Parliamentary Budget Office Defence Forces: Remuneration, Recruitment and Retention

An Oifig Buiséid Pharlaiminteach Parliamentary Budget Office Defence Forces: Remuneration, Recruitment and Retention

Publication 30 of 2020 Séanadh

Is í an Oifig Buiséid Pharlaiminteach (OBP) a d’ullmhaigh an doiciméad seo mar áis do Chomhaltaí Thithe an Oireachtais ina gcuid dualgas parlaiminteach. Ní bheartaítear é a bheith uileghabhálach ná críochnúil. Féadfaidh an OBP aon fhaisnéis atá ann a bhaint as nó a leasú aon tráth gan fógra roimh ré. Níl an OBP freagrach as aon tagairtí d’aon fhaisnéis atá á cothabháil ag tríú páirtithe nó naisc chuig aon fhaisnéis den sórt sin ná as ábhar aon fhaisnéise den sórt sin. Tá baill foirne an OBP ar fáil chun ábhar na bpáipéar seo a phlé le Comhaltaí agus lena gcuid foirne ach ní féidir leo dul i mbun plé leis an mórphobal nó le heagraíochtaí seachtracha.

Disclaimer

This document has been prepared by the Parliamentary Budget Office (PBO) for use by the Members of the Houses of the Oireachtas to aid them in their parliamentary duties. It is not intended to be either comprehensive or definitive. The PBO may remove, vary or amend any information contained therein at any time without prior notice. The PBO accepts no responsibility for any references or links to or the content of any information maintained by third parties. Staff of the PBO are available to discuss the contents of these papers with Members and their staff, but cannot enter into discussions with members of the general public or external organisations. Defence Forces: Remuneration, Recruitment and Retention

Contents

1 Key Messages 4 Introduction 5 The Defence Forces and the Public Sector Pay Bill 6 Organisational Context 8 Turnover 2002-2017 12 The trend in overall departures 12 Rising Departures at Middle Management Level between 2002 and 2017 14

Career Progression in the Permanent Defence Forces 18 Enlisted Personnel and Non-Commissioned Officers 18 Commissioned Officers 20

Pay-Related Measures recommended by the Public Sector Pay Commission 22 Impact of Salary Scale increases and the Military Service Allowance 23 Privates and Non-Commissioned Officers 24 Commissioned Officers 26 Impact of Increases to Other Allowances 28 Combined Impact of the Pay-Related Measures 30

Conclusions 32

Appendix: Ranks Across Permanent Defence Force Branches 33 Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Figures

Figure 1: Gross Voted Spending on Pay and Allowances for the Permanent Defence Force 6

Figure 2: Spending on Pay and Allowances for Members of the Permanent Defence Force as a share of total Gross Voted Spending on Pay 7 2 Figure 3: Turnover Rate in Irish Permanent Defence Forces and UK Armed Forces, 2013-2017 13

Figure 4: Defence Force Departures and the Unemployment Rate – 2002-2017 13

Figure 5: Correlation between Unemployment and Departures from the Defence Forces – in Total and in the First Five Years of Service, 2002-2017 14

Figure 6: Enlisted Departures from the Irish Defence Forces, 2002-2017 15

Figure 7: Departures from Army Middle Management and Privates, as a Share of Officer and Enlisted Strength, Respectively 15

Figure 8: Middle Management Departures from the Irish Defence Forces, 2002-2017 16

Figure 9: Departures of Captains from the Irish Defence Forces, 2002-2017 17

Figure 10: Comparison of Salary Scales for selected Defence Forces Grades 19

Figure 11: Cumulative Relative Impact of the Recommendations of the Public Service Pay Commission and the Pay Increases Promised under the Public Service Stability Agreement in 2019 and 2020 on Selected Salary and Military Service Allowance of Enlisted Ranks 24

Figure 12: Cumulative Relative Impact of the Recommendations of the Public Service Pay Commission and the Pay Increases Promised under the Public Service Stability Agreement in 2019 and 2020 on Salary and Military Service Allowance Pay of Selected Commissioned Officer Ranks 27

Figure 13: Combined Indicative Impact of PSSA and PSPC on Salary, Military Service Allowance and Security Duty Allowance 31 Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Boxes

Box 1: Pay for Recruits, Privates and Ordinary Seamen 10

Box 2: Military Pay Calculation 21 3 Tables

Table 1: Percentage Change in Basic Pay and Military Service Allowance for 3-Star Private and Equivalent Ranks, 2011-2017 10

Table 2: Indicative Pay Calculation Examples w/e from 1 September, 2019 21

Table 3: Amount in Euros Paid in Allowances Reduced by the HRA and Number of Employees Paid 29

Table 4: Estimated Impact of Restoration of Patrol Duty, Security Duty and Overseas Support Allowances based on 2018 Levels 30 Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Key Messages

4 n Departures from the Irish Defence Forces within the first five years (from enlistment) exhibit a strong relationship with the national unemployment rate, while departures in total do not. This suggests that while departures within the first five years are closely related to labour market conditions, this may not be the driving factor for longer-serving members.

n There has been an upward trend in departures at Captain level since 2009 that has followed domestic economic growth closely.

n Despite the upward trend in departures, the staffing complement at Captain level is stable, as the workforce planning system for the Defence Forces facilitates the filling of the vacancies created by these departures.

n Career progression, in both enlisted and commissioned ranks, is dependent on completion of training courses and is generally not open to public competitions. This means that retention issues at higher grades, and among training instructors places increased pressure upon the career progression system.

n Reform of the recruitment system may therefore be necessary to alleviate bottlenecks in the current system when replacing officers departing prior to their retirement age.

n Including the latest increase in pay (from 1 January 2020), the Public Service Stability Agreement and the Public Service Pay Commission recommendations will result in increases in total remuneration of:

l 5.6% to 6.3% for 3-Star Privates;

l 5.5% for Corporals;

l 4% for Sergeants;

l 5.8% to 5.4% (decreasing as the salary scale ascends) for Lieutenants;

l 5.3% to 5.0% for Captains;

l 5.1% to 4.8% for Commandants;

l 4.8% to 4.7% for Lt. Colonels; and,

l 4.7% to 4.5% for Colonels.

n Due to limitations on the remit of the Pay Commission, it is not clear that the measures proposed by the Public Service Pay Commission would address the areas of most concern (e.g. the specific retention problems at certain specialist technical personnel in a targeted fashion. Further measures, such as those outlined in Phase One of the Strengthening Our Defence Forces plan, may be required to address retention problems Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: for those specific areas. Defence Forces: Remuneration, Recruitment and Retention

Introduction

5 The recruitment, retention and remuneration of members of the Defence Forces has been an issue of extensive public and parliamentary debate. In the 32nd Dáil, Defence Forces remuneration was the subject of at least 820 Parliamentary Questions. In addition, recruitment and retention was the subject of a specific module of the work of the Public Service Pay Commission.

The Irish Defence Forces are made up of three branches: Army, Naval Service and Air Corps. The ‘Establishment’ is the size of the Defence Forces that the Government has committed to maintaining, and this is set at 9,500 personnel, made up of 7,520, 1,094 and 886 in each of the three branches respectively. At the end of 2018, the strength of the Defence Forces was 8,957 whole-time equivalents (WTEs), with 7,243, 989 and 725 in each branch respectively.

In this paper, the Parliamentary Budget Office (PBO) will set out the organisational context relevant to these discussions and will review the impact of the existing Public Service Stability Agreement and the recommendations of the Public Service Pay Commission on the pay of members of the Defence Forces. To give further context, the PBO will also consider the historical trends in departures from the Defence Forces (using data submitted to the Pay Commission) and the career progression system that exists within the Defence Forces.

This paper is laid out as follows:

n Firstly, we outline the organisational context of the current situation in the Defence Forces, including the reductions and restorations of pay and allowances;

n Secondly, we review Defence Forces departure data between 2002 and 2017, and then review trends in levels of departures at different ranks;

n Next, the paper reviews the nature of career progression in the Defence Forces; and,

n Finally, we examine the impact of the Public Service Stability Agreement and the Public Service Pay Commission’s recommendations on the pay and allowances of members of the Defence Forces. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

The Defence Forces and the Public Sector Pay Bill

6 Throughout this paper, we will present statistics that cover Defence Forces personnel in the period 2002-2017. This is the time period chosen because it is covered by the data provided in the Employer’s Submission to the Public Service Pay Commission, but it also makes a logical timeframe to cover as it provides a long-run view of staffing in the Defence Forces, and covers a period of significant change both for the Defence Forces and the country.

Before discussing the Defence Forces in detail, it is worthwhile to discuss the overall public sector pay bill, the pay bill for the Defence Forces and the position of the latter within the former. For the whole public service, the period from 2002-2017 can be split into three phases: 1. economic growth and rapidly rising expenditure from 2007 to 2009; 2. followed by consolidation and cuts in staff numbers and pay from 2010 to 2014; 3. followed by a period of rising expenditure from 2015 onwards.1

The Defence Forces followed the same trajectory as the wider public sector, with the added detail that the Defence Forces underwent a broad restructuring in 2012 (discussed in more detail in the next section). As Figure 1 shows, spending on pay and allowances for members of the Permanent Defence Force (PDF) follows the same growth, contraction, growth pattern as the wider public sector pay bill.

Figure 1: Gross Voted Spending on Pay and Allowances for the Permanent Defence Force

600,000

500,000

400,000

300,000

200,000

100,000

0 2002 2003 2004 2005 2006 2007 20082009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: PDF Pay PDF Allowances

Source: DPER Databank.

1 For a much more detailed discussion of the Public Sector Pay Bill in the last two decades, see ‘Public Sector Pay and Pensions: Features and Key Determinants’, a PBO briefing paper published in 2018. Defence Forces: Remuneration, Recruitment and Retention

However, public sector pay in general has risen rapidly since 2015 on the back of pay agreements and re-opened recruitment. The 2012 re-organisation of the Defence Forces has a had a permanent effect on the total number of staff in the Defence Forces, so while numbers in the Public Sector are now at their highest ever level, the PDF remains below its established size, which is itself a permanent reduction from pre-2012 levels.

Figure 2 illustrates the falling share of public sector pay spending that is spent on the pay and allowances of PDF 7 members. This is because the PDF received a permanent cut in size, while the rest of the public service has now exceeded its pre-crisis workforce.

Figure 2: Spending on Pay and Allowances for Members of the Permanent Defence Force as a Share of Total Gross Voted Spending on Pay

4.0%

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0% 2002 2003 2004 2005 2006 2007 20082009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

PDF Pay and Allowances as a Share of the Total Public Pay Bill

Source: PBO calculation based on DPER Databank. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Organisational Context

8 To understand the current situation of the Irish Defence Forces in relation to recruitment, pay, retention and career progression, it is essential to understand the context and impact of the last decade of reform in the Defence Forces.

In the past three decades there have been numerous reforms of the Irish Defence Forces. The Gleeson Report in 1990, the Price Waterhouse review of the Defence Forces in 1994, the 2000 White Paper on Defence, the 2012 Reorganisation of the Defence Forces and the 2015 White Paper on Defence have all changed the realities of working life for members of Ireland’s Defence Forces.

The 2000 White Paper set the strength of the Permanent Defence Force (PDF) at 10,500,2 the report of the Special Group on Public Sector Numbers and Expenditure Programmes (July 2009) recommended a reduction in numbers to 10,000 Permanent Defence Force personnel. In December 2011, following the completion of a Comprehensive Review of Expenditure, the Government decided to stabilise the strength of the Permanent Defence Force within a strength ceiling of 9,500 personnel. In reality, this was an acceptance of the de facto reduction in the strength of the Defence Forces that occurred because of the recruitment moratorium instituted during the economic and fiscal crisis. The strength of the Defence Forces had already fallen to 9,550 by the end of 2010.3 In addition to the reduction in its overall strength, the economic and fiscal crisis impacted the take-home pay of members of the Defence Forces – through reductions in basic pay and allowances. This took place in a more general context of reductions to public sector pay across the board, as part of the Government’s fiscal consolidation efforts. The key reductions that affected the pay of all public servants, including members of the Defence Forces were:

n The FEMPI Act (No. 2) of 2009 reduced public servants’ pay across the board:

Income of: Reduction

First €30,000 5%

€30,000 – €70,000 7.5%

€70,000 – €125,000 10%

l This Act also reduced allowances paid as part of annual remuneration (i.e. in respect of the Defence Forces, included Military Service Allowance, technical pay and sector-based allowances) by 5% for those earning up to €125,000. There were other reductions for those earning over €125,000 but they are not factored into this PBO analysis. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces:

2 The White Paper on Defence: Review of Implementation, Department of Defence and the Defence Forces, (2007) page 16. 3 Department of Defence and Defence Forces Annual Report 2010, Department of Defence (2010) page 15. Defence Forces: Remuneration, Recruitment and Retention

n The FEMPI Act of 2013 further reduced incomes in excess of €65,000:

Income of: Reduction

€65,000-€80,000 5.5%

€80,000-€150,000 8% 9 l This Act also includes reductions for those earning over €150,000 but those reductions are not factored into this PBO analysis.

n In 2013, the Haddington Road Agreement allowed for:

l A reduction of 10% in certain duty and sector-based allowances;

l The removal of premium weekend rates for Security Duty and related allowances;

l The abolition of the Special Instructors for Officers and Border Duty allowances for both future Officers and enlisted personnel (with a buyout scheme for personnel who were in receipt of the Border Duty allowance);

l Following a review of Technical Pay Grade 1 under the Croke Park Agreement, Driver and Clerk duties were removed from the Tech Grade 1 pay group4 and incorporated into the general duties of Defence Forces members, for any new person undertaking such duties. Those in receipt of the payment at the time of entry into force of the agreement retained the payment on a personal to holder basis.

These measures have been the subject of an unwinding process via the Public Service Stability Agreement 2013-2018 (the Lansdowne Road Agreement 2015) and the Public Service Stability Agreement 2018-2020.

The main pay restorations that affect the ranks under discussion so far have been:

n 1 January 2016: Salaries up to €24,000 increased by 2.5%, Salaries from €24,000 to €31,000 increased by 1%;

n 1 September 2017: Salaries up to €65,000 were increased by €1,000;

n 1 January 2018: Salaries increased by 1%;

n 1 October 2018: Salaries increased by 1%;

n 1 January 2019: Salaries up to €30,000 increased by 1%;

n 1 September 2019: Salaries increased by 1.75%; and,

n 1 January 2020: Salaries up to €32,000 increased by 0.5%.

In 2017, following negotiations with the representative body for enlisted personnel (PDFORRA), general service recruits and privates who joined the Permanent Defence Force in 2013 and after received increased pay scales, backdated to 1 July 2016.5 Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces:

4 Technical pay is an appointment based annual payment that is made in addition to basic pay and allowances, which is discussed in more detail later in this paper, on page 24. 5 Parliamentary Question from Deputy Eamon Ryan to the Taoiseach and Minister for Defence, 6 March 2018. Defence Forces: Remuneration, Recruitment and Retention

Box 1: Pay for Recruits, Privates and Ordinary Seamen

The reductions and subsequent increases at the entry-level non-commissioned ranks is more complicated than for other ranks. The 2013 Haddington Road Agreement included reductions targeted particularly at these entry level ranks6. This agreement resulted in reductions of between 0% and 15%, depending on the point on the scale 10 concerned (see below).

These reductions were more than reversed by the agreement made in 2017, with the largest increase over the period 2011-2017 occurring at the top end of the salary scale. The changes in 2017 were backdated to 1 January 2016, with arrears in pay paid to personnel. As Table 1 shows, the entry level enlisted ranks have received specific measures during the period from 2011-2017, resulting in an increase of the top-end of their salary scale by 20%. This measure was the result of a dispute between the representative association and the Department about the implementation of paragraph 2.31 of the Haddington Road Agreement.

Table 1: Percentage change in basic pay and military service allowance for 3-Star Private and equivalent ranks, 2011-2017

Point 2011 2013 2017 2011-2017

1 €24,168.56 €20,665.32 €26,917.28 11%

3* €27,625.52 €23,400.00 €26,917.28 -3%

5 €29,631.16 €26,722.28 €33,306.00 12%

7 €31,320.12 €29,842.28 €34,944.00 12%

9 €31,320.12 €31,320.12 €37,626.68 20%

Source: 2011 and 2013 Salary Scales, SIPTU (Labour Relations Commission Proposals for the Public Service 2013-2016), 2017 Salary is as per PDFORRA Information Circular No. 30/2017. 2017 salary is not reflective of current salaries, as further increases have been implemented. *Pay at Point 3 on the scale has fallen due to changes in the Military Service Allowance (discussed in detail later in this paper) which removed one of the levels of the allowance that was paid at points 3 and 4 of the scale.

In March 2019, a ‘New Entrants’ Agreement was implemented across all pay scales that received two additional points under the Haddington Road Agreement. Under this agreement, staff on those pay scales will skip points 4 and 8 on their scales. This affects the enlisted entrance grades of Private, Able Bodied Seaman and Airman (see Appendix for Grade Structure of Army, Naval Service and Air Corps), and the Commissioned Officer entry grade of Lieutenant (or equivalent). Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces:

6 See Labour Relations Commissions Proposals for the Public Service 2013-2016, SIPTU (2013) page 31. Defence Forces: Remuneration, Recruitment and Retention

Another increase of 1.75% was awarded in 1 September 2019, but this paper takes as its starting point the salaries of Defence Forces personnel AT THE TIME the Public Service Pay Commission’s report was published in May 2019. Given the staggered nature of the 2009 reductions to pay, the change in pay rates between 2009 and January 2019 has a wide range of variation. The notable dynamics over the period are that:

n Gross Salaries that started below €24,600 – and were thus below 24,000 in January 2016 – have increased by 11 5% over the period;

n Gross Salaries of between that level and €33,000 were roughly in line with their pre-FEMPI levels by January 2019;

n Gross Salaries of €70,000 were 5% lower in January 2019 than before FEMPI; and,

n Gross Salaries of €125,000 were 6% lower in January 2019 than before FEMPI.

This provides the broad context for pay measures in 2019, and means that broadly, the lowest ranks in the Defence Forces have been restored to the approximate position they were in (basic gross salary – this does not account for allowances) prior to the 2009 FEMPI Acts. The payscales for all but the most senior non-Commissioned Officers (NCOs) have been restored to the levels of salary prior to FEMPI, while junior and middle management officers will generally be 3%-5% below their salaries prior to FEMPI. However, as detailed in Box 1, salaries at enlisted entry grades have seen an increase in addition to the percentage increases under the Public Service Stability Agreement.

By the end of the current Public Service Stability Agreement, the payscales of all public servants earning under €70,000 per annum will be restored to pre-FEMPI levels. The restoration of the 5% reduction to allowances reduced under FEMPI is also scheduled in the agreement. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Turnover 2002-2017

12 The trend in overall departures

n On average, 620 personnel departed the Defence Forces each year between 2002 and 2017.

n Departures peaked in 2002, 2012, and 2017.

n The relationship between the national labour market and departures from the Defence Forces is complex.

n There is a strong relationship between the rate of departures and those with less than five years of service, but not with departures overall.

On average, just over 620 members departed the Defences Forces each year between 2002 and 2017.

Retention is a function of recruitment, turnover and career progression in the Permanent Defence Force. In this section of the paper, we will examine the turnover part of that equation. Turnover is a serious issue for armed forces internationally; turnover during training is high across the armed forces of many nations and turnover among serving personnel is higher than in the wider public sector.7 In general, a wide set of factors are assumed to contribute to the sector-specific high turnover in evidence in armed forces globally, including unrealistic expectations of military life, more attractive options outside of the military and the perceived person-environment fit (i.e. that the recruit finds themselves ill-suited to military life, given the unique difficulties involved) and quality of life in the military organisation.8

As Figure 3 shows, the turnover rate in the Irish Permanent Defence Forces (PDF) is rising but is still lower than the turnover rate in, for example, the UK’s Armed Forces. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces:

7 Recruiting and Retention of Military Personnel, Research Task Group HFM-107, North Atlantic Treaty Organisation (2007), page 31, 63, and 99. 8 Ibid, page 325. Defence Forces: Remuneration, Recruitment and Retention

Figure 3: Turnover Rate in Irish Permanent Defence Forces and UK Armed Forces, 2013-2017

20% 20% Inc. Trainees Exc. Trainees

15% 15% 13

10% 10%

5% 5%

0% 0% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Ireland – PDF UK – Armed Forces

Source: Recruitment and Retention: Defence Forces Data Analysis and Quarterly Service Personnel Statistics, UK Ministry of Defence.

Figure 4 below illustrates the number of departures from the Defence Forces between 2002 and 2017 and compares these to the national unemployment rate over the same period.

As Figure 4 illustrates, the number of departures each year fluctuated significantly over the period. In addition, there is no clear pattern in the departures with 2012, 2017 and 2002 having the largest number of departures.

Figure 4: Defence Force Departures and the Unemployment Rate – 2002-2017

900 0% 800 2% 700 4% 600 6% 500 8% 400 10% 300 12% 200 14% 100 16% Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: 0 18% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Departures from all Branches (lhs) Seasonally Adjusted Unemployment (rhs)

Source: Recruitment and Retention: Defence Forces Data Analysis and the CSO. Defence Forces: Remuneration, Recruitment and Retention

The strong relationship noted by the Public Service Pay Commission is displayed for departures of those with less than five years’ service.9 However, the relationship between the labour market and departures from the Defence Forces is complicated. As Figure 5 shows, there is a minimal relationship between overall departures from the Defence Forces and the Unemployment Rate. Thus, it appears that while labour market conditions are important for the rate of departure of early-career members, this may not be the driving factor for longer-serving members. 14 This distinction is important due to the different distribution of departures throughout the ranks.

Figure 5: Correlation Between Unemployment and Departures from the Defence Forces – in Total and in the First Five Years of Service, 2002-2017

18 18 16 16 14 14 12 12 R2 = 0.7308 10 R2 = 0.0373 10 Unemployment Rate (p-p) Rate Unemployment 8 (p-p) Rate Unemployment 8 6 6 4 4 2 2 0 0 0 250 500 750 1000 0 100 200 300 400 Total Departures Departures in the First Five Years

Source: PBO calculations based on Recruitment and Retention: Defence Forces Data Analysis and the CSO.

Rising Departures at Middle Management Level between 2002 and 2017

n The majority of those leaving within their first 5 years do so during training, before being assigned to their rank.

n The trend for enlisted departures is relatively flat – it is not increasing quickly.

n Middle-management commissioned officers (Captain to Lt. Colonel) are displaying a trend of increasing departures. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: In 2017, 66% of those who left with less than five years’ service were trainees of one form or another. The majority of these were enlisted trainees (197 of 209), as many leavers are usually Recruits in training to become Privates (unless there was no general recruitment that year). In the Permanent Defence Forces, the long run trend for enlisted departures is relatively flat and slightly downward (as shown in Figure 6) – however, the overall size of the Defence Forces decreased

9 The relationship between unemployment and departures is negative – i.e. lower unemployment is correlated with higher departures. This is used here as a proxy for a labour market closer to full employment. Defence Forces: Remuneration, Recruitment and Retention

over this period. Using data on the strength across all ranks for the Army, trends indicate that departures of enlisted members follow a flat trajectory over the period 2002-2017 (see Figure 7). Interestingly, the number of departures of Non-Commissioned Officers (NCOs) is regularly almost as high or higher than the numbers of departures of Privates, despite there being a larger pool of the latter.

Figure 6: Enlisted Departures from the Irish Defence Forces, 2002-2017 15

350

300

250

200

150

100

0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Enlisted Trainees Private 3* NCOs

Source: Recruitment and Retention: Defence Forces Data Analysis.

Figure 7: Departures from Army Middle Management and Privates, as a Share of Officer and Enlisted Strength, Respectively

0% and Retention Recruitment Remuneration, Defence Forces: 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Middle Management (Capt. to Lt. Col.) Privates

Source: Recruitment and Retention: Defence Forces Data Analysis. Defence Forces: Remuneration, Recruitment and Retention

As Figure 7 also shows, the trend for departures at the enlisted level shows a large amount of variation (primarily around the 2008 economic crisis), but is roughly flat in the long run between 2002 and 2017. Departures of commissioned officers between Captain and Lieutenant Colonel show similar variation, but trend upwards in the same period. Figure 8 shows that this trend in middle-management is reflected across all branches of the Defence Forces, but not at the most senior levels. 16 Figure 8: Middle Management Departures from the Irish Defence Forces, 2002-2017

0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Middle Management (Capt. To Lt. Col.) Senior Management (Col. and above)

Source: Recruitment and Retention: Defence Forces Data Analysis.

The Public Service Pay Commission specifically referenced retention of Captains as an issue requiring attention, saying that “the evidence and research presented to and analysed by the Commission indicates a retention problem at Captain”.10 Figure 9 depicts the trend in departures from that rank between 2002 and 2017. A particularly notable trait in the departures at the rank of Captain is that the trend is pro-cyclical from 2007 onwards. This strongly suggests that these departures are being driven by market conditions and a competitive job market, though further research on the reason for departure on exit would be needed to verify this hypothesis. Exit interviews and surveys are carried out when officers retire or resign prematurely, so further data on this question should be available which would facilitate more in-depth research. However, despite the rise in departures at the rank of Captain, the average age of Captains has not changed significantly. The highest age of a serving Captain did however rise from 51 to 57 years between 2010 but the average age remained steady at close to 34. In addition, despite the rise in departures, the whole-time equivalent number of Captains remained relatively steady at 368 in 2010 and 365 in 2019.11 The foregoing suggests that, at present, the recruitment and progression system within the Defence Forces responds to the need to fill vacancies created by the Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: rate at which Captains are departing.

10 Public Service Pay Commission, page 74. 11 Communication between Department of Public Expenditure and Reform and the PBO dated 13 February 2020. Defence Forces: Remuneration, Recruitment and Retention

Figure 9: Departures of Captains from the Irish Defence Forces, 2002-2017

30 15%

25 10% 5% 17 20 0% 15 -5% 10 -10%

5 -15%

0 -20% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Captains (lhs) Modified Domestic Demand (Constant Prices) (rhs)

Source: Recruitment and Retention: Defence Forces Data Analysis and CSO.

While direct recruitment is used to fill positions that require specialist skills – e.g., engineer officers and medical officers, most officers are “Line” officers, which are recruited through internal promotion. This creates a fundamental difference between the career pathways open to entrants to the Defence Forces, compared to the Civil Service, which (in that sector’s context) has reformed recruitment to include open recruitment for senior management roles. This means emerging gaps at middle and senior management level (in both commissioned and non-commissioned) must be planned for in advance, as they must generally be filled from within the existing military complement at specific ranks. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Career Progression in the Permanent Defence Forces

n Career progression in the Defence Forces is divided into two main strands – enlisted personnel and commissioned officers.

n Enlisted personnel have limited salary progression within each grade, and there are limited positions at senior Non-Commissioned Officer (NCO) grades.

n Both enlisted personnel and commissioned officers must undergo training courses to qualify for promotion. This may create bottlenecks in recruitment for higher grades if retention issues at middle management level continue to grow.

Enlisted Personnel and Non-Commissioned Officers

In comparison to other Public Sector employees, enlisted personnel of the Defence Forces are notable for requiring significant career progression to reach comparable upper-limit salaries.

Figure 10 shows the salaries for Enlisted and (some) Non-Commissioned Officer ranks, with some Commissioned Ranks shown for comparison. As evidenced by the length of the salary scale and the five-year contracts that Enlistees receive, the intention is not for 3-Star Privates to serve at the rank for a long-term, and a higher level of turnover at this level is expected (if not actually seen in the data). The data on departures shows that the average 3-Star Private leaving the military had 15 years of service in 2017. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Figure 10: Comparison of salary scales for selected Defence Forces grades

€80,000

€70,000

€60,000 19

€50,000

€40,000

€30,000

€20,000 3-Star 3-Star -Major* Officer Officer Officer Higher Private* Clerical Captain* Corporal* Sergeant Sergeant Sergeant* Executive Executive Lieutenant*

Starting Salary Standard Scale Maximum Higher Scale Maximum Commandant*

* MSA is included in the calculation for Defence Forces pay.

The logic behind the short salary scales for many ranks is likely based upon an assumption of shorter terms of service overall. Considering that the average lengths of service for Privates, Corporals and Sergeants leaving the Defence Forces in 2017 were 15, 19 and 29 years respectively, many members appear to serve past the length of their salary scales.12 In addition, considering that only 4% of Defence Forces members are NCOs above the rank of Sergeant, very few members are likely to reach the highest salaries available in the non-commissioned ranks.13

NCOs and Privates in the Defence Forces have two routes into the Commissioned ranks: 1. Cadetship Competitions; and, 2. Potential Officers Course

The first route involves becoming a cadet via the same process as new entrants and entering the Defence Forces as a 2nd Lieutenant (if not a graduate) or Lieutenant (if a graduate). The second route is highly limited in number (with 24 completing in 2019)14 and the rank on entry depends on the rank of the NCO but is at the top point of either the Lieutenant or Captain salary scale. While this second route offers an opportunity for progression within the enlisted ranks, these competitions are held only very occasionally, with the 9th course held in 2007/08 and the 10th in 2018/19. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces:

12 Recruitment and Retention: Defence Forces Data Analysis, page 39. 13 Wellbeing in the Defence Forces: Report on the Defence Forces ‘Your Say’ Climate Survey 2015, page 24. 14 ‘Twenty-four new Defence Forces officers commissioned in Dublin Castle’, The Irish Times, March 13 2019. Defence Forces: Remuneration, Recruitment and Retention

Commissioned Officers

Like enlisted personnel, the career progression of commissioned officers is based upon a range of courses that must be completed before candidates become eligible for promotion to higher rank. The most significant courses undertaken by commissioned officers as part of their career development are:

20 n Young Officers Course: a diploma programme integrated with the fifteen-month cadetship programme;

n Junior Command and Staff Course: a 23-week residential course for officers of Captain (or equivalent) rank that is a requirement for promotion to Commandant; and,

n Senior Command and Staff Course: a 39-week residential course required for promotion to Lt. Colonel.

Capacity for personnel to complete these career progression courses each year is limited, with 17, 54 and 21 (a total of 92) respectively undergoing the three courses above in 2018.15 For comparison, 6 Lieutenants, 20 Captains, 23 Commandants, 16 Lt. Colonels and 8 Colonels departed the Defence Forces in 2017 (a total of 73).

Given the upward trajectory for middle management turnover noted earlier in this paper, the capacity to train candidates for promotion may need to be increased if trends are not reversed. In addition, unlike middle and senior management in the civil service, recruitment to middle and senior management in the Defence Forces is almost entirely internal (though exceptions may be made for technical grades). This means that vacancies must be filled by the internal training system, and if staff required to give the training were to become of short supply, this would further compound training and retention issues.

The Public Service Pay Commission recommended several recruitment reforms that would address some of these issues:

n Open recruitment for most specialised roles;

n Integrating the requirement for ICT professionals into a wider public service model;

n Provision in specialist areas with higher attrition;

n Re-enlisting or recommissioning retired members to train staff, freeing existing members for operational use; and,

n Increasing graduate entry (including increasing the upper limit on entry age).16

In response to the onset of the COVID-19 pandemic, measures to encourage the re-enlistment of retired former personnel of the Defence Forces into specialist roles, or roles where supply was not meeting demand were introduced as emergency legislation. While implemented on the foot of the COVID-19, the measures in the Defence sector are not set within a defined emergency period and could be used by the Minister going forward to re-enlist former personnel for specialised or in-demand areas.

Regarding the final recommendation, to increase the upper limit on age for graduate entry, the government decreased Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: the age limit from 28 to 26 in 2019.17 This was done based on a recommendation from the military authorities in 2017.

15 Annual Report 2018, Department of Defence and Defence Forces, page 22. 16 Public Sector Pay Commission Report, page 74. 17 Question from Deputy Jack Chambers to Minister of State Kehoe, 8 October 2019. Defence Forces: Remuneration, Recruitment and Retention

Box 2: Military Pay Calculation

When calculating the impact of the measures proposed under the “Strengthening our Defence Forces”, we first estimate a baseline pay for the changes to be compared against. Due to the unique nature of military service and the working conditions under which military employees operate, estimating the pay of any given grade in the 21 military is difficult and requires several assumptions.

First, the basic salary that a soldier is guaranteed to receive has been supplemented at most ranks by the Military Service Allowance (MSA) since 1979. The MSA is meant to compensate service members for the unique difficulties of military service. When comparing basic salary in the military to basic salary in the rest of the public service, there is no consensus about whether to include the MSA in the comparison. In this paper, the PBO will show Basic Pay (i.e. the salary scale) separate to the MSA. We will call this “Guaranteed Pay”, as it is pay that is not dependant on the type of service the members undertake (all ranks Colonel and below receive the MSA – though not at the same level).

On top of the “Guaranteed Pay”, members are also likely to receive allowances of one form or another. There are a wide range of allowances but the most significant in terms of overall cost are Overseas Allowance, Security Duty Allowance and Patrol Duty Allowance. Total Pay = Guaranteed Pay + Allowances

Most allowances have a small number of beneficiaries, but almost all members of the Permanent Defence Forces received either the Security Duty, Overseas or Patrol Duty Allowances in 2017. Table 2 shows some examples of how the total pay of a member of the Defence Forces could be calculated.

Table 2: Indicative Pay Calculation Examples w/e from 1 September, 2019

Rank Point Basic Pay@ MSA Pre Guaranteed Allowances* Total Pay 01/09/19 PSPC Rec Pay

Private 3-Star – 5 €28,391 €6,340 €34,731 €1,073 €35,804 Post 2013 Entrant

Sergeant 1 €36,633 €6,340 €42,973 €1,073 €44,046

Captain (Pay Rate 1) 1 €47,826 €4,730 €52,556 €1,037 €53,593 – Class A

Source: Class A Officers’ Pay Scales, Officers Allowances Class A & ,C Enlisted Personnel Pay Scales and Enlisted Personnel Allowances. *For the purposes of this example, the only allowance included is the Security Duty Allowance, calculated using a weighted average based on Appendix D of the Public Sector Pay Commission’s Report on Retention and Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Recruitment in the Defence Forces. Most members up to the rank of Captain receive only this allowance, based on the data in Appendix D of the Pay Commission’s Report. Defence Forces: Remuneration, Recruitment and Retention

Pay-Related Measures recommended by the Public Sector Pay Commission

n The Commission’s Recommendations were set in the context of the Public Service Stability Agreement, which includes percentage increases in salaries;

n The Commission’s recommendations included an increase to the Military Service Allowance and other allowances reduced by the Haddington Road Agreement; and,

n The Commission recommended that pay structures in the Permanent Defence Force be examined in the context of the adequacy of a more general examination of current pay arrangements in the context of the Public Service Stability but was limited from making any recommendations on this topic by its terms of reference.

Following the May 2019 Report of the Public Service Pay Commission, Recruitment and Retention in the Permanent Defence Force, the Department of Defence published the “Strengthening our Defence Forces” high-level implementation plan. The plan has three themes: 1. Valuing members of the Permanent Defence Force; 2. Retaining the best people in the Permanent Defence Force; and, 3. Attracting the best people to the Permanent Defence Force.

The first of these themes – Valuing members of the Defence Forces – contains the pay-related measures being undertaken. The immediate measures being taken are:

n 10% increase in the Military Service Allowance (or a minimum of €350 annually);

n Restoration of all allowances reduced by 10% under the Haddington Road Agreement to pre-HRA levels; and,

n Restoration of weekend premium rates.

In addition to the recommendations that arise from the Pay Commission’s report, there is the Public Service Stability Agreement, which continues the process of unwinding FEMPI (the financial measures implemented during the economic and fiscal crisis to control the cost of providing public services).For the purposes of this section of the paper, we calculate the remaining benefits due to accrue to Defence Forces members AFTER the publication of the Public Sector Pay Commission’s report. These are:

n 1 September 2019 – Annualised salaries to increase by 1.75%; Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: n 1 January 2020 – Annualised salaries up to €32,000 to increase by 0.5%;

n 1 October 2020 – Annualised salaries to increase by 2%

n 1 October 2020 – 5% reduction of Allowances cut under FEMPI to be restored.18

18 Public Service Stability Agreement, page 14. Section 24(1) of the Public Service Pay and Pensions Act 2017 repeals Section 2(3) of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009, which reduced allowances paid to public servants earning €125,000 or less by 5%. It also reduced allowances for public servants earning more than €125,000 by 8%, but that has no bearing on this paper. Defence Forces: Remuneration, Recruitment and Retention

The calculation of military pay is complicated by the existence of the Military Service Allowance and the other allowances awarded to members of the Defence Forces. Box 2 sets out the calculation of total remuneration received by a member of the Defence Forces. For the purposes of this paper, we will calculate the impact of the Public Service Pay Commission’s recommendations and the Public Service Stability Agreement in two parts: 1. Impact of Salary Scale increases and Military Service Allowance; 23 2. Impact of increases to other allowances.

The data available means that the first calculation (guaranteed pay) can be done reliably. However, the second part of the recommendations require making far more assumptions to make the calculations for allowances. Our estimation of the impact of the PSPC recommendations for these allowances can give only an indicative impression of the change.

The Public Service Pay Commission was limited in what it could recommend by its Terms of Reference. Specifically, it was precluded from “undertaking a general pay review on behalf of any group.”19 The Commission makes a point alluding to this specifically when discussing Captains (or Lieutenants in the Naval Service) and NCOs by saying: “The increases recommended in the MSA and SDA and other allowances will enhance the remuneration package of all ranks including NCO’s. However, the Commission is satisfied that further measures directed at rewarding long service in these ranks are required in addressing retention goals. Because the Commission is constrained from addressing matters in relation to basic pay, it recommends that some system of incentivising long service in these ranks should be considered a priority in the context of future pay negotiations.”20

Impact of Salary Scale increases and the Military Service Allowance

n In the enlisted ranks, the increases to gross pay range from a peak of 6.3% for Privates to 4.6% for a Sergeant Major. The relative increase falls higher up the grade structure, as the MSA makes a smaller share of total pay, so a 10% increase in MSA is a declining proportional increase in total pay; and,

n In the commissioned ranks, the increases range from 5.6% for Lieutenants to 4.6% for Colonels.

Taken together, the design of the Public Service Stability Agreement and the recommendations of the Public Service Pay Commission have a number of traits:

n The Public Service Stability Agreement includes mostly percentage-based increases in basic salary across all grades, with two pay increases targetting low-paid public servants in 2019 and 2020; and

n The decision to recommend an increase in Military Service Allowance rather than basic pay means that the

increase is distributed irregularly, because of differences in the level of MSA paid at different ranks and years and Retention Recruitment Remuneration, Defence Forces: of service.

Throughout this section of the paper, the calculation will be based on Class A (post-1995) salaries, and will be for Line personnel (i.e. not including technical pay received by personnel in technical roles).

19 Public Service Pay Commission Report, page 72. 20 Public Service Pay Commission Report, page 74. Defence Forces: Remuneration, Recruitment and Retention

Technical pay operates differently for commissioned and enlisted personnel. Commissioned Personnel have different salary scales depending on the role, while enlisted personnel receive an allowance in addition to their salary. The size of the allowance received by enlisted personnel is based on which of six technical groups (in ascending order of size of payment) that the role falls into. A significant share of the appointments are in Technical Grades 1 and 2, with these accounting for 1,406 and 933 of 3,618 appointments. These two grades accrue annual payments of €421.61 24 and €1,403.64 for pre-2013 recruits, respectively. There are slightly higher payment rates for post-2013 recruits.

Privates and Non-Commissioned Officers

For example, as shown earlier (in Figure 10), the Public Service Pay Commission’s recommendations do not have their full effect until a 3-Star Private’s fourth year of service. This is due to a lower base level of MSA at points 1, 2 and 3 of the salary scale. The MSA has the same value for 3-Star Privates with 3 or more years of service, Corporals and Sergeants, meaning that the Pay Commission’s recommendation offers diminishing returns the further up the the pay scale of any given rank the recipient is, or the higher their rank.

8.0% 3-Star Private 8.0% Corporal

6.0% 6.0%

4.0% 4.0%

2.0% 2.0%

0.0% 0.0% 1 2 3 4 5 6 7 8 9 1 2 3 4

8.0% Sergeant 8.0% Sergeant Major

6.0% 6.0%

4.0% 4.0%

2.0% 2.0%

0.0% 0.0% Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: 1 2 3 4 1 2 3 4

Public Service Pay Comission Public Service Stability Agreement

Cumulative impact on gross weekly income of the recommendations of the Public Service Pay Commission and the pay increases promised under the Public Service Stability Agreement in 2019 and 2020 on selected Salary and Military Service Allowance of Enlisted Ranks. Defence Forces: Remuneration, Recruitment and Retention

Private Corporal

Starting Starting Point Point

Mid Mid Point Point 25

End End Point Point

€0 €10 €20 €30 €40 €50 €60 €0 €10 €20 €30 €40 €50 €60

Sergeant Sergeant Major

Starting Starting Point Point

Mid Mid Point Point

End End Point Point

€0 €10 €20 €30 €40 €50 €60 €0 €10 €20 €30 €40 €50 €60

Public Service Pay Comission Public Service Stability Agreement

The results of the Public Service Stability Agreement for 3-Star Private, Corporal, Sergeant and Sergeant Major (the highest NCO rank) are all shown in Figure 11. The largest increase in pay in relative terms is received by 3-Star Privates, but this increase is concentrated at the middle of the 9-point salary scale. Figure 10 also shows the impact this change has on gross weekly income.

For Privates, the increase in pay ranges from 5.2% (about €27 a week) in the first three years, to a peak of 6.3% €( 40 a week) in their fourth year. The largest increase in terms of weekly pay is at point 8 of the pay scale, which increases by €42 per week – higher than the next point due to two Public Service Stability Agreement increases not affecting the final point of the scale (because it is over€ 32,000 annually). For Non-Commissioned Officer ranks, the impact of the combined measures is very stable – ranging from 4.9% (€41-€43) for Corporals to 4.6% (€53-€56) for a Sergeant Major. The fall in relative change is because the MSA is a flat rate from Company Quartermaster Sergeant upwards, while the salary scale continues increasing. This means the increase in MSA recommended by the Public Service Pay Commission declines in relative scale at the most senior NCO ranks. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Commissioned Officers

Figure 12 sets out the impact of increases applied in 2019 and those scheduled in October 2020 as provided for under the Public Service Stability Agreement (PSSA) and Public Service Pay Commission (PSSC) on gross income for the ranks from Lieutenant through to Captain. Proportionally, the measures have largely the same impact on each grade’s income, 26 with the only variation caused by the different size of the MSA applied to each grade:

n €4,730 for Lieutenants and Captains (Class A PRSI);

n €5,020 for Commandants (Class A PRSI); and,

n €4,931 for Lt. Colonels and Colonels (Class A PRSI).

This means that the slight variation that there is, is a result of the different percentage of Total Pay that is made up of the MSA (i.e. Lieutenants receive an average increase of about 5.6% at different points on the scale, while Colonels receive 4.6% on average). As the PSSA benefits are identical for all ranks, the only differentiator is this difference in MSA. Looking at the breakdown of weekly gross income gain in Figure 12, the income gain increases in line with the overall size of the salary at each grade.

The Public Service Pay Commission concluded in their report that “the increases recommended in MSA and SDA and other allowances will enhance the remuneration package of all ranks including NCO’s. However, the Commission is satisfied that further measures directed at rewarding long service in these ranks21 are required in addressing retention goals … it recommends that some system of incentivising long service in these ranks should be considered a priority in the context of future pay negotiations”. These measures do not need to be pay-related measures, and the Commission also said that “non-pay measures are an important element of the employment proposition in other jurisdictions”. 22 Measures towards this goal are contained within the “Retaining the best people in the Permanent Defence Forces” theme of the Strengthening our Defence Forces plan.23 The Pay Commission’s recommendations by their very nature result in a relatively flat distribution of the pay rewards from the measures, and the Public Service Stability Agreement is slightly targeted at those earning less than €32,000, but otherwise offers proportional increases to all grades. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces:

21 Captain, and certain NCO and equivalent ranks in the Naval Service, particularly those with specialist skills. 22 Recruitment and Retention in the Permanent Defence Force, page 74. 23 Strengthening our Defence Forces, page 5. Defence Forces: Remuneration, Recruitment and Retention

Lieutenant Captain 6.0% 6.0% 27 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 LSI LSI 1 2

Commandant Lt. Colonel 6.0% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% 1 2 3 4 5 6 LSI LSI 1 2 3 4 1 2

Public Service Pay Comission Public Service Stability Agreement

Cumulative impact on gross weekly income of the recommendations of the Public Service Pay Commission and the pay increases promised under the Public Service Stability Agreement in 2019 and 2020 on selected Salary and Military Service Allowance of Commissioned Ranks. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Lieutenant Captain

Starting Starting Point Point

Mid Mid 28 Point Point

End End Point Point

€0 €10 €20 €30 €40 €50 €60 €70 €80 €0 €10 €20 €30 €40 €50 €60 €70 €80

Commandant Lt. Colonel

Starting Starting Point Point

Mid Mid Point Point

End End Point Point

€0 €10 €20 €30 €40 €50 €60 €70 €80 €0 €10 €20 €30 €40 €50 €60 €70 €80

Public Service Pay Comission Public Service Stability Agreement

Impact of Increases to Other Allowances

n The PBO’s estimation of the impact of the 10% restoration of allowances reduced under the Haddington Road Agreement is indicative only, as many assumptions are required to provide an estimate.

n Most members of the Defence Forces receive either the Security Duty Allowance or the Patrol Duty Allowance each year. A large minority receive the Overseas Support Allowance as well.

n The estimated impact of the increase to the Security Duty, Patrol Duty and Overseas allowance is significantly smaller than the impact of the salary increases under the Public Service Stability Agreement and Public Service Pay Commission.

The other key pay-related recommendation of the Public Service Pay Commission was for the restoration of allowances

Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: that had been reduced by 10% by the Haddington Road Agreement.24 Data is not readily available on the number of employees receiving each of these allowances, so it is not possible to estimate the impact of restoring these allowances back to their pre-Haddington Road Agreement (HRA) levels. Table 3 lists the allowances that were reduced by the HRA and where data is available. The Army Ranger Wing’s strength is classified, so data on the number of recipients is not available. The other allowances show that most Defence Forces Members receive either the Security Duty Allowance or

24 Border Duty Allowance, Security Duty Allowance, Patrol Duty Allowance, Overseas Allowance, Children’s Allowance, Army Ranger Wing Allowance, Instructors Allowance, Naval Service In-Charge Allowance, Outpost Allowance, Foreign Language Proficiency Allowance, Irish Language Allowance, Health & Safety Allowance, Personnel Support Services Allowance, Election Payment, and Mast/Erector Allowance. Defence Forces: Remuneration, Recruitment and Retention

the Patrol Duty Allowance (one of these applying mostly to the Army and the other to the Naval Service) as well as a sizable minority receiving the Overseas Allowance (tours usually last for less than a year, e.g., 1,696 Defence Forces member served in 683 overseas postings during 2018, therefore it is likely many members receive both an overseas allowance and a duty allowance).25

Table 3: Amount in Euros Paid in Allowances Reduced by the HRA and Number of Employees Paid 29

Allowance Paid in 2018 Enlisted Commissioned

Border Duty €255,731 575 0

Security Duty €8,068,025 6,724 823

Patrol Duty €2,134,386 576 140

Overseas €18,564,112 1,578 412

Army Ranger Wing €732,934 Not Public Not Public

Instructors €640,527 520 0

Naval Service In-Charge €55,183 0 34

Outpost €201,605 93 4

Foreign Language Proficiency €11,683 0 4

Irish Language €5,337 7 0

Health & Safety €29,598 0 9

Personnel Support Services €27,778 0 7

Source: Public Service Pay Commission Report May 2019.

Most Defence Forces personnel who will benefit from Public Service Pay Commission recommendations will benefit via the MSA, Security Duty, Patrol Duty and Overseas Peace Support Allowances. Accordingly, we will focus on these four allowances when calculating the benefit an average member of the Defence Forces will receive. To do this we must make several assumptions for the purposes of this exercise: 1. The Allowances are evenly distributed, with all ranks in receipt of them carrying out the same number of days of duty. 2. For the Security Duty and Patrol Duty Allowances, only the 24-hour rate is used. 3. The Overseas Duty Allowance has different rates for: a. Private – €55.14 per day;

b. Corporal – €57.10 per day; and Retention Recruitment Remuneration, Defence Forces: c. Sergeant – €59.07; d. Captain and lower – €72.26; and, e. Commandant and higher – €79.51.26

25 Department of Defence Annual Report 2018, page 36. 26 These rates are prior to the 10% restoration recommended by the Public Service Pay Commission. Defence Forces: Remuneration, Recruitment and Retention

4. We assume the same number of days Overseas Service are carried out by each rank, so an average Allowance is calculated proportional to the share of employees at each rank. Using this we calculate two Overseas Support Rates: a. Enlisted – €56.34; and, 30 b. Commissioned – €75.93. 5. We also assume that all staff in receipt of the Overseas Support Allowance are also in receipt of the Overseas Armed Support Allowance of €21.22 per day for enlisted personnel and €22.24 per day for Officers; and, As no data was available on weekend duties, this analysis excludes the effect of restoring weekend premiums. Using these assumptions, Table 4 shows the estimated annual impact of a 10% increase in the rate of these allowances for both Enlisted and Commissioned members of the Defence Forces (as the rate is often different for each). These averages are only indicative of the scale of the increase that might be received on average by members of the Defence Forces.

Table 4: Estimated Impact of Restoration of Patrol Duty, Security Duty and Overseas Support Allowances based on 2018 levels

Allowance Annual Change Annual Change Enlisted Personnel Commissioned Officers

Patrol Duty €331 €330

Security Duty €119 €115

Overseas Support €982 €1,243

Combined Impact of the Pay-Related Measures

As explained earlier in this paper, putting an exact figure on the impact that the Public Service Pay Commission’s recommendations will have for specific members of the Defence Forces is extremely difficult. For illustrative purposes, the PBO has calculated the combined impact of the PSSA pay increases, a 10% increase to the MSA and a restoration of the Security Duty Allowance to pre-FEMPI levels for several ranks. This illustrates that:

n The reliance of the PSSA on percentage increases to salary means that the size of the increase is very heavily related to the starting pay level.

n The measures that target the MSA with percentage changes result in similar increases in absolute value across the ranks, and therefore a relative targeting of the enlisted ranks.

n The rate for Security Duty Allowance is very similar across ranks, so the restoration of this allowance is relatively Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: evenly distributed (given the assumption that Security Duty hours are evenly distributed). Defence Forces: Remuneration, Recruitment and Retention

Figure 13: Combined Indicative Impact of PSSA and PSPC on Salary, Military Service Allowance and Security Duty Allowance

Commandant (Line - 2 Years at Rank) 31 Captain (Line - 3 Years at Rank)

Sergeant (1 year at Rank)

Private 3* (4 Years at Rank)

€0 €500 €1,000 €1,500 €2,000 €2,500 €3,000 €3,500

Change in Salary Change in MSA Change in SDA Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Conclusions

32 As the analysis in this paper shows, the benefits of the Public Service Stability Agreement and the recommendations of the Public Service Pay Commission result in pay increases that are largest proportionally at lower ranks (i.e. lower starting salaries) but largest in absolute share at higher ranks. As shown by Figure 11, Figure 12, and Figure 13, the increase in take-home pay is largest in absolute terms for the higher ranks, but largest in relative terms for Privates. In addition, the bulk of the increase is provided by the Public Service Stability Agreement, which was an agreement covering the public service in general, and as such could not take sector-specific issues into account.

The Strengthening our Defence Forces high-level plan shows that the government is progressing the implementation of the Public Service Pay Commission’s recommendations. As this plan includes reviews of technical pay arrangements, incentivised long-service arrangements (for the specific Commission and NCO ranks identified by the Commission), barriers to extended participation and current retention strategies, it appears to provide a framework for addressing the recommendations of the Public Service Pay Commission. Monitoring and reporting on the implementation of this plan is essential for the confidence and credibility of the plan. As such, the Oireachtas, through the existing Committee channels should consider monitoring the outcome of the actions being taken under the plan, especially those set out for the medium and long term.

The measures contained within Strengthening our Defence Forces and suggested by the Public Service Pay Commission are not confined to increases in pay. The climate surveys commissioned by the Department of Defence and structured interviews carried out on behalf of the Pay Commission point to concerns held by rank and file members about the working conditions within the Defence Forces. The issue of remuneration is therefore only one component in addressing recruitment to and retention within the Defence Forces. Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Appendix: Ranks across Permanent Defence Force Branches

33 Enlisted

Army Naval Service Air Corps

Private, 2-Star Ordinary Seaman Airman/Airwoman 2-Star

Private, 3-Star Able Seaman Airman/Airwoman 3-Star

Corporal Leading Seaman Corporal

Sergeant Petty Officer Sergeant

Company Quartermaster Sergeant Senior Petty Officer Flight Quartermaster Sergeant

Company Sergeant Chief Petty officer Flight Sergeant

Battalion Quartermaster Sergeant Senior Chief Petty Officer Regimental Quartermaster Sergeant

Battalion Sergeant Major Warrant Officer Regimental Sergeant Major

Commissioned Officers

Army Naval Service Air Corps

Second Lieutenant Ensign Second Lieutenant

Lieutenant Sub Lieutenant Lieutenant

Captain Lieutenant Captain

Commandant Lieutenant Commander Commandant

Lieutenant Colonel Commander Lieutenant Colonel

Colonel Captain Colonel

Brigadier General Commodore Brigadier General

Major General Major General

Lieutenant General Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Defence Forces: Remuneration, Recruitment and Retention

Notes

34 Defence Forces: Remuneration, Recruitment and Retention Recruitment Remuneration, Defence Forces: Contact: [email protected] Go to our webpage: www.Oireachtas.ie/PBO Publication date: 21 May 2020 Houses of the Oireachtas Leinster House Kildare Street Dublin 2 D02 XR20 www.oireachtas.ie Tel: +353 (0)1 6183000 or 076 1001700 Twitter: @OireachtasNews

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