The Government has abandoned plans to postpone pay rises of up to 15 per cent for top-earning public servants, amid fears over legal action and possible protests.
Among those in line for rises of 10-15 per cent are judges, hospital consultants and many senior public officials. The move affects some 4,000 public servants earning in excess of €150,000 and will apply from next week.
It is expected to provoke a strong backlash from Opposition politicians and the public, struggling with spiralling inflation and the general cost-of-living crisis. Last week, talks between trade unions and the Government broke up when unions rejected an offer of a 5 per cent pay increase over two years.
Pay restoration is the last phase of the unwinding of pay cuts imposed on public servants during the financial crisis.
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The restoration date, which is July 1st, was set in legislation.
Late on Tuesday night a Department source said that legal advice confirmed it was “not permissible to amend or delay the restoration of pay within the current legislation or by means of further legislation”.
This means restoration must proceed from Friday week. Restoration has already taken place for all other public servants. Previously, Ministers had intended to postpone the pay rises. But legal advice suggested such a move would be open to challenge, something that Ministers and senior officials expected would be inevitable.
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Doctors’ organisations have previously warned the Government not to cancel or postpone the pay increases.
In addition, it is understood hospital consultants would not proceed with talks on a new contract if their pay was not restored.
In a statement, the Department of Public Expenditure said its Minister, Michael McGrath, expected to make a decision later this week or early next week. But political sources say the restoration must now proceed and expect a fierce political backlash.
It comes as the Government continues to resist calls from the Opposition to introduce an emergency budget before the autumn to help struggling households amid record inflation levels.
In the Dáil, Sinn Féin again called on the Coalition to introduce immediate measures to tackle the cost of living, but Taoiseach Micheál Martin said the Government would intervene at budget time to “get people through what will be a difficult winter period”.
Tánaiste Leo Varadkar promised a record Budget 2023 package which will include an increase in the bonus a worker can be given tax-free, from €500 to €1,000. However, he also said “the only plan we have at the moment is for a major intervention to help people with the cost of living and that will happen in the autumn, on budget day”. He confirmed the Government is looking at changes that could be implemented immediately once they are announced.
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Mr Varadkar said welfare and pension increases will have to be larger than last year to keep up with the cost of living. A tax package, with a “big increase” in the standard rate cut-off point, is seen as the most likely way to deliver a break to the squeezed middle in the budget, said insiders .
“The good news is, and this probably won’t be a surprise to anyone, that we have more room to manoeuvre for the budget this autumn than we would have had in any year in recent years,” said Mr Varadkar. " The public finances are in a good state.
“But that has to be offset against the fact that the budget is happening in the context of inflation,” he said. “So, pension and welfare increases will have to be bigger than they were in previous years.”
