Minister for Public Expenditure, National Development Plan Delivery and Reform statement on Pay Incentives for Public Sector workers to combat Recruitment and Retention issues

The Minster states:

A broad range of factors influence staff recruitment and retention. As a result of Ireland's significant economic growth, unemployment is low and labour market conditions remain tight. Labour and skills shortages are presenting recruitment and retention challenges for employers across the labour market, including the civil and public service. Despite this, staff numbers in the public sector have continued to grow significantly. Between 2015 and quarter 1 of 2025, which is the most recent data available to my Department, overall estimated public service numbers in full-time equivalent terms increased by over 36% from 302,000 to over 411,000.

The public service is a good employer and continues to offer competitive pay and other terms and conditions to attract and retain staff, including flexible working arrangements, opportunities for continuous professional development, pension provision and secure employment. In the case of recruitment policy in the Civil Service, for which I have policy responsibility, my Department works closely with the Public Appointments Service and other Departments to achieve the objectives set out by the 2024 plan for Civil Service renewal and to ensure that the State remains an employer of choice.

Pay in the public service has been governed by a system of collective agreements since the negotiation of the Croke Park agreement in 2010. These agreements have enabled the Government to increase pay for our public servants in a fair, sustainable and affordable way. The current agreement runs for two and a half years from 2024 to mid-2026 and the total cost amounts to €3.6 billion. The agreement provides for increases of 10.25% over a two-and-a-half-year period. This is made up of general round increases totalling 9.25%, as well as a provision for a local bargaining mechanism equivalent to 1% of the basic pay cost.

Under the current agreement to date, public servants have benefited from pay increases totalling 6.25%. There is one further general round of 1% for all public servants due on 1 August. This will be followed by two further general round increases in 2026, with an increase of 1% in February 2026 and an increase of 1% in June 2026.

There is a local bargaining provision that allows management and unions to negotiate changes to pay and terms and conditions up to a maximum of 3% of pay costs for the relevant grade. The first instalment under this provision, equivalent to 1% of pay costs, is due to be implemented from 1 September 2025 and negotiations are commencing at local level across the public service.

This agreement, like its predecessor, is weighted towards lower paid public servants. Over the lifetime of the agreement, the lowest paid public servants will see cumulative benefits of up to 17.3%, inclusive of the local bargaining provision, compared with the standard benefits of 10.25%.

This is why the State's overall investment in housing as part of the national development plan is critical. Last year during the budgetary process, we advanced the expansion of the renter's tax credit to respond to the relative price of rent in the economy. That will be a continued focus for the Government in the national development plan and through the budgetary process.