Expert group to look into cutting public sector costs

Faced with mounting pressure to tackle day-to-day running costs in the public sector and make substantial job cuts, the government has responded by establishing a special expert group to examine the scope for cost reductions. A report by the Organisation for Economic Co-operation and Development noted that productivity and customer-related improvements could be made in several areas. If voluntary redundancies are proposed, the scheme is likely to be over-subscribed.

Response to economic crisis

In order to tackle its current overspending, the Irish government has established a ‘special group’ to be chaired by a leading and popular economist, Colm McCarthy. Mr McCarthy chaired a previous effort by a similar cost reduction ‘watchdog’ during the economic and fiscal crisis that beset Ireland in the 1980s. The McCarthy-led 1980s group was one element in a wider national drive – epitomised by the 1987 social partnership agreement, the Programme for National Recovery (PNR (757Kb PDF)) – that paved the way for the so-called Celtic Tiger economy of the late 1990s.

In a statement accompanying the recent announcement, the government declared that it was establishing a ‘Special Group on public service numbers and expenditure programmes’ to ‘examine the current expenditure programmes in each department and to make recommendations for reducing public service numbers’. The special group will report to the government every two months from January 2009 to June 2009.

Need for greater productivity

The special group was established after the publication of a separate report by a government-appointed taskforce examining a major report on the Irish public sector by the Organisation for Economic Co-operation and Development (OECD); the latter was formally published in the spring of 2008. The taskforce did not propose any practical measures other than restating the central principles of the original OECD report, which had found that employment levels in the Irish public sector are modest by European standards, while noting that productivity and customer-related improvements could be made in several areas.

However, prior to the launch of the taskforce report on 25 November 2008, the public sector trade unions were expecting the government to confirm media speculation that a voluntary redundancy plan would be unveiled for public sector workers. Instead, the government established the McCarthy-led special group to assess what further cost-cutting measures could be made in addition to the 3%–4% cost reductions in each department that the Minister for Finance, Brian Lenihan, announced in the government’s budget in October 2008.

Rationalising public service

Speaking about the role of the special group on 26 November 2008 (full speech), the Prime Minister (Taoiseach), Brian Cowen, explained that it would advise the government on potential reductions in the numbers of workers employed in areas which are ‘no longer essential’ to ‘lead either to their redeployment to areas of greater need or provide for their exit from the public service’.

The broad remit of the special group includes the following tasks, namely to:

• review the scope for reducing or discontinuing expenditure programmes;

• analyse and make recommendations on the numbers employed in each area of the public service, in order to identify posts and activities that are not essential. This will be reviewed with regard to prioritising particular output targets, the achievement of greater efficiency and economy, and the scope for rationalising and streamlining delivery;

• make recommendations on the reallocation of staffing or expenditure resources;

• examine and make further recommendations for the further rationalisation of state agencies.

Implementation of change agenda

The government is also to establish a cabinet committee to oversee a wider public sector transformation effort. This committee will be chaired by the Taoiseach and comprise the Ministers for: Finance, Mr Lenihan; Health and Children, Mary Harney; Education and Science, Batt O’Keeffe; Justice, Equality and Law Reform, Dermot Ahern; and Environment, Heritage and Local Government, John Gormley.

The taskforce report acknowledged the commitment from public servants and their trade unions to the principles of the OECD report. It also recognised the public service modernisation agenda set out in the social partners’ [Transitional Agreement 2008–2009 (2.8Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Taoiseach Report_web.pdf) (IE0810019I, IE0812019I) within the framework of the [Towards 2016 (2.9Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Towards2016PartnershipAgreement.pdf) national social partnership agreement (IE0606019I). However, the taskforce emphasised that this potential needs to be developed to deliver real improvements. The report asserted that the collaborative approach to managing change in the public sector and the partnership committees of management, employees and their representatives could provide ‘a useful basis for the local customisation and implementation of the change agenda set out in this report’.

Perhaps the most significant reform proposal – and the hardest one to achieve – is the idea of a unified public sector, which raises the issue of the different status enjoyed by civil servants, as opposed to public sector workers generally.

Meanwhile, it is believed that, should a voluntary severance plan emerge in the coming months, it is likely to be over-subscribed. The last time that the government launched a voluntary severance plan was in 1987, and some 20,000 workers availed of the deal, despite the fact that the then minority Fianna Fáil administration had initially targeted a total of 10,000 job cuts.

Brian Sheehan, IRN Publishing