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The levy or direct deduction from wages was announced in the Dail on 4th
February by the Minister of Finance Mr Brian Lenihan in the following terms;
“The payment will be on a graduated scale with the average payment being 7.5% of total
earnings. This payment will apply to all elements of the public service pay bill (with the
exception of employers’ PRSI), including both pensionable and non-pensionable (e.g.
overtime) items. This payment is in recognition of the fact that public service pensions are
significantly more favourable than the generality of pensions in the private sector together
with the need to reduce net public service pay costs. This change will require new legislation
which will be introduced as a matter of urgency. A much smaller component of the total pay-
related savings will be achieved through reductions in travelling and subsistence rates and
other savings.
In addition, the increases provided for under the Review and Transitional Agreement with
effect from 1 September 2009 and 1 June 2010 will not now be paid on those dates. Further
discussions in relation to these increases will be held in 2011, without prior commitment. This
will save a total of €1 billion 2010.
The pay-related savings will also apply to local authority staff. To that end, it will be necessary
to amend the existing legislation in relation to the Local Government Fund. Again, it is
proposed that the necessary legislative amendments will be introduced as a matter of
urgency.
Public Servants paying the new pension contribution will be treated for tax purposes in the
same way as those making pension contributions in the private sector. Contributions will be
deducted from gross pay by employers before income tax, PRSI and health levies are
calculated and as such Pension Contributions will be effectively relieved of tax at the marginal
rate.
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2. How Much is it?
The Govt has said that it will come into effect on 1st March 2009. The levy will
be brought into effect by legislation which will define its detailed application
and give it legal effect. Previous levies announced in Budgets have been
given legal effect by the Finance Acts.
As is the case with any legislation it will be given effect by a Dail and Seanad
vote. The names of those voting to cut the wages of our members will be a
matter of record and will be provided to each member for information.
The Unite position is that this is in effect a cut in wages for our members and
that it is unreasonable and misdirected. It is the view of the Union that the
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shortfall in public finances and the economic crisis cannot be solved by cutting
wages. If increased revenue is required it should be obtained from those who
have profited from the bubble of land and property prices and that trade
unions must resist attempts to make workers pay for the cost of restarting the
economy. Employers of all kinds are being given a lead by the Government
that it is now time to cut wages across the economy. The increase in
unemployment will in itself depress wages even in profitable employments but
there is no benefit to an unemployed worker if someone else’s wages are cut.
Discussions between ICTU and the Govt broke down over the pensions levy
and have not resumed. Congress has called the first of a series of
demonstrations for Dublin on Saturday 21st to protest at the Governments
approach. All trade unionists should support this action.
As one party, the employer, has unilaterally put themselves outside the
Towards 2016 procedures and structures the agreed framework for such
structures no longer exists. Members should ensure that all matters are dealt
with through the normal industrial relations procedures.
Make your local political representatives aware that you would strongly
personally disapprove if they vote to cut your wages.