IRELAND - Irish public sector trade unions have warned they are "not ruling anything out" in reaction to government plans to introduce an average public service pension levy of 7.5% on €50,000 earnings.

A meeting of all the Dublin branches of Impact, Ireland's largest public sector union, yesterday culminated in the union deciding to stage a "mass lobby" of politicians' local constituency clinics on 14 February 2009.

It said members of the Irish Parliament (TDs) of all political parties should prepare for a busy day, as the union responded to a "wave of anger" from workers affected by the new levy.

Peter McLoone, general secretary of Impact, revealed the union had received "hundreds of emails and phone calls" from angry public servants after the government announced earlier this week almost €1.4bn of the €2.1bn savings in the economic budget would be funded by the pension levy. (See earlier IPE article: Irish gov't unveils public pension levy)

"People are angry at the unfairness of this measure when the bankers and property speculators who caused this mess are being let off scot-free. They are asking us how they can express their anger and protect their incomes. This mass lobby will help them get the message across to their elected representatives and we will be inviting the other ICTU unions to participate in a united campaign," said McLone.

The Teachers Union of Ireland (TUI) has also confirmed it is "ruling nothing out" in response to the levy ahead of a meeting of its executive committee today, as it has also been "inundated" with complaints from members.

Don Ryan, president of TUI, said: "The vast majority of these teachers and lecturers earn less than the expenses claimed by our government politicians. We are seeking an early meeting of the Public Services Committee of the ICTU with a view to considering an extensive programme of action in opposition to the continued scapegoating of the public service."

Ryan added the union was "particularly appalled by the campaign of misinformation by government", adding: "A myth has been spread that teachers, as public service workers, make no contribution to their pension entitlement. This assumption is completely false."

TUI pointed out teachers and other public sector workers already pay a 6.5% pension contribution and are now being asked to pay an additional levy of up to 8.5%, and this sum will not necessarily go towards their pensions, as the levy is on pay "whether pensionable or not".

Impact is also co-ordinating an email lobby of TDs to help ordinary workers express their anger at the "unfair public service levy".

McLoone warned: "TDs should brace themselves for a wave of anger; not just at the high cost of the levy to ordinary workers but also at the rank unfairness of the government's failure to insist that business and the wealthy should make a contribution.

"My members are prepared to do their bit for economic recovery but they can't understand why others, especially the banks, speculators and high earners, are not being made to contribute too," he added.

The reaction of the unions follows strong criticism of the proposals from a number of TDs in debates held this week in the Dáil Éireann, the house of representatives of the Oireachtas the Irish parliament.

Although the government confirmed the actual levy on public sector workers would be less than originally stated as a result of tax relief, so a single worker earning around €50,000 would pay 4% instead of 7.5%, opposition parties said the structure of the levy was "riddled with unfairness".

Richard Bruton, of Fine Gael, claimed the measure means "people on low incomes derive no pension benefit from the public service pension now", while in key income ranges the levy goes up and down because of the impact of tax relief.

He said: "For instance, at €30,000 people pay a 4.6% levy net, at €40,000 it drops to 4.1% and at €35,000 it is 5%. It drops by a full percentage point between €35,000 and €40,000. Many people are in those ranges and having a topsy-turvy system that imposes more burden on the lower paid in those ranges does not make sense."

Meanwhile, Kieran O'Donnell, also from Fine Gael, pointed out that the government still intends to invest €8bn from the National Pensions Reserve Fund (NPRF) into banks, even though he said the fund is currently worth around €16bn.

O'Donnell said: "The government plans to invest €8bn of pensioners' money in the banks, while asking public sector employees to make pension contributions. This is not fair. It appears some people in the public sector pension scheme will not benefit from the contributions they are making. It is incumbent on the government to provide a detailed breakdown of how its pension levy plans will work and how people will gain at the various levels."

In addition, Arthur Morgan, of Sinn Féin, said: "It is clear the government's pension levy plan discriminates against the lower paid as the higher one goes up the scale the smaller the increases become. This does not include the fact that the high earners in the public sector will be able to claim most of this money back in tax relief on their pensions."

However, Dara Calleary, of the ruling party Fianna Fáil, said: "It is important to emphasise that the pension contribution is tax deductible. The nature of the contribution means that it will reduce the level of income at which PRSI and levies are paid. As a result, the bulk of headline reductions are not as major as may seem."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

 

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