Tuesday, December 21, 2010

Public Sector Pay and Pensions

In 2010, central government will have a current voted expenditure total of just under €55 billion.  Based on 2009 figures (and here) about one-half of this will go on current transfers.  The Estimates of Public Services show that the public sector pay and pensions bill for 2010 was forecast to be €18.8 billion.  This is about one-third of current voted expenditure.

This means that of the full amount of current voted expenditure nearly five-sixths or 83% of this is a cash transaction between the government and its residents; the payment of pay and pensions to existing and retired public servants and the transfer of cash and benefits to those in receipt of social protection.

The government is a huge cash circulation machine.  The problem we now face is that the government is handing out almost €20 billion more than it is taking in meaning that the public finances are completely unsustainable.

One area that escaped in the recent budget was the subject of public sector pay.   The public sector pay bill for central government was forecast to be just over €16 billion in 2010.  Wages and salaries paid by local government will add another €3 billion to this.  The public sector pension bill in 2010 will be about €2.8 billion.  The measures announced in the recent budget will reduce this by about €100 million.

Under some vote headings the proportion of gross current expenditure that goes on pay and pensions is immense and is 34.4% for central government as a whole.  The proportions for some of the key individual votes are

  • Garda Síochána – 89.4%
  • Prisons Service – 79.1%
  • Education and Science – 77.2%
  • Defence – 72.5%
  • Health Service Executive – 53.1%

With the Croke Park Agreement protecting public sector numbers and pay rates any cuts/savings/adjustments in current expenditure in these areas will have to come from the remaining portion once pay and pensions have been paid.  This is unlikely to achieve anything like the amounts necessary to restore order to the public finances.

A full table of the 2010 proportion of each vote’s current expenditure that goes on pay and pensions is below the fold.  Click the table to enlarge.

2010 Pay and Pensions

3 comments:

  1. Seamus

    The Dept. of Finance produces a booklet annually providing a much more detailed analysis of pay & pensions figures. The link to it is below.
    http://www.finance.gov.ie/documents/publications/reports/2010/payanal0510.pdf

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  2. Hi Niall,

    Thanks for the link to the document. There is a lot of useful material in that.

    The one detail it doesn't give though is the proportion of spending under each vote that goes on Pay and Pensions. It's gives the aggregate level but as we can see above this varies hugely by Department and area.

    I will be keeping an eye for the next release of that document.

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