Public Sector Pay Post author By Philip Lane Post date April 22, 2009 Ronan Lyons does some analysis of pay levels for teachers here. Categories In Fiscal Policy Tags public sector pay in Ireland 44 Comments on Public Sector Pay ← IMF on Costs of Financial Stabilisation → More Detail on the Fiscal Position 44 replies on “Public Sector Pay” You really need to go to the comments part of that post to get a flavour of the subtle statistical manipulation being wrought – the comparisons are actually quite misleading. I’m a wee bit disappointed that it was linked to without that caveat being appended. The bottom line is that teachers are professionals with professional degrees who provide the community with a professional service – and should be paid accordingly. @Sean Happy to engage in discussion here – I don’t think anyone is disagreeing with your bottom line (I’m certainly not). The issue is whether teachers and other members of the education sector (including, ahem, contributors to this forum) are in a position to contribute more than most, which led me on to a secondary issue: whether or not our teachers are being paid above your “bottom line”, i.e. according to their professional qualifications. There is indeed substantial debate in the comments section. It revolves around whether teachers should be judged by contact hour or by day teaching. I chose day teaching as I thought it would stimulate a more fundamental debate on the structure of the teaching year in Ireland, which could be perceived as too tightly packed into too short a year. I was consciously but as is now evident unsuccessfully trying to steer the debate away from class sizes, where both sides of the debate acknowledge the evidence is mixed. A minor debate also took place in the middle of the comments on whether gross or net pay is a better measure. Both debates were unresolved as the gulf between the two sides was two big, IMO. I’m not really sure what you mean when you say the issue is whether teachers “are in a position to contribute more than most” – contribute to economic recovery in general, more rounded education funding, the lightening of the public expenditure bill – all of the above? I don’t mean to be sniffy, but vague and airy of talk of “contributions” need to be worked out a little more thoroughly than they are at present before we start asking any profession to contribute more. Just on the secondary issue then – could you give us an estimated figure as to how much teachers should be paid for their professional qualifications? I’ve read the Ronan Lyons blog piece and most of the commentary and feel I would have a much better grasp of what’s going on if the figures were broken down along the lines of rates of pay for primary, secondary, thrid level teaching posts in Ireland and comparisons with their equivalents in other eurozone countries. Lyons points out that teachers’ pay here is relatively more expensive at primary and lower secondary levels than at senior secondary level, which appears to suggest that at entry level to the profession, teachers’ pay may be set at too high a rate. In a lot of other professions it really doesn’t matter what sort of degree you have, when you start off working you are paid the basic rate. How much or how far you progress beyond that depends on how good you are at the job. I don’t think there is any escaping the reality that education services will be cut in the short term because it’s not possible to cut teachers’ pay from current levels. For the government to attempt to reform the structure of teachers’ pay would also be fraught with difficulty i.e. a new lower rate for freshman teachers, even if it would increase the number of jobs that can be made available to graduate teachers and maintain a range of services to the public, as they would be immediately accused of creating a ‘yellowpack’ species of teacher. If you look at the post, the context is set out as follows: “Trade unions have been clear on one point since the size of Ireland’s fiscal crisis became clear: those most in a position to pay should bear the brunt. At the same time, teachers unions have said that their pay is not up for discussion. This implies that teachers presume that they are not among those most in a position to pay.” I sought to investigate this. An analogous discussion would be top bankers/footballers/some other well paid occupation. They may be really well qualified and really experienced – and thus earn their pay – but that doesn’t mean they should avoid a contribution as Ireland seeks to solve its huge fiscal crisis. I’ll have to ask that second one again – what does Mr Lyons reckon teachers should be paid, in money, per year, for their services? And the first one again – contribute to what? Should teachers be asked to take docked pay to see the money funnelled into the general revenue, or should that money be ring-fenced for broader education spending? And, if you’re proposing the latter, do you see this as a feasible or forseeable turn in Government policy? Really? I’m also unsure as to this comment above: “In a lot of other professions it really doesn’t matter what sort of degree you have, when you start off working you are paid the basic rate.” What basic rate? What professions? These kind of hazy vagaries can’t simply be thrown around. Sean I dont think anyone should be paid purely on the merits of a degree. They should be paid on the merits of their effort and producivity. There should be individualised contracts where good teachers get to earn more and poor teachers don’t – use whatever gauge you see as being best, but one where people’s talent can be judged accurately and fairly. Non-merit-based long service awards, unionised standard pay scales and a complete lack of accountability are the main reasons for the entire public sector receiving such high rates of pay rather than just the talented members who deserve it. I’m not sure if Ronan is being deliberately provocative by choosing teachers as his example of people being overpaid in Ireland. I’ve looked at the comments on his blog and indeed there is some heat being generated. The reality is every profession and most jobs in Ireland are overpaid. That includes teachers, economists, accountants, lawyers and I believe even waitresses vis a vis their European counterparts. Sean – I am an accountant, university graduate, member of the ICAI. I qualified through KPMG (over 20 years ago) and when I left it was a question of what I could demand for my services. There are no basic rates for qualified accountants, it is based on supply and demand. Over the past 5 years recently qualified accountants and even long qualified ones had huge expectations and with the rampant demand for professional services ratcheted up the salary scale. Now my former employer (KPMG) is making 200 qualified accountants redundant (that didn’t even happen in the 1980s) and supply should exceed demand. What will happen is the salary levels offered for vacant positions will be advertised at lower rates and the salary level will drop. Many are taking pay cuts and have seen their bonuses vanish – the net effect is upwards of 15% to 20% cut in pay. Even at the lower end of the scale the rate per hour offered to waitresses etc will be kept down by over supply. The basic economic theory that says prices (i.e salaries) fall when supply exceeds demand will operate in a large part of the private sector. The question is how does this work in the public sector. There is I understand (or about to be) an excess of teachers so pay rates should fall according to basic economic theory. But this is not the way the public sector works. (Actually it would be interesting if it could for TDs. Perhaps you could get voted in on the basis you would do the job for less money!) Somehow the public sector pay bill has to fall. It can only happen in 2 ways – less people or lower salaries. @Sean C You really don’t have to ask the second one again, as it is clearly an unfair question. Assuming Ronan still finds time for his dayjob, he can’t be expected to perform abstract calculations like that. What he has shown (albeit somewhat vaguely) is that teachers are quite well paid by both domestic and international standards. With that in mind, the reactions of teachers unions to suggestions that teachers should ‘contribute’ (or whatever euphemism is popular that week) is disappointing. ‘Conrtibute to what?’ You are no doubt aware of the State’s fiscal situation. I doubt (though I don’t know) that Ronan was suggesting that revenue extracted from (/denied to) teachers go to fund education spending. I would assume he was talking about cutting back overall spending. This isn’t really all that outrageous a position. Under other circumstances it would be more reasonable to talk about what teachers deserve. But right now what the state can afford is a more pressing issue. I don’t necessarily disagree with your conclusions, but there are some additional complexities that need to be taken into account – in particular: first: relative GDP (or GNI for Ireland) per capita in each country – even if teachers in, say, India worked as hard as those in U. States, you wouldn’t expect them to be paid as well – the relative wealth of each country needs to be taken into account second: results achieved in each country – there are international assessments such as PISA – I don’t think those countries at the bottom of the PISA rankings would be justified in paying their teachers as much as those at the top of the PISA rankings For the record, here are the relevant stats on these two points: first, GDP (GNI for Ireland) per capita (PPS) in 2007 [ 1] Luxembourg 66,308.7 [ 2] Neth’lands 32,586.1 [ 3] IRELAND[GNI] 31,826.5 [ 4] Austria 30,845.7 [ 5] Sweden 30,440.7 [ 6] Denmark 29,875.8 [ 7] U. Kingdom 29,559.3 [ 8] Belgium 29,392.2 [ 9] Finland 28,835.5  Germany 28,577.3  France 27,160.5  Spain 26,244.4  Italy 25,222.6  Greece 23,619.5  Portugal 18,959.4 second, aggregate mean scores in PISA 2006 (sum of scores for reading, science and maths): [ 1] Finland 1,658 [ 2] Neth’lands 1,563 [ 3] Belgium 1,531 [ 4] IRELAND 1,526 [ 5] Germany 1,515 [ 6] Sweden 1,512 [ 7] Austria 1,506 [ 8] U. Kingdom 1,505 [ 9] Denmark 1,503  France 1,479  Luxembourg 1,455  Spain 1,429  Portugal 1,412  Italy 1,406  Greece 1,392 So, Ireland is 3rd richest country in EU15 in 2007 and 4th ranked in PISA 2006 among EU15. Based on this, I’d say teachers in Ireland are: (a) not overpaid rel to Italy, Spain, Greece, Portugal because these are poor countries and get lousy results in PISA (b) not overpaid rel to Germany and Netherlands as these are roughly of same wealth as Ireland, achieve similar PISA results and are paid approximately the same as Ireland (c) are overpaid rel to Finland as Finland is roughly of same wealth as Ireland but gets better PISA results but aren’t paid as much as Ireland. It would be interesting if you gave salary figures for the other Nordic countries to see if they are as low as Finland. Having said that, it remains a fact that in times of global recession and falling tax takes everywhere (not just Ireland), all public sector salaries are going to have to be cut right across the board and in all countries. That’s just an economic fact of life, quite separate from whether or not teachers in one country are overpaid relative to those in another country – regardless of whether we are talking of the public sector or the private sector, when the employer is skint (which will be true of nearly all governments as long as the global recession lasts), the employees can no longer be paid in the manner to which they are accustomed. Period. Ronan said: “Trade unions have been clear on one point since the size of Ireland’s fiscal crisis became clear: those most in a position to pay should bear the brunt. At the same time, teachers unions have said that their pay is not up for discussion. This implies that teachers presume that they are not among those most in a position to pay.” I think you are mistaken in the conclusion you have reached. Asking those “most in a position to pay” to bear the brunt of this recession simply means that any extra taxes and levies should be progressive rather than flat rate. It’s not unreasonable to examine whether or not teachers are overpaid, even after the recent wage-cut (the pension levy has nothing to do with pensions), or that the overall cost of our public sector is too high, but to argue that because teachers’ unions have sought to protect teachers’ pay, it follows that teachers are seeking to contribute proportionally less than other workers, is simply wrong. Teachers are paying the extra income and health levies at the same levels as any other working earning a similar salary. Veronica said: “Lyons points out that teachers’ pay here is relatively more expensive at primary and lower secondary levels than at senior secondary level, which appears to suggest that at entry level to the profession, teachers’ pay may be set at too high a rate. In a lot of other professions it really doesn’t matter what sort of degree you have, when you start off working you are paid the basic rate. How much or how far you progress beyond that depends on how good you are at the job.” I may have misunderstood you, but it would not be at all correct to suggest that teachers “enter” the profession at primary level, and work their way up through lower and higher secondary level to thid level. All full-time teachers in Ireland, primary and secondary, are paid according to a Common Basic Payscale, with allowances for qualifications. Third level pay scales are different. Finally, comparing the cost of Irish teachers to others by examining only the number of days that teachers are contracted for per year is an extremely narrow focus. In order to measure the value for money provided by teachers in Ireland it is necessary, at a minimum, to count the number of children whose educational needs are being met, and the number of hours instruction with which they are provided. When those factors are considered, it is impossible to support the arguments Ronan made in his post. @ John That’s an interesting approach, but I think there’s a couple of problems with it. 1) I know PISA scores are seen as quite reliable, but a share of the score may well be affected by good/bad administration/bureaucracy. So a decrease in the administrative/allocative efficiency would lead to a decrease in derived pay to teachers, which would be a bit unfair. Still, I know very little about PISA, so maybe that kind of thing wouldn’t affect the ranking. 2) Tying the salaries of teachers to that of a country as a whole is a bit dodgy. That would lead to Baumol’s Disease. Tying salaries to cost of living seems more reasonable. Admittedly, in advocating a pay freeze/cut for teachers I’m making the same mistake in reverse… seems hard to avoid though. Ronan writes: I was consciously but as is now evident unsuccessfully trying to steer the debate away from class sizes, where both sides of the debate acknowledge the evidence is mixed. Can this be the same Ronan who wrote, in the comments to his own blog post that, and I quote: “There’s no evidence that larger classes are associated with diminished student performance.” Then, when called on the obvious falsehood, wrote in response to me: “The evidence on class size is very mixed, as you no doubt well know but won’t say.” Who is it now that “knows but won’t say” that the evidence is mixed? Is it me or Ronan? This manner of proceeding is of a piece with the entire modus operandi of Ronan’s post, which obviously started with the conclusion–Irish teachers are overpaid–and then massaged the data to arrive there by focussing on the irrelevant per diem rates of pay and not the per contact hour rates. Ronan’s claim here that he “sought to stimulate a debate on the length of the teaching year” is simply not credible given the overall thrust of his post, which is all about pretending to look at (in order to dismiss) a few mitigating factors that might explain high annual teacher salaries in Ireland. So he looks at inflation and then looks at length of the school year and conveniently ignores the two obvious mitigating factors: annual contact hours and class sizes. I’ll let others come to their own conclusions about why he would proceed in this way. But I expect the Independent Newspapers to pick up this valuable contribution to the national debate any day now. Hmm. Stuart nails it I think – we are all “overpaid”, relative to the eurozone. Now, to ustify that in any area or overall we need to produce more. part of the problem in education is that its very very hard to measure the quality of output so we fall back on cruder measures. Three things strike one when we look at schools a) the relativly short school year b) the insane overconcnetration on gaeilge and religion and c) the lack of vertical professionalisim ie teachers not being supported by SNA’s, etc. The latter, where the modal irish teacher is a jill of all trades compared to the other countries may partially explain the difference. John, I’m afriad you did misunderstand me. What I was getting at is the first point on the scale, whether it’s in the primary or secondary level doesn’t matter. If teachers are coming into the system at a salary level that is relatively high compared to the final point on the remuneration scale, then there may be scope for starting them off on a lower salary and lengthening the scale amd increasing the number of increments. Over time this should have the effect of lowering the total wage bill, enabling the employment of a higher number of permanent teachers, and retaining higher levels of educational services to the public. But that would be a long term structural reform. The problem at the moment is that the Government is immediately faced with either making cuts in teachers’ pay or cuts in educational services. It’s either one or the other. As Stuart points out above professionals in the private sector are faced with the consequences of supply and demand and accountants are being let go. So too are engineers, solicitors and IT professionals by the bucketload and if they’re fortunate enough to find another job it’s likely going to be at a lower salary and less advantageous terms and conditions than they were accustomed to in the past. The world has changed. Just how transformative that change will be remains to be seen. But no profession in the public or private sectors is immune to its effects in the meantime, irrespective of how highly they may value their own qualifications or how hard they may have worked to attain them. Someone very dear to me was made redundant on a Tuesday, passed her Viva on the Wednesday and signed on for the dole on Friday, all in one week. ‘Doctor on the Dole’ – that’s life, even if it’s not how we want to know it. The teachers are clearly there for the taking. Sean Coleman asks 2 questions, the answers to which are obvious: 1. “what does Mr Lyons reckon teachers should be paid, in money, per year, for their services?” Clearly, they should be paid the lowest wage possible to clear the market, and we know there’s a lot of unemployed teachers who’d gladly work for less and that the government could easily face this unpopular group down. 2. “…contribute to economic recovery in general, more rounded education funding, the lightening of the public expenditure bill – all of the above?” None of the above. The reduction in teachers’ pay can contribute towards a reduction in the budget deficit and consequently the amount that Ireland is required to borrow. No other contribution required. I think Dr Ed Walsh, founding President of the University of Limerick, hit the nail on the head on Sunday: “The logical path towards cutting public expenditure is to retrace our steps to 2000, when we were a highly competitive country with 85,600 fewer public servants and a pay bill of more than €6 billion a lower. Those on the Irish public payroll are now among the highest paid in Europe, whether politicians, teachers or health workers. The pay gaps created by benchmarking are extraordinary. Irish teachers are paid 37 per cent more than their British counterparts and 26 per cent more than those in Germany. Irish ambulance drivers are paid as much as junior consultants in Finnish hospitals. Benchmarking against other EU countries provides the framework within which Irish public sector salaries can be brought into line again”. http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS+FEATURES-qqqm=nav-qqqid=41137-qqqx=1.asp Dr Walsh has previously referred to Ireland’s low test scores in maths and science. People might have more time for teachers if they showed an interest in real reform in this area instead of seeking to protect their grossly excessive pay. The only thing stopping action being taken is our useless government. If they are being reported accurately here, then Dr. Walsh’s comments are misleading. They ignore the fact that the population increased from 3,789,500 in 2000 to 4,422,100 in 2008 (probably a further increase since then). That’s an increase of 632,600, or 16.7%, in 8 years. Is it seriously to be argued that you can have 632,600 additional people in the country and not employ additional teachers, doctors, nurses, policemen to service them? Those who continually rail against the increase in the number of public servants in the past decade (for example, the Finfacts editor) always conveniently omit any mention of the staggering increase in population in that period. As a proportion of the employed workforce, the number of public servants was lower in 2008 than in 2000. The proportion will probably increase during the global recession, as it will in all countries. However, as the OECD report showed last year, that proportion is lower than in almost all other EU15 countries. In relation to maths and science scores, Ireland scored above the OECD and EU averages in both these, although the ranking was not as high as for reading literacy for which Ireland came second only to Finland among EU countries. Full figures below. http://www.cso.ie/releasespublications/documents/other_releases/2007/progress2007/measuringirelandsprogress.pdf Dr Walsh of the University of Limerick might have a point were he right with his statistics. He’s not. According to the OECD publication Education at a Glance 2008 (p. 453), teachers in Germany make US$62 per contact hour (using PPPs) at primary level, $68 at lower secondary and $78 per hour at upper secondary. The figures for Irish teachers are $53, $66 and $66 respectively. Irish teachers make less than German teachers, not more. They also teach larger classes, which adds to their workload outside of class. I don’t know what the source is for his claims and the OECD report doesn’t provide data for Britain as a whole or even in all its parts, so I can’t say whether Irish teachers make more than British teachers. But given the way the attacks on the public sector are being carried out, I would be deeply suspicious of the claim that Irish teachers make 37% more. What is interesting is the average salary is very high relative to other sectors in Ireland. And when compared with equivalents in the Eurozone. Thats the bottom line, though it would be good to see more breakdown to verify were talking about the same set of people in all countries, not including or excluding categories… And compare temporary vs permanent etc, would that make any difference I wonder Quoting figures per contract hour and then declaring “Irish teachers make less than German teachers, not more.” is not a fair conclusion. I hope thats not a science or maths teacher making that point…. What does contract hour actually mean in both countries? We need to get away from the focus on teachers. It gets all too emotive. I’m sure every profession could find statistics to prove they are not overpaid. Two questions 1. Do we agree that on the whole Irish people are overpaid relative to their EU peers? 2. What are we going to do about it? In the private sector the market will work it out. The people either lose work to other countries (already seeing this with dentists and there’s no reason why it won’t work for others) or will see their pay rates going down (already happening) In the public sector some other mechanism has to operate. It will be less people but also has to be less pay. (Benchmarking in reverse) No one likes the idea of earning less but the Irish lifestyle as it stands is unsustainable. On the plus side the high cost of living in Ireland should come down – Houses become more affordable, professionals should charge less for their services, education should cost less etc etc. We can wake up to this fact slowly or quickly. I’d prefer quickly. Garry: I didn’t say “contract hour.” I said “contact hour.” It means hour of contact with students. This figure (pay per contact hour) is one that the OECD uses in its regular comparative studies of educational systems. I hope you’re not an English teacher…. Stuart: The market will work it out? Did the market “work out” a sensible allocation of resources to the property sector? Why are we in this mess in the first place? In my view, it’s a spectacular market failure. If there is one lesson to be taken from this, it’s that we can’t rely on the market to work out much of anything. By the way: some areas of the public sector hire internationally (third level, notably) and have to pay wages that are competitive internationally in order to attract talent to what is, after all, a small and expensive and in many ways unattractive country. @Ernie If there is one lesson to be taken from this, it’s that we can’t rely on the market to work out much of anything. And now we’re discussing ideology. You’re right the market isn’t perfect. There will always be boom bust cycles & bubbles. There will be inequities. Nurses will be paid far less than an estate agent (in boom times). I don’t fancy the alternative and I’m not aware of any country that has one in place or ever did that I would want to live in. I note that many are arguing why their particular sector shouldn’t take a pay cut. We have the teachers argument here and now Ernie we have your third level example. Well Ernie I went to third level and did business studies. I didn’t notice any international superstars just ordinary people doing their job running courses most of which are not rocket science (except of course degrees in rocket science!). A third level post looks pretty attractive to me. While I would never go into secondary teaching (I do think controlling 25-30 teenagers is an unenviable task) I would consider third level. Pay looks good, hours look good and most the lecturers I know have time to do consultancy type work. There might be one or two posts where you’re right and you have to go abroad but plenty of good talented Irish people available for most posts. Stuart, are you sure you were qualified in your capacity as a third-level student to recognise who was and who was not an international superstar? I think if you look at the production of Irish PhDs in most domains you’ll find that they do not constitute an adequate pool from which to fill many posts. Most small countries have to recruit their third-level staff internationally for just this reason. Many large countries–the United States most notably– also recruit their third-level staff internationally for obvious reasons: more competition means better staff. But I do note with interest your willingness to ignore the realities of the global marketplace in this domain and to pretend that we are somehow isolated from it. No need for Ireland to compete internationally for staff! That’s a recipe for the rapid decline of third level in this country from the low position it already occupies internationally. It would be short-sighted in the extreme. I never said I worked at third level so I don’t know why you feel justified in personalising your response. One other point with regard to third level: in general, the best teaching and research staff–native-born Irish included–are also the most mobile. They are the ones who have the least difficulty finding employment elsewhere. If we do not handle this matter delicately, that giant sucking sound you hear will be the brain drain as the most talented staff leave the country. It would be a mistake to act as though they cannot possibly leave or that their jobs can be filled by just anyone. @Ernie Apologies for the assumption you worked in third level. My comment was that for most posts there are well talented Irish people available and I’m sure willing to do the job. All I know is all my lecturers were Irish, some in fact contribute to this site. Are there figures for how many 3rd level posts have been recruited internationally? What tends to happen in any argument is someone takes an exception (e.g. the need to recruit outside Ireland for some particular post) and then uses it to prove the rule. I repeat most lecture courses at third level can be taken by good quality Irish people and today there are a lot more of these people available than 5 years ago. Most courses are fairly run of the mill trying to instill into 18-22 year olds the basics of the particular course they are in. Post grad may be different. Another example is banks are arguing they can’t recruit people of the right calibre if there is a paycap of €500k. This is also nonsense. I would say they could find some great people in the financial sector who would be delighted to work for €500k. But if they admit it is so all banking salaries will drop (which again they need to). I have no anti public sector beef. You will see in my posts I am arguing we all need to take the pain. @ Ernie I actually agree with you that we should compete for the best and brightest at third level, regardless of where they are from. Pay them on the basis of (a) what they are worth and (b) what we can afford. However the problem that arises here is that the unions are looking for the complete opposite system at primary and secondary level – they want standardised pay scales, no aspect of performance related pay, and little flexibility for poor performing teachers to be booted out. There’s also no notion that maybe paying teachers 57k is unsustainable and a bad idea. As Stuart noted above, in an economic downturn the private sector adjust by looking for pay cuts, lower costs and eventually job cuts. The public sector by contrast seeks to have pay increased or certainly not reduced, class sizes cut (ie increased costs, decreased efficiencies) and want to know why they can’t hire more staff. Intresting contrast, no? Also, if we paid on the basis of contact hour, do you think we’d hear calls from some teachers for bigger class sizes (and therefore more pay) or smaller class sizes? I think many would plump for the latter on the basis of being eligible for higher pay. I wouldn’t necessarily be against it, as at least then we’d know which teachers are actually willing to work harder. In relation to what Stuart said above, I for one do not accept that workers in Ireland are overpaid relative to those in the Eurozone when productivity is takeninto account (although there may be some particular groups who are) Nor do I accept that Ireland is uncompetitive relative to the Eurozone. Could those who say otherwise explain the following figures for manufacturing output in Eurozone countries (source: Eurostat)? changes in man. output between 2000 and 2008: Ireland +43.3% Austria +34.1% Finland +26.9% Germany +21.4% Luxembourg +12.8% Belgium +11.2% Netherlands +9.3% France -1.0% Spain -1.0% Greece -2.8% Italy -3.7% Portugal -9.0% y-o-y changes in man. output in January 2009: Ireland -0.4% Austria -9.0% Netherlands -11.0% Greece -12.8% Belgium -15.9% Italy -16.8% France -17.3% Portugal -17.6% Sweden -18.3% Germany -19.6% Finland -21.5% Spain -22.3% y-o-y changes in man. output in February 2009: Ireland -1.7% Greece -6.5% Austria -9.0% Netherlands -12.8% Belgium -15.9% France -17.8% Portugal -18.5% Italy -20.3% Finland -21.5% Germany -22.5% Spain -22.6% Luxembourg -26.0% The ‘loss of competitiveness argument’ is a ruse. If Irish workers are overpaid relative to German workers, how come Germany has lost a quarter of its manufacturing output since last year (more than occurred in 1944 when the AAF and RAF were bombing their factories to bits), while Ireland has lost hardly any. I could add the fact that (a) Ireland’s trade suplus is now running at almost 3.5 billion a month v 2.0 billion in recent years (b) the balnce-of-payments is moving into surplus. None of these indicate a lack of competitiveness. As I see it, what’s happening is as follows. The severe downturn in the housing market has resulted in a major loss of jobs and consumer demand. Employers and those economists who work for them are trying to take advantage of this to cut both wages and the social wage right across the board under the pretext that somehow or other these developments are actually due to failing manufacturing and exports, and that this can only be corrected (how conveniently) by both private and public sector workers taking massive pay cuts. But, there’s no evidence at all that aither manufacturing or exports are failing. As the figures above show, they continue to outperform the Eurozone. Hence the claim that workers in Ireland are overpaid relative to those in the Eurozone has no basis. @ John Unfortunately industrial and manufacturing numbers alone can’t tell you whether average earnings are too high or too low. Take the example of South Korea. The Korean Won is about 50% lower now than it was this time last year, so obviously their cost efficiency in USD and Euro has increased giving them a huge competitive advantage over potential rivals. However, how then do you explain that their industrial producton output was down 18% y-o-y in December, 25% y-o-y in January, and 10% y-o-y in February, while their current account balance has been a healthy surplus in 4 of the last 5 months (to Feb), having been negative for 9 of the previous 10 months. Are you suggesting that South Korean workers are possibly the most overpaid in the developed world??? When i see average houses trading at 10 times average earnings, and average earnings being 30% higher than the EU average, and average public sector earnings here therefore being about 80% higher than the average worker in Europe, then i think it’s a fair question to ask just what it is that the average public sector worker in this country does so so so so much better than everyone else in Europe? If the answer is soley that “the cost of living here is higher”, then all we are is a massive inflationary bubble and a lot of the wealth and wages of this country are completely and totally unsustainable. Given that the public sector wages cannot exist without at least some form of private sector, you then start to come to an argument where it is complete and utter madness and hypocrisy to expect private sector pay cuts and job losses whilst not seeing the same in the public sector. I think Brian Lucey and Stuart Blythman have hit the nail on the head. Many posts in Ireland are overpaid relative to other countries and a country with a small population and poor infrastructure simply cannot afford to continue as we are. Salaries above a basic level have got out of hand and percentage increases (which are supported by all unions) simply improve the living standards of the better-paid versus the lower-paid. 10% of nothing is still nothing. The Public Sector must stop feeling that they are being scapegoated. They’re not; it’s simply that we now need reverse benchmarking especially in the top echelons of the public sector. WE need to see some sense in private sector salaries too and Stuart is right; there are plenty of good people who will work for €500,000.00 a year but until recently there was a culture that if you had a proper sense of your “worth” you had a right and entitlement to a ginormous salary. Otherwise, you would be regarded as stupid by your peers. I refer you all to Professor Alan Matthew’s article on “legitimate expectations”. Last night, on the Late Debate Conor Lenihan used this argument to justify the continued payment of the Long Service increments to TDs. Surely, if it applies to the situation above, it can also be applied to the REPs cuts and the “Pension Levy”. Got a link to the Alan Matthew’s article? I’d like to read it. If you think the public sector is not being scapegoated, you must not be paying attention. The largest circulation newspaper in this country does not let a day go by without blasting the ‘greedy fat cats’ in the public sector. By the way, I have a radical solution to the public sector pay bill: simply reduce the salaries of all those making over €150,000 to €150,000. This includes hospital consultants (their recent contract should’ve been ripped up at the same time that the last partnership agreement was torn up). Because, as I see it, that’s really the problem: the public service has grown top heavy. @Ernie You need to ignore the media. They love the soundbite stuff. Detailed arguments are too difficult for them. Bad, good, black, white – that’s all they seem to be able to work with. On hospital consultants you’re absolutely right. Another cartel. The hospital should be able to find a surgeon through market forces. Again there has to be plenty of able young doctors who’ll do the work at a lower cost if their profession let them. Ernie – Alan Matthews is a contributor here on irisheconomy. See list of contributors on homepage. Stuart – again, I agree about the Consultants but it takes a lot of courage to stand against the “group good” of your peers. One of Brian Lucey’s Trinity peers was on the Late Debate panel last night and certainly wouldn’t be happy with the argument that the university sector is overpaid. There was a strong whiff of “entitlement” and “buttons and peanuts” when compared to private sector equivalents. Owen C said: “However the problem that arises here is that the unions are looking for the complete opposite system at primary and secondary level – they want standardised pay scales, no aspect of performance related pay, and little flexibility for poor performing teachers to be booted out.” As a teacher I’d be delighted to see some way of incentivising better teaching, and would love to see the lazy/incompetent teachers (the ones whose classes you hope you won’t have to teach the year after them…) dealt with. On the latter issue, the new Teaching Council, something for which the INTO has been pushing for years, will give principals and boards of management much more power to act. The problem with performance related pay is that it is very difficult to quantitavely evaluate the work a teacher does. Teachers working in ‘designated disadvantaged’ schools will never match the test scores of their colleagues in ‘better’ schools, no matter how hard they work. And a great deal of my job is about stuff that never appears on any test paper. I’m not saying it can’t be done, but I don’t know what the best way to do it would be. @Pat Cooper, Stuart Blythman and Owen C. The most recent survey I could find for a comparison of average earnings in Ireland and the EU was the Deloitte Remuneration Survey for 2007. This doesn’t support claims made in some of the above posts that average earnings in Ireland are far above those in other EU15 countries. Here is the link: http://www.finfacts.ie/biz10/Rumuneration2008.pdf In 2007, excluding social security contributions, employee earnings in Ireland were only 8th highest in the EU15 – annual earnings for Ireland and higher-ranked countries were: denmark 50,923 euros luxembourg 43,696 euros germany 42,971 euros belgium 37,119 euros france 35,887 euros finland 35,513 euros u. kingdom 35,346 euros ireland 34,800 euros If employers social security contributions are included, Ireland ranked only 9th highest: france 52,567 euros germany 51,612 euros denmark 51,593 euros belgium 49,251 euros luxembourg 48,699 euros sweden 45,528 euros finland 45,002 euros u. kingdom 38,889 euros ireland 38,541 euros So, in 2007 labour costs in Ireland were a quarter lower than in France, Germany and Denmark and about a fifth lower than in Belgium and luxembourg and about a sixth lower than in Sweden and Finland. Because of the fall in sterling, labour costs in Ireland will certainly have gone above those in the U. Kingdom since then. But, if reports of wage cuts in Ireland reported in the media are accuarate, then the gap between Ireland and the other countries listed above will have widened dramatically since 2007. So, do those who say there should be wage cuts in Ireland also say there should be even bigger wage cuts in France, Germany, Denmark, Belgium, Luxembourg, Sweden and Finland. And, if not, why not? Why are teachers the best way to impart knowledge? For example mathematics could probably be taught 100% by computer based learning. I really do not believe classroom lectures help the best students, and bottom half are totally left behind. Teachers whinge about grading papers, and prep time, computers have no such problem. If a student progresses fast, a new lesson is a click away. If a student needs more drilling, no problem. Really the whole system needs to be re evaluated. the figures speak for themselves, the reality is that teachers here seem to spend more time crying than the kids in their class do! Teachers don’t want competition, performance related pay, or the ability to be sacked, basically they are looking for our education market to be based on EVERYTHING with the exception of their own labour! And in a service industry! Add up the actual hours worked, factor in all the extra time off compared to other industry jobs and then there are also facts not being mentioned like the 30 or 31 sick days available etc. and tell me that you still have a hard life. John, I think my argument was on higher pay (not average pay) and how our system favours increases in the higher pay scales. In my last job most of the operatives were earning less than €500.00 gross per week and a lot of people are working for minimum wage which for a 40 hour week is about 340 per week. I believe that average wages is only useful for showing total cost of output but means nothing. The example of 2 guys earning 100,000 each and the 20 operatives on 30,000. Average this and it works out at 36,500. What purpose does that have? Do the Revenue publish any stats that show Irish salaries and the numbers earning at certain levels, say in blocks of €5000? Your figures are from 2007 and I find it interesting that, even allowing for some increase, the average teacher salary quoted in this article is a long way above the average salary for 2007. I do feel that teachers are doing okay because of the shorter hours and the long holidays. I’m genuinely perplexed when I hear people earning more than €200,000.00 calling for a cut in the annual welfare rate of €10,608 or the minimum wage rate of about €17,680 pa. The intelligentsia has in the main stayed out of the debate and when I hear “worth” and “value” it will always bring a smile because I don’t believe the market is nearly as good an arbiter of value as we are led to believe. The recent OIL price increase was a manipulation of the market. The prices of shares on the Irish stock market had nothing to do with productive value; pure speculation. The housing market was bloated by cheap plentiful pretend money and 40 year term mortgages. As an atheist, I truly admire our christian modus operandi. @geo8rge Nice to see you can faithfully regurgitate the contents of an article you read in the Independent. And by your proposals, that ability means you’re an educated person. Congratulations! @geo8rge: “Why are teachers the best way to impart knowledge? […] Really the whole system needs to be re evaluated.” I’m not as convinced as you are of the merits of computerised instruction. Nonetheless, you raise an issue that (in the longer term) is considerably more important than the pay rates of teachers (or of TDs or bankers). The state has ceded effective control of the education industry to the front-line operatives, who have fought to reduce productivity and to increase costs while sticking to traditional production methods and arrogating the right to define the industry’s products. Teachers are the white-collar equivalents of the Dublin taxi-drivers and I suggest that innovation might be encouraged, costs driven down and quality and output improved by allowing the management of the industry to pass to new and competing providers. As the late Comrade Mao Zedong so wisely put it: “Letting a hundred flowers blossom and a hundred schools of thought contend is the policy for promoting progress in the arts and the sciences and a flourishing socialist culture in our land.” bjg @John The figures are interesting though I’m always wary of stats. They do fly against what I have experienced in my business life but perhaps it is the averaging that’s the problem. The difficulty is if we’re not overpaid and indeed are paid less than the Germans et al we have a bigger problem. I and many others assume we can improve our competitiveness by bringing down our labour costs vis a vis other countries. If we’re not overpriced then what do we do? Part of the problem is we relied too much on mobile foreign investment for our manufacturing base and were so successful at attracting it didn’t nurture indigenous businesses. The FDI that is leaving Ireland now is not going to Germany but lower paid economies in Eastern Europe and the Far East. Everybody keeps talking about an Export led recovery but who will be doing the exports? @Pat. As a Christian there is currently very little Christian modus operandi out there. At the moment it is every man or woman for him/herself. @Brian Many of the most modern industries these days cede large amounts of control to autonomous front-line operatives. The sort of managerialism you advocate is so . . . 1950s. You’ll have to explain why you think ‘productivity’ is a meaningful concept when applied to teaching… Michael Taft has just written an excellent response to Ronan’s original piece, well worth a read. Go to http://notesonthefront.typepad.com/ Hi Donal, As I mention in the comments after Michael’s point-of-view on his blog, his article is as much as call for more detail as it is the suggested rebuttal. Happy to provide more detail and will be working away on this when I get the chance over the coming weeks. Will post here when it’s up, R Teaching is one of the easiest well paid and underworked careers going. Up to 70k a year for 7 months 22 hours a week. Once permanent cannot loose a job unless extremely bad circumstances. Add pension worth about 30% on top of salary. Anyone who cannot cope with the so called stress quite clearly are not fit for the job. They went out protesting over payrises and pretend to care for the children. They could not care less about the children. If did why not offer to keep same numbers by cutting rates. The fact a person with a 1H can get an extra payment is mad. A 1H does not make a better teacher. I am a qualified professional and have teached part time. 5 years ago went for full time role 200 applicants for 1 position. This in the middle of the boom. Also it was only some jobs that did very well during boom and alot are now out of a job where the guys in public sector who wanted benchmarking are still overpaid. If the benchmarking was so a fair system why is there no benchmarking down. Comments are closed.