The Government's savings targets for 2012 for public service allowances and premium pay will not be realised.

The Minister for Public Expenditure and Reform Brendan Howlin said 1,100 allowances had been notified to his department and over 800 business cases were made for the retention of the payments.

Minister Howlin accepted that given the size of the review that the savings targets would not be met.

But he said it would not impact on the achievement of the pay bill budget for the year which will be on target.

But the Minister announced some changes to the allowance regime. Some payments will not be made to new beneficiaries. The annual cost of paying these is in the region of €475m.

Allowances worth €245m will be modified and allowances paid to officials to travel outside the country will be abolished for new and existing staff.

Minister Howlin said the public service is expected to be 292,000 by the end of this year a reduction which is 2,000 ahead of target.

There will also be a standardised annual leave system in the public service with reduced leave benefits for promotees and new entrants.

The Government says that allowances are, and will continue to be, a normal part of the pay structure in the public service.

A statement posted on the website of the Department of Public Expenditure and Reform says that the provision of an allowance remains valid, appropriate and cost effective but that the position is that allowances will only be paid in circumstances that;

  • reflect the arduous nature or unsocial hours, including the need to remain on call at weekends and other times, clearly associated with the duties of the post.
  • work of additional value is actually received by an employer
  • or that an actual cost accrues to the employee derived from their employment.

Allowances and overtime cost €1.8 billion in 2011, with €403m spent on overtime and €1.442 billion spent on allowances.

That figure equates to 12% of overall public service pay costs of €15.4 billion in 2012, 30% of the Government's current expenditure.

The Government says that the review of allowances aims at reducing the exchequer paybill by €3.8 billion in the period 2009 - 20115.

The full list of allowances, abolished, reduced or spared is available here.

This year the Government's target was to save 10% in overtime payments and 5% in allowances. Minister Howlin today said that those targets will not be met in full.

In 2011, the HSE had the highest level of overtime and allowances, €252m in overtime and €616m in allowances.

Education, excluding third level, had no overtime cost allocated but spent €488m on allowances in that year.

Garda overtime cost €90m with allowances amounting to €218m in 2011, the prison service spent €36m on overtime and €52m on allowances.

Civil service overtime cost €24m and €33m was spent on allowances.

Overtime in the defence forces in 2011 amounted to €1m, while allowances amounted to €35m.

Howlin says that pay may be adjusted to compensate

Brendan Howlin told RTÉ News this evening that pay scales for some public servants will be adjusted to take account of losing allowances.

The move could result in improved pay for recently appointed teachers who are earning up to 30% less than colleagues hired two years ago due to a 10% cut in the starting pay rate and the elimination of qualification allowances for new entrants.

Mr. Howlin said that many of the 1100 allowances paid to public servants were really core pay - and the government wants to redefine them as such.

He said he wanted to migrate to a system of a pay scale that attached the duties that used to attract the allowances as part of a job.

That would see the elimination of additional allowances, but could see higher core pay scales.

He said he wanted to be fair to people starting out to ensure they were not overly impacted upon - and that he was in negotiation with the Department of Education to shorten the scale so they would start at a higher point on the scale.

He said he would seek to soften the blow for anyone who was facing the double impact of a 10% pay cut and losing the qualification allowances.

He said the Ministers for Justice and Education would be involved in the restructuring of pay scales.

Mr. Howlin said that for about one third of all allowances by value will no longer be paid to new appointees.

They will seek to modify the entitlement to allowances worth around €250m under the Croke Park Agreement.

Further allowances will be bought out over time using the public service formula of a one-off lump sum worth 1 and a half times the annual loss.

Asked how many increments were being cut for incumbents, he acknowledged that only one would go.

The representation allowances for civil servants representing Ireland abroad can be as high as €218.89 per night - over and above and travel and subsistence payments.

However, Mr. Howlin said 180 classes of allowances would be abolished immediately for new appointees.

Asked whether the government was taking the soft option by only targeting future employees, he said that allowances had built up over decades and constituted up to 20% of garda or teacher pay in some instances.

He said he could not just strip that out now without having serious impact on their ability to live.

Asked about failing to reach this years target of €75 million in savings, he said it was an indicative sum that was never part of the budgetary arithmetic.

He stressed that they would achieve the pay savings targets for this year and would be even more ambitious in pursuing pay savings next year.

He said that the €75m had included not just allowances but also premium pay like overtime - and forecast further savings from the new hospital consultants deal.

He also predicted savings from using cheaper grades of public servants to deliver services.