TAOISEACH BRIAN Cowen has moved ahead with a plan to stabilise the economy and cut public spending following the refusal of the Irish Congress of Trade Unions to accept a public sector pension levy in the early hours of yesterday.
In spite of the rejection of the plan by the unions, Mr Cowen continued to insist on his commitment to social partnership, saying last night “partnership is not dead. Social partnership is alive and well”.
Speaking in the Dáil and later at a press conference, the Taoiseach defended his decision to spend the past month attempting to develop a consensus approach to the economic crisis.
Fine Gael leader Enda Kenny accused Mr Cowen of putting the people of the country into suspended animation while he sought a consensus. “For the past two months, the Government outsourced decision-making to the social partners. It is a most disgraceful abrogation of a leader’s responsibility in the politics of this country,” he told the Dáil.
Congress general secretary David Begg said the pension measures were more onerous than workers would bear. He believed that if unions had accepted the levy, workers “would have a revolution against them”.
The plan announced yesterday came against a background of further disastrous exchequer figures for January which show tax receipts €900 million down on the first month of last year.
Unemployment figures out today are expected to show another steep increase for January.
Mr Cowen told the Dáil that while the social partners had last week endorsed a framework for economic renewal, they had not been able to agree to a pension levy which would save €1.4 billion a year.
“While this is regrettable, it does not mean that the engagement with the social partners was a failure: the overall framework has been agreed, the need for an immediate adjustment of €2 billion on a credible basis was also agreed,” he said.
He announced a series of measures agreed by the Cabinet yesterday designed to save €2.1 billion in a full year and €1.8 billion in the remaining 10 months of 2009.
By far the biggest item is a reduction of €1.4 billion in the public service pay bill, the bulk of which will be achieved through a new pension-related payment to be made by all public servants in the State.
A person on €15,000 gross earnings will pay a levy of 3 per cent or €450 a year. This will rise to 5 per cent on a salary of €25,000 and, in a number of further stages, to 9.6 per cent for somebody earning €300,000.
Minister for Finance Brian Lenihan told a meeting of the Fianna Fáil parliamentary party last night that the levy would come into effect on March 1st.
Other measures include a cut of €95 million in overseas development aid, €75 million through a reduction in the early childcare supplement and €80 million from cuts in the professional fees paid by the State to lawyers and doctors.
The Government will also save €1 billion next year by deferring national wage agreement payments which were due in September 2009 and June 2010.
Fine Gael deputy leader and spokesman on finance Richard Bruton accused the Government of wasting far too much time on the process of formulating a plan.
He also said the tax receipts for January raised the possibility that it had again got its tax projections wrong for this year. “The Government have wasted valuable time, money and political capital on a tortuous talks process that was akin to a lengthy labour that produced a mouse,” he said.
Mr Bruton said the principle of asking public servants to contribute more to their pensions was not unreasonable but it seemed highly unfair to ask the lowest-paid public servants to contribute more when they did not benefit from pensions beyond their entitlement to a State pension.
Fianna Fáil TDs welcomed the measures at a parliamentary meeting last night but said they expected strong criticism from public sector employees.
Siptu president Jack O’Connor said he very much regretted the failure to reach agreement on a social solidarity pact in discussions with the Government.
“The economic crisis threatens everyone in Ireland but it also offers an opportunity to develop a genuine national effort to which all sectors of society could contribute in accordance with their capacity to do so.”
