Recession-hit Ireland to cut employees, agencies

DUBLIN — Battling red ink and recession, Ireland's government unveiled a sweeping plan Wednesday designed to slash its costs and reverse more than a decade of boom-fueled excess.

Finance Minister Brian Lenihan said the government must cut its payroll and demand more from those on it. He said the number of state employees has grown over the past four years by 11 percent to 318,000 — including civil servants, teachers, nurses and doctors, soldiers and police — while their total pay has surged 39 percent to euro18 billion ($23 billion), representing 32 percent of Ireland's total budget.

"We can no longer afford the increases in numbers we have seen over the last decade. In this time of economic difficulty, we must do more with less," Lenihan told a news conference as he published plans for Ireland's first cutbacks in government staffing since the late 1980s.

Lenihan said he would appoint a four-person expert committee, led by economist Colm McCarthy, who faces a June deadline to identify inefficiencies in Ireland's public services — including more than 200 government agencies — and recommend cuts and reforms.

State employees will be expected to accept new rules of employment, including much greater flexibility in transferring to different departments or agencies, as the government shuts down or amalgamates institutions deemed inefficient or unessential.

Lenihan said the expert panel "will look critically at the numbers of public servants employed across all areas of the public service, to assess the scope for transferring staff to priority areas and for reducing numbers overall, and to identify surplus staff."

Profligate spending, a hallmark of Irish governments throughout the Celtic Tiger boom of 1994-2007, is hitting a raw nerve now that the economy has done a brutal U-turn.

During his 11 years in power former Prime Minister Bertie Ahern discounted economists' calls to control the growth of government employment and agencies. Ahern funded the expansion with record tax revenues fueled by a runaway property market.

But Ahern's successor, Brian Cowen, rose to office in May just as the economy was falling into recession. Today he faces a near-doubling of unemployment to 7 percent, a return to heavy deficit spending, unpopular decisions to raise income and sales taxes, a busted property market, and a struggle to ensure that none of Ireland's debt-exposed banks goes belly-up.

Lenihan said the government must get its borrowing back below 3 percent of the nation's gross domestic product by 2011 — the limit set for Ireland's membership in the euro common currency. Currently, the government estimates it will borrow euro12 billion ($15.5 billion), or 6.5 percent of GDP, in 2009.

"We should all appreciate at this stage the seriousness of the economic and budgetary position that Ireland now faces," Lenihan said.

He spoke hours after a spending scandal forced the resignation of Rody Molloy, chief executive of a government training and employment agency called Fas.

Media and government probes uncovered how Molloy, other senior Fas executives and their wives spent more than euro600,000 ($800,000) on flights to the United States, particularly Florida, since 2003 on official business.

The bills included first-class air fares costing more than euro9,000 (US$12,000) per person, golf rounds and at least one hair-and-nails appointment costing $410 (euro320). Molloy went live on Irish national radio Tuesday morning to explain the bills — including how he exchanged first-class air fares for two business-class tickets so that his wife could go to Florida too — and then quit his post that evening.

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