Lenihan: seeking €3bn in cuts

All heads of government departments have been urgently requested to provide real verifiable cost-saving reforms achievable under the Croke Park public pay deal by next Wednesday.

An internal memo to all secretaries-general from the body charged with ensuring the pay deal is implemented said work is "progressing urgently" to identify the savings required for this December's budget and for the "challenging years ahead". The terse memo said changes which "avoid costs" should only be included "when they are clearly identifiable, costed and imminent, and preferably linked to a government decision".

The deal provides for no further pay or job cuts until the end of 2014. But unions also signed up for reforms including an extended working day in the health service, an extra hour a week non-teaching duties for teachers, new rosters for gardaí and compulsory redeployment across the public service.

But a controversial 'get out of jail free' clause in the deal allows the Department of Finance to cut public-service pay in the event of an "unforeseen budgetary deterioration".

Some union leaders harbour vague fears that a number of well- aimed swipes by economists at the Croke Park deal in the last few weeks are preparing the way for Finance to use this clause and cut pay again.

Last year's cuts and a cull of nearly 10,000 public servants through early retirement and the ban on recruitment cut nearly €1.5bn off the pay bill. But finance minister Brian Lenihan won't be able to get anything near that from pay this time as he searches for what he now admits could be cuts in excess of €3bn.

While the prospect of further pay cuts is seen as remote, unions still feel it best to agree cost-saving reforms lest they give the government the excuse to scrap Croke Park.