2008 – 2013
The financial crisis began in 2008, as the international banking crisis erupted across the world. Ireland’s banks collapsed, and the Government introduced a series of public spending cutbacks and reforms to get the public finances back on track. With the November 2010 bailout and the arrival of the Troika, Ireland lost its economic sovereignty until December 2013, when the bailout ended and the economic recovery tentatively began.
The years of austerity had an enormous impact on the salaries of public and civil servants at all levels, with massive unilateral pay cuts combined with significant impositions in charges and taxes.
Wages deteriorated, pay agreements were ignored, and family incomes suffered.
There were four waves of austerity measures.
- Pay Freeze.
In September 2009 the FEMPI (Financial Emergency Measures in the Public Interest Acts) imposed an 11-month pay freeze. Previous National Agreement pay increases due in September 2009 (3.5%) and June 2010 (2.5%) were abandoned (Towards 2016).
- PRD/Pension Levy.
In March 2009 the PRD (pension related deduction) was introduced under FEMPI. The levy is deducted at source, and returned to the Exchequer, so is therefore a reduction in gross pay.
Higher rates were applied to the higher paid, but the average deduction was 7% of total salary.
To give an idea of its scale, the PRD has yielded savings of over €900m. for the Exchequer in each full year since it was introduced.
- Pay Cut.
A second FEMPI Act was enacted in December 2009. This introduced a comprehensive pay cut from January 1st 2010. A Clerical Officer on average pay lost €1500 per annum gross in this pay cut.
- Haddington Road Agreement.
In 2013, the Haddington Road Agreement (HDA) brought further cuts in public service pay and pensions, and a raft of productivity measures, including additional hours valued at 6% in pay terms. This Agreement introduced increment deferrals, overtime rate changes, and changes in flexible work practices.
THE UNIVERSAL SOCIAL CHARGE
As well as the four waves of cuts, the Government restructured two levies – the income levy and the health levy – into one: the Universal Social Charge or USC.
A worker on €37,000 a year (the maximum for a Clerical Officer) pays almost €1400 a year in USC.
The lower paid took a huge hit in these cuts. See a full breakdown below.
During the austerity years, successive Governments cut public service employment across the board. Numbers fell from a high of 320,000 to less than 290,000 jobs in 2015. This was imposed by the blunt instrument of a moratorium, incentivized retirement and voluntary departures. Overall, there was a 10% reduction in jobs across all the public sectors.
These cuts have resulted in huge income losses for all public and civil servants, but particularly those on lower incomes i.e. between €20,000 and €37,000 a year. As well, those in work have longer hours, less flexibility, more work and less supports.
PUBLIC PAY BILL
As a result of these cuts, the public service pay bill has fallen dramatically, from over €17bn before the recession to €14bn net in 2014.
As well as taking this from the workers, this money has also disappeared from the economy with the loss of discretionary income and savings.
Despite propaganda to the contrary, the pay levels of lower public servants are in line with or below the average pay of those elsewhere in Europe, according to OECD data.
The OECD also published statistics in December 2014 which show that the size of the Irish public sector – at 18.4% of total employment – is not far from the average level across the OECD.
COMMITMENTS TO LOWER PAID MUST BE MET
The Government and the public service unions implemented two agreements during the austerity years: the Croke Park Agreement and the Haddington Road Agreement.
Unions agreed measures to help restore the public finances, but the Government committed to ensuring that when those finances were restored, the lower paid would be the first to benefit.
NEARLY HALF ARE LOWER PAID
Official figures show that 45% of all public servants earn less than €45,000 a year, while 68% of public servants earn less than €50,000 a year. The impression given that the majority of public servants are highly paid is wrong.