The average public sector worker in the Republic will be asked by the Irish government to sacrifice up to €6,000 a year in pay and pension entitlements in a desperate bid to save €2bn.
But insiders are predicting only public sector employees on higher pay will take an actual reduction in salary, amid union resistance to swinging across-the-board pay cuts.
The government’s opening salvo in talks, due to begin tomorrow, is expected to be pay cuts of up to 10% across-the-board and an |increase of up to 4% in pension contributions.
The proposal would mean the average earner on €50,000 would lose nearly €6,000 from their gross salary.
But senior sources expect the outcome of the negotiations to result in only those on over €60,000 or €70,000 being hit with direct pay cuts, and a pay freeze for lower paid employees.
Senior sources revealed it would be looking to reduce the working week, but not frontline services, including nurses and gardai.
The Cabinet is holding its second day of meetings today on plans to cut €2bn from spending, with wages top of the agenda.
Talks with unions and employers are expected to begin tomorrow, when the government is then expected to present its savings proposals.
A senior source said the |increase in pension contributions and 10% pay cut would be the Government’s opening position.
This would lead to an immediate €2bn saving — as the public sector pay bill is just below €20bn. But Irish officials expect a compromise, in the shape of a pay cut above a threshold around €60,000, with lower paid workers facing a pay freeze.
The government is also likely to seek deferral of pay increases under September’s national wage deal and the postponement of an overdue benchmarking pay rise of €50m.
Sources said overtime and increments were not a centrepiece of the proposals as they were complex to negotiate, unless applied across the sector, and were “hard won” by unions.
Although public sector unions have ruled out a pay cut, senior sources indicated they might accept pension contribution increases.
A high-ranking government source said: “The government would love to get 10% pay cuts across the board but there is |likely to be a compromise.
“It is likely pay will be cut above a certain level but it will not be anywhere as high as €100,000. We won’t want to waste time on things that will only generate Mickey Mouse money of around €60m or €70m. We need €2bn.”