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Budget leaks: Dublin and Brussels in €300m dispute over public pay bill

The government says cutting public jobs will save €2.5bn by 2015 – but the European Commission’s draft report is far less optimistic.

Plans announced by Brendan Howlin on Thursday include saving €2.5bn by shedding public jobs - but the European Commission is less optimistic.
Plans announced by Brendan Howlin on Thursday include saving €2.5bn by shedding public jobs - but the European Commission is less optimistic.
Image: Eamonn Farrell/Photocall Ireland

THE EUROPEAN COMMISSION has poured cold water on the Irish government’s hopes of saving billions of euro by cutting tens of thousands of public jobs – estimating that the cuts will save €300 million less than the government believes.

The Commission’s confidential draft report on its visit to Ireland in October – the fourth quarterly review of Ireland’s progress under the EU-IMF deal – disputes the government’s assertion that it can reduce its annual pay bill by some €2.5bn between 2008 and 2015.

TheJournal.ie has obtained a copy of the draft report, which was circulated to members of Germany’s budget committee earlier this week – ahead of a vote on whether to approve Ireland’s next round of bailout loans.

Earlier this week, public expenditure minister Brendan Howlin outlined plans to cut 23,500 staff from the public payroll between the end of 2010 and the end of 2015 – aiming to bring the government’s annual pay bill to €16.8 billion in 2015, down from €19.3 billion in 2008.

But while the Commission’s report expects a similar volume of jobs to be cut, it says the government will only get its pay bill cut to €17.1 billion – some €300m more than the government’s expectations.

Budget plans

While the government also expects to make major savings by overhauling the generous pension allowances of the top public earners, the reduction in its pay bill is particularly important – as it forms a major part of the planned spending cuts in the 2012 and 2013 Budgets.

Next month’s Budget for 2012 will cut current spending by €1.45 billion – with February’s mass retirement of public servants expected to help the government make up a large portion of this target.

The draft proposals for 2013 contain similar plans to cut spending by downsizing the public workforce, whose wages will be expected to make a major contribution to the €2.25 billion target of spending cuts in that year.

The government says it is confident of achieving its target of 23,500 job cuts without having to enforce compulsory redundancies – which are outlawed by the Croke Park Deal.

That deal is due to expire in 2014, however – raising the possibility of mandatory public layoffs in 2015 and beyond.

In full: TheJournal.ie‘s coverage of the Budget Leaks >

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    Gavan Reilly

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