ISME, the Irish Small and Medium Enterprises Association, has called on the Government to immediately introduce a pay and recruitment freeze in the public sector in order to control government expenditure, which is already running in excess of budget. The association warned that unless immediate action is taken the cost of running the public sector would result in significant exchequer deficits, with increased borrowings, taxation or both. This scenario would have devastating consequences for an economy which is already on its knees, the association has explained.
Referring to figures published by the CSO, ISME Chief Executive Mark Fielding outlined: “Public servants are paid on average €49,000 per annum in comparison to €41,500 in the private sector and well in excess of the average industrial wage, which is currently €34,000. Unless the public sector is brought into line, including the pay element, the rest of the economy will be left to pick up the pieces through increased taxation and higher borrowing.”
Current expenditure for the first six months of the year has increased by 11 per cent, well in excess of the 8.2 per cent figure announced by the Government in the last budget. The main cause of the excess is public sector pay and pensions, which has increased by 64 per cent since 2002 and is forecast at almost €19 billion for 2008, accounting for 48 per cent of total public current expenditure.
Employment in the public sector increased by 6,300 in the last 12 months and is up an incredible 30,000 since 2002, when the then Minister for Finance Charlie McCreevey announced he was going to reduce numbers by 5,000.
“As the public sector prospers through increased earnings, with little responsibility or accountability, other parts of the economy have to bear the brunt in the form of higher costs and reduced competitiveness. This situation is completely unsatisfactory, with many small business owners now looking incredulously at the pay and conditions of those in the sheltered sector of the economy. The private-sector is no longer willing to pay for public-sector pay growth through the loss of private sector jobs and businesses,” continued Mr Fielding.
“It is completely unacceptable that at a time when the private sector is struggling and the labour market is deteriorating rapidly, with redundancies up 30 per cent in the last 12 months, public sector workers are completely insulated from these market forces, with their jobs for life and Rolls Royce pensions. If we are serious about getting the economy back on track, sacrifices will have to be made throughout the economy, including in the much-protected public sector.”
In conclusion Mr Fielding stated: “The public sector cannot be allowed crowd out the productive private sector, as this would ultimately undermine economic activity and lead to further job losses. A long-overdue pay and recruitment freeze, together with an efficiency drive, is urgently required to reduce the burden of a sector that threatens to strangle the rest of the economy if immediate action is not taken.”
