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Irish pension levy reaches final stage

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  • Irish pension levy reaches final stage

IRELAND - The final stages of legislation allowing a pension levy on public sector workers to be introduced next month is expected to be completed in the Dáil tonight, just as trade unions are preparing to ballot members over industrial action.

Under the terms of the Financial Emergency Measures in the Public Interest Bill 2009 the Irish government intends to introduce an average pension levy of 7.5% on civil servants earning €50,000, although this reduces to 4% after tax relief, in an effort to meet its cost-cutting target of €2bn.

The new deduction, which will not actually increase members' pension benefits, is estimated to save the government €1.16bn in 2009 and €1.35bn in a full year.

Brian Lenihan, the minister for finance, stated in the Dáil last week that the measures would apply to "all public servants serving on or appointed after 1 March 2009".

In the debate on the second reading, held yesterday in the Oireachtas - the Irish Parliament -  deputy Martin Mansergh, a minister of state, told members of the Dáil, the house of representatives, that the Bill recognises "on a cost-benefit basis public sector pensions are on average worth a great deal more at the present time than the average private pension".

He added: "The pension levy, though unpopular, is an attempt to establish greater fairness across different sectors of the economy, but is above all designed as the least unacceptable way to relieve what has become an unsustainable level of government expenditure."

Mansergh also pointed out in the past "many measures, including income tax, have been introduced on the falsely optimistic understanding that they were temporary. The minister for finance has correctly given no such assurance in relation to the pension levy".

Meanwhile, deputy Chris Andrews, a TD for the ruling Fianna Fáil party, admitted the levy "will be difficult for everybody to swallow", but warned "we must not skirt around the difficulties and there can be no escaping the facts, regardless of how unpalatable they may be. We are in the midst of a global recession whose effects are being felt in every developed country."

The government representatives pointed out the economy has deteriorated at a faster rate than expected and "the State will have to borrow €18bn this year at steeper interest rates to finance current and capital spending", which equates to €4,500 for every man, woman and child.

Andrews told the Dáil: "Yes, the pension levy will be difficult for people. However, it is only the first step and there will be significantly greater pain to come for all sections of society."

However, trade unions are continuing to oppose the introduction of the levy, and following a mass demonstration on 21 February organisations are urging members to vote in favour of industrial action if the government fails to agree to a three-year plan.

The Irish Congress of Trade Unions (ICTU) said it recognised the "enormity of the crisis facing our society and all our citizens" but revealed it has formulated a "10-point solidarity plan" as the basis for a medium-term agreement to ensure more fairness.

Following a meeting of ICTU's executive council yesterday, the trade union body said "thus far Congress has been unable to persuade the government and employers of the merits of this approach".

The executive council confirmed it had therefore decided to "advise affiliated unions" that they are entitled to resort to industrial action and "to be prepared for this contingency, it is recommended that unions should ballot their members commencing next Monday, concluding over a period of three weeks, seeking a mandate for industrial action up to and including strike action".

The Teachers Union of Ireland (TUI) has already opened a ballot on potential industrial action, which could include strikes, work to rule and non-cooperation or withdrawal from various initiatives. 

Peter MacMenamin, general secretary of the TUI, said: "TUI acknowledges that we are in severely difficult economic times. However, any viable national solution must first involve a fair sharing of the remedy. What we are currently seeing imposed is a patently unfair and unjust targeting of the public service for further punishment.

"Our members see the so-called ‘pension levy' salary cut as a bridge too far - unfair, unjust, unpalatable and unacceptable. Enough is enough. We encourage all members to vote ‘Yes' and in doing so give a clear mandate to TUI's national executive committee to engage in whatever action it deems appropriate to oppose this latest attack," he added.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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