The Government has to-day (Friday 11 December 2009) published Report No 44 of the Review Body on Higher Remuneration in the Public Sector.

Role of the Review Body

The Review Body on Higher Remuneration in the Public Sector, which was established in l969, is an independent standing body whose primary function is to advise the Government on the general levels of remuneration appropriate to higher public servants including political office-holders.

Previous Report of the Review Body

The Review Body completed its last general review of top public service pay in September 2007. In that report, Review Body recommended increases averaging 7.3% of the pay cost of those covered; this was the weighted average increase. The level of increase recommended varied from group to group and in a number of cases no increase was recommended.

Following the Report of the Review Body, an increase of 5% from 14 September 2007, the date of the Report, or where the total increase is less than 5%, the full increase from that date, was applied to the generality of the groups for which increases had been recommended. However, this increase was not applied to Parliamentary Office-Holders including the Taoiseach and Ministers.

In July 2008 the Government decided that all of the remaining increases recommended by the Review Body would not be implemented.

Present Report of the Review Body

In April 2009, the Minister for Finance asked the Review Body to undertake a fresh review of top level public service pay, to take account of the changed budgetary and economic circumstances, the changed private sector pay environment and to compare pay against that of other countries of comparable scale, particularly in the eurozone.

Recommendations of the Review Body

Following its examination, the Review Body recommended reductions in pay varying from 8% to 15% generally and 20% in the case of the Taoiseach.

As the examination had to be confined to a sample of grades because of time constraints, the Review Body recommended that the reductions for the sample grades should be extrapolated for other relevant groups. Accordingly, the recommendations of the Review Body have been extended and adapted, as necessary, to cover groups that were not specifically examined.

Apart from the reductions in pay, the Review Body recommends that there be no increases in the pay of the higher public service groups, including any adjustments that might otherwise arise under National Agreements, before the end of 2012.

Secretaries General

In the case of Secretaries General, Level 1 (Secretaries General of the Departments of the Taoiseach and Finance), a reduction of 15% was recommended by the Review Body. However, the Secretaries General concerned have volunteered to accept a reduction of 20%.

The Government has decided that a new reduced pay rate will be introduced for Secretaries General, Levels 2 appointed after 1 July 2010 to align with the salary of a Minister. In order to provide an appropriate differential between levels, the Secretary General level 3 rate will also be adjusted downwards for new appointees from the same date.

Hospital Consultants

While Hospital Consultants were not among the grades examined by the Review Body the Government has decided that reductions should be applied to them on the same basis as other groups at similar salary levels.

Salary Reductions

Examples of the reductions arising are as follows:

Taoiseach:                                         20%

Secretaries General, Level 1                  20%

Tánaiste                                            15%

Ministers                                            15%

Secretaries General, Levels 2 and 3: 15%

These reductions together with the effects of the pension levy means the Taoiseach’s salary and those of Secretaries General, Level I will be cut by close to 30 per cent in total and that there will be an overall cut of close to 25% for Ministers and other Secretaries General of Government Departments

Judiciary

The Review Body noted that there is a constitutional prohibition on a reduction in the pay of members of the Judiciary and stated that if it were not for that, they would have considered a downward adjustment in the salary of High Court Judge (which was one of the sample groups examined).

However, the Review Body also expressed the view that the UK provides the only valid comparison for the Judiciary. In the case of a Judge of the High Court, the salary in Ireland was found to be ahead of the UK salary in nominal terms but when comparison is made on an adjusted income basis, allowing for differences in purchasing power, the Irish salary was somewhat lower than the UK level.

Since the Review Body would have considered a reduction of judicial salaries, the Minister for Finance has decided that there will be no increase in judges’ pay during the lifetime of the Government. The Minister also stated that future Governments may choose, as in the past, to continue this course of action.

Schemes of performance-related awards

The Review Body remains in favour of moderate performance-related award schemes in the public service but, in current circumstances, recommends that these schemes should be formally suspended and the Government has accepted this recommendation.

Membership of the Review Body

The members of the Review Body are

Tony O’Brien, Chairperson of Review Body Chairman of C&C Group plc. Former non-Executive Director of CRH plc. and chaired the Remuneration Committee. Former member of the Civil Service Committee for Performance Awards. Past President of IBEC.

Brian Hillery

Chairman of Independent News and Media plc, and Providence Resources plc. Commissioner, National Pensions Reserve Fund Commission. Former TD and Senator. Former Professor, Graduate School of Business, UCD. Director of the Central Bank and Financial Services Authority of Ireland.

Vivienne Jupp

Chair, Accenture Institute for Public Service Value. Former global managing partner in Accenture. Board member of the UCD Smurfit Graduate School of Business. Chaired the Information Society Commission from 1996 to 2000.

Peter Malone

Former CEO of Jurys Doyle Hotel Group. Chairman of National Roads Authority. Chairman CBRE. Chairman Business Tourism Forum.

The Review Body’s report is available at www.finance.gov.ie and at www.reviewbody.gov.ie

Examples of reduced salaries

Basis of comparison Page 5 of the report of the Review Body contains a table setting out the current salaries of the sample posts examined and the effect of the deductions proposed. However, the rates shown for Secretaries General are based on the rates which would apply to persons recruited after 1995. The rates actually payable to Secretaries General are pre 1995 rates which are 19/20ths of the post 1995 rates[1].

The table below shows the position in pre 1995 terms for Secretaries General which gives a more accurate picture of the actual position.

Post                                                            Current Rate        Revised Rate               Reduction

Taoiseach [2]                                              €285,583             €228,466                    €57,117 (-20%)

Tánaiste    [2]                                              €245,325             €208,526                   €36,799 (-15%)

Minister     [2]                                             €225,196             €191,417                    €33,779 (-15%)

Secretary General, Level 1                             €285,341             €228,466                    €56,875 (-20%)

Secretary General, Level 2[3]                         €253,635             €215,590                    €38,045 (-15%)

Secretary General, Level 3                             €221,929             €188,640                    €33,289 (-15%)

[1] In the case of the civil service and some other public service groups revised pension arrangements were introduced in 1995 involving an employee contribution for personal superannuation benefits. In the case of these groups their salary scales were increased to 20/19ths of the scales applying to pre 1995 staff to reflect the new pension contribution. However, these changes did not apply to a number of public service groups whose pension arrangements did not change in 1995 including Parliamentary office-holders, local authority and health staff.

[2] The report of the Review Body notes that the increase of 5% applied to other posts shown in the table with effect from September 2007 on foot of the Review Body’s 2007 report was not applied to these posts.

[3] A new pay rate will be introduced for Secretaries General, Level 2 appointed after 1 July 2010 to align with the pay of Ministers. In order to provide an appropriate differential between levels, the Secretary General Level 3 rate will also be adjusted downwards for new appointees from the same date.