Irish Say Revised Pay Savings Talks Virtually Complete

Irish Public Expenditure Minister Brendan Howlin said the government and leaders of the main labor unions “virtually ended” talks on a revised plan to shave 1 billion euros ($1.3 billion) from public-sector pay by 2015.

Unions must now forward draft proposals to their members for consideration, Howlin told reporters in Dublin today. There are different offers for individual groups of government workers and in some cases for individual unions, he said.

“I’m asking public servants to walk with this on the final leg of the path” toward economic recovery, Howlin said. “They know that they can now make plans for the next three years without a further” contribution.

Prime Minister Enda Kenny suffered his biggest setback last month when the unions rejected his plans to cut pay for state employees. His government has since insisted it needs to reduce its pay and pensions bill by 1 billion euros by 2015 to lower the deficit to below 3 percent of gross domestic product. The European Commission forecasts Ireland’s deficit will be the European Union’s highest this year, at 7.5 percent.

Howlin said he’s confident an agreement would yield the government’s targeted 300 million euros of savings this year and that he hopes that there won’t be forced firings.

The government approved legislation today putting in place pay cuts for public servants earning more than 65,000 euros a year, the Ministry for Public Expenditure & Reform said in an e-mailed statement. It did not give differences between the original and new proposals.

Teachers, Nurses

Under the new plan, teachers who lose supervision and substitution payments under an accord would receive the money back within five years, the Irish Times newspaper reported today, citing unnamed sources. While nurses’ working hours would increase to 39 hours a week from 37 1/2 hours, they would keep premium payments for Sunday shifts, it said.

Unions voted last month against salary cuts for workers earning more than 65,000 euros, in the biggest revolt after five years of spending reductions and tax increases. The government, which received a 67.5 billion-euro international bailout in 2010, last year completed three-quarters of the 33.4 billion euros of budget cuts planned to run for eight years through 2015.

Still, the yield on Ireland’s October 2017 bond has fallen to 2.15 percent from 2.64 percent on April 15, the day before the last plan was rejected. Irish five-year bond yields spiked to more than 17 percent in July 2011 after Moody’s Investors Service cut the nation’s debt rating to Ba1, one level below investment grade.

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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