A new analysis by the Oireachtas warns of a significant rise in public sector pay costs if the next pay deal mirrors private sector wage increases. The Parliamentary Budget Office (PBO) identifies this as a key financial risk facing the Irish economy.
The next public sector pay deal in 2027 could result in a sharp acceleration in costs to the State, representing a key financial risk for the next government, according to a new analysis published by the Oireachtas. With rising public sector employment and general pressure on wages, the next deal could involve an annual increase in the public pay bill of €1.66 billion, more than three times the annual increase which resulted from the current deal.
The Parliamentary Budget Office (PBO) has identified the future public sector pay bill as one of the main six risks facing the Irish economy during the term of the 34th Dáil. The paper, which has just been published, sets out forecasts for increases in wages in the Irish economy between 2025 and 2030. It states that wages in the Irish economy are expected to grow strongly over the term of the next government, with annual increases ranging from 3.7 per cent to 4.2 per cent. Noting that the current pay deal in the public sector will expire in 2026, the analysis says if a future public sector pay deal grew in line with wage increases in the private sector, and the number of workers grew in line with expected population growth, the annual increase in State spending on public pay would rise from €554.7 million in 2026 to €1.66 billion by 2027. Public sector employment has been rising fast. The report says that between 2008 and 2023 employees in the public sector increased by 22 per cent, more than a fifth
PUBLIC SECTOR PAY IRELAND ECONOMY RISKS GOVERNMENT
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