Approving big pay increases for heads of commercial State sector firms could alienate ordinary workers, writes Martin WallIndustry Correspondent.
The report of the review of pay levels in the commercial State sector demonstrates quite clearly that the some of the chief executives in this area are by far the highest paid personnel in the public sector with pay scales far ahead of ministers.
However, the report argues that even total pay levels running in some cases well in excess of €300,000 per year are lagging far behind packages that are on offer in the private sector.
The report by the Hay group says that in practice the pay of chief executives in the commercial State sector is running 14 per cent on average behind the market median.
It states that in the larger companies the pay level is 19 per cent behind the market, which it indicates would have significant implications for companies seeking to headhunt senior managers from outside. "This does not represent a competitive positioning for companies that might wish to appoint a CEO from the external market", it states.
The report also maintains that it is not only in direct basic pay that the commercial State sector is falling behind but also in relation to bonus payments.
It notes that in practice chief executives in the sector are receiving an average 17 per cent bonus payment annually.
"Although this raises concerns in principle, it must be recognised that these amounts are significantly below the actual bonus payouts in the private sector where achieved bonus is at least twice this level."
Overall it estimates that the gap in terms of total payments in the commercial State sector and in private industry could be as much as 40 per cent.
The report also notes that on average the total cash remuneration paid in the commercial State sector was 71 per cent of the median in the private sector. It states that in only six cases which it examined was the total cash payment above 85 per cent of the median package available for comparable roles and all of these were in port/harbour companies.
"This means that the majority of companies in the sector are very far away from matching or even approaching comparable private sector total cash packages at CEO level."
For the Government the report presents an obvious dilemma.
To compete with lucrative pay scales in the private sector by sanctioning ever larger salary packages will only add to its troubles with ordinary workers who are being told to tighten their belts and accept pay moderation in forthcoming national pay talks.
However, on the other hand it is being advised that this is the route it will have to travel if it wishes to be competitive in the market for highly skilled senior managers.