Financial Emergency Measures in the Public Interest (FEMPI) Acts

The Financial Emergency Measures in Public Interests (FEMPI) legislation provided the basis for the Public Service Pay and Public Service Pension reductions and the reforms that took place between 2009 and 2015. The implementation of the FEMPI Acts was supported through the Croke Park Agreement and Haddington Road Agreement.

Between 2000 and 2008, the Exchequer pay bill more than doubled, increasing from €8 billion to €17.2 billion. This was driven by a 73,000 expansion in public service employee numbers and increases in rates of pay through national wage agreements and other pay awards. The latter was the main driver of Exchequer pay bill increases over this period, accounting for €6.7 billion, or 73%. Significantly, the rate of increase in the pay bill was faster than GDP growth in the economy as a whole.

This level of expenditure proved to be unsustainable when the financial crisis hit, so the government introduced deep reductions in both the number of public servants employed and their rates of pay. From 2009 to 2014, a moratorium on recruitment, limited voluntary redundancy schemes, and extraordinary emergency pay legislation were used to reduce the Exchequer pay bill by €3.7 billion. This was achieved through a 32,000 decrease in employee numbers and €2.1 billion in reductions in pay, under the Financial Emergency Measures in the Public Interest (FEMPI) Acts.

FEMPI Act 2009: Provided for the introduction of the Pension-Related Deduction (PRD), a new deduction from the remuneration of pensionable public servants. Known as the ‘Pension Levy’, the effect on individuals pay was on average about 7% of salaries, yielding some €900 million annually. The PRD has since been replaced by the Additional Superannuation Contribution.

FEMPI No. 2 Act 2009: Application of reductions of between 5% and 20% in the gross pay levels of majority of public servants, effective from 1 January 2010. This was to facilitate a reduction in the gross pay bill cost of public servants by some €1 billion in 2010.

FEMPI Act 2010: A reduction in the pay rates of members of the Government and a reduction to the National Minimum Wage.

FEMPI Act 2013: Implementation of a further reduction for public servants earning annual salaries of more than €65,000 and a reduction in public service pensions over €32,500.

Section 12 of the Financial Emergency Measures in the Public Interest (FEMPI) Act 2013 obliges the Minister of Public Expenditure and Reform to carry out a review of the operation, effectiveness and impact of the Financial Emergency Measure in the Public Interest Acts, having regard to the overall economic conditions in the State and national competitiveness: Annual Reviews of the operation of the FEMPI Acts.