The ‘FEMPI’ (Financial Emergency Measures in the Public Interest) legislation was introduced by the last Government, which imposed the so-called ‘pension levy’ in 2009 plus cuts to pay rates in 2010 and cuts to pensions in 2011. FEMPI was also used last summer to underpin temporary pay reductions under the Haddington Road agreement.

“Next year we certainly will have to engage with the unions on the orderly winding down of FEMPI, who should benefit first, and how that should be done over time. It is not going to be a big bang, because that would undo all the good work we have done over three years. There has to be an orderly wind-down as opposed to a sudden ending,” Howlin told the Independent.

IMPACT had already indicated that it would seek talks on pay restoration once the Government met its 3% deficit target, which is expected to happen next year. The union set out its priorities for pay restoration in the public, private and community sectors at its delegate conference last May.

There has been no formal approach to IMPACT or other unions at this stage, although that’s not surprising given that talks aren’t expected until next year.

IMPACT said the minister’s comments were encouraging and said pay must move as the economy comes out of recession. A union spokesperson told journalists: “It’s really important that we get on the road to income recovery to improve living standards and support growth and recovery by getting people spending in the local economy again.”

Minister Howlin’s comments are significant because he is the minister in charge of public service pay. But it’s not the first time this year that senior Government figures have talked about public service pay restoration. Former Tánaiste Eamon Gilmore told IMPACT’S May conference: “Next time the Government and unions sit down to talk, it will be to talk about increasing pay not reducing it.” He also said he looked forward to the day “when the FEMPI legislation becomes a thing of the past.”