Analysis: public sector employment - and the public sector pay bill - are now higher than before the recession
Austerity policies implemented in response to the 2008 recession led to a contraction in public sector employment. However, a recent paper shows that the public sector began to grow again after 2013, and the latest data show that public sector employment - and the public sector pay bill - are now higher than before the crisis.
One of the key government responses to the recession was to cut the public sector pay bill. both by cutting pay and by reducing the number employed. Total employment in the public sector fell by over 10% from 325,117 in 2008 to 291,838 in 2013. The main sectors experiencing contraction in employment included local authorities (down by 21%), non-commercial state agencies (less 22%), and the health sector (down by 10%). The civil service itself contracted by 8%.
In the context of economic recovery, public service employment increased to 330,576 in 2018, more than almost 5,500 greater than before the recession and more than 13% greater than in 2013. Employment in non-commercial state agencies increased by almost 35%, education increased by almost 17% and there was an almost 14% rise in the health sector.
Figure 1 shows changes in public service pay and pensions between 2008 and 2019. In 2008, the total public service pay and pensions bill reached a peak of €18.7bn. As the cuts in public service numbers and pay introduced by government took effect, total expenditure on public service pay and pensions fell to €16.2bn in 2014.
However, in the context of economic recovery, the growth in public sector numbers, and the restoration of public sector pay, total expenditure on public service pay and pensions increased to almost €21bn in 2019: representing an increase of €4.6bn or 28% on 2014, or 26% in real terms, adjusting for changes in consumer prices.
Total public service pay (excluding pensions) increased by €4.4 billion or 32% from €13.7 billion in 2014 to €18.1 billion in 2019, an increase of 30% in real terms. Table 2 shows some of the public service sectors with substantial increases in pay expenditure between 2014 and 2019. For example, the pay bill in the health sector increased by over 40% to almost €8 billion in 2019 and by 25% to almost €6 billion in education.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ