agreements now consecutively since 2010 when the Croke Park agreement was negotiated. It has by and large served us well over the last 12 years in that we have had continued industrial peace through that period although, of course, there have been different disputes at different points in time. We have sought to resolve them at all times, however, within the framework of the industrial relations machinery we have within the State.

We have an existing agreement in Building Momentum, which is in place to the end of this year. As the Deputy will be aware, the public services committee of the Irish Congress of Trade Unions, ICTU, some time ago triggered the review clause in that agreement because of the exceptionally high level of inflation that is being experienced at this time and the cost of living pressures that are resulting for its members and public service workers.

Of course, the same applies across the private sector where we are seeing individual pay deals being done across the country as well. That agreement is now the subject of that review clause and at this very moment, officials from my Department are negotiating with representatives from the public services committee. This is the critical phase of those talks. They have been having informal discussions over a number of weeks and this has now moved to the formal stage. Those talks are being held under the auspices of the Workplace Relations Commission, WRC, and I expect we will have a good sense of the outcome of those discussions within the next short number of days.

In seeking to agree on new public service pay arrangements, there are a number of key considerations. Of course, cost of living and inflation will be among them. There is no denying the impact the current level of inflation is having on the living standards of workers both public and private. Though these talks relate to the public service and the importance of securing industrial peace, it is important for us and our economic model to ensure that we can offer stability with regard to industrial relations.

The importance of ensuring that we retain our competitiveness as a country and an economy is fundamental to Ireland’s future as well. We must ensure that any deal is fair to the public servants who are represented in the talks but also to taxpayers generally. We must ensure it is affordable and sustainable for our country at a time when there is much uncertainty in the global economy, which has resulted in the downgrading of growth forecasts pretty much across the board, including in respect of the Irish economy.

The Exchequer is facing much pressure. There is a cost to looking after refugees who come here from Ukraine, which we will absolutely continue to do to the best of our ability, and others who seek international protection in our country as well. Of course, there are always legitimate demands to improve public services across the board in healthcare and education, to continue to invest in infrastructure and provide a budget package that enables us also to address cost-of-living measures through welfare increases and improvements in the taxation system for low and middle-income workers in particular.

There are, therefore, many issues on the table but the talks that are ongoing at the moment are focused on pay across the public service. Some 365,000 public servants are essentially represented at those talks and it is at quite a sensitive point at this stage. I hope that within the next day or two, we will have a clear idea of where we stand.

The Minister is right; we are at critical stage. However, I believe that people who go out to work want to see the benefit of that work. It is not all always about the pay scale. It is actually about what will happen in terms of tax credits, especially for the lower and medium income earners. If they get an increase in wages, what often happens is that it puts them over a threshold for student grants or medical cards or whatever. I also think the transition from a 20% to 40% tax rate is too much. There has to be a more graduated form of taxation. This all has to come into line because the private sector just cannot keep paying out more wages.

The person who is working needs to see more money coming into the household to meet the cost of living. There should also be tax credits for the cost of traveling to work where a person does not have public transport such as trains and buses. People have to go to work and pay for that themselves. It is important that we get all of this in line in order that working pays as opposed to not paying.

On the question of tax, we have a programme for Government commitment that I strongly support. If we were to have a static tax system in which no changes were made at a time of rising incomes, it would be the equivalent of an increase in income tax. I do not believe it is fair that workers who earn that little bit more would then be paying more than half that in tax through USC, income tax and PRSI. Therefore, I anticipate there will be changes in respect of income tax but it will be about keeping pace with the reality that we have rising incomes for many workers across the country and we do not want more and more of their income to be taxed by stealth at the marginal rate of tax.

There is, therefore, a programme for Government commitment, which I believe is important that we continue to honour. The forthcoming budget will have a cost of living focus, however, and it will not be all about tax. It will predominantly be on the expenditure side, as it has been in recent budgets. That is where we can make the greatest difference and target the limited resources that are available to the people who most need it.

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