Public Sector Pay Differentials: Regressions Can Actually Be Useful

Last week, the CSO released the latest results from the National Employment Survey, which reports detailed information on earnings across all sectors of the economy.  The data from the survey relate to October 2007.

The first media treatment of the story that I saw was the Sunday Independent’s lead story saying the public sector is “now earning 50 per cent more the private sector.”  My reaction was that while the headline might be true, this wasn’t a very useful way to think about the issue of public sector pay. 

The report also details a host of other well-known patterns: Those with more education earn more, older workers earn more, those in professional occupations earn more.  With the possible exception of Vincent Browne, I’m not sure there is anyone out there who would draw the implication from these figures that the government should intervene to eliminate all these gaps.

In any case, it’s a sufficiently well-known point that one needs to control for worker characteristics before one can make meaningful comparisons that I decided to take a break from Sunday newspaper bashing and leave it be.

However, now we are seeing pieces of analysis put forward by professional economists that claim to be presenting such meaningful comparisons but unfortunately are not.  Ronan Lyons and Constantin Gurdgiev have excitedly pointed to some figures released by Davy’s showing a series of bilateral comparisons: For each occupation, age, education, and experience grouping, there is a public sector premium ranging from 25% to 75%.  Case closed—the premiums are much larger than we thought, no?

Well, not necessarily.  A bilateral comparison of public and private sector workers in the same age grouping won’t control for the fact that public sector workers may have higher education levels.  Similarly a bilateral comparison of public and private sector workers in the same education grouping won’t control for different levels of experience.

Now, as it turns out, calculations from the ESRI’s analysis of the previous edition of this survey—see page 25 of this PDF file—show that public sector workers are more than twice as likely to have a third level degree, have more years of work experience, and are more than four times more likely to be classified as having a professional occupation. So this issue definitely arises when making these comparisons.

Perhaps then it is impossible to control for all these different features at once I hear you say?  Well, it turns out that some economists use a highly scientific method called multiple regression to deal with this issue and those boffins at the ESRI have run these, em, regressions to estimate the public sector wage premium. 

The ESRI study, linked to above, found that, controlling for observed characteristics, the premia in 2006 ranged from 10% at the upper end to 32% at the bottom end.  (Of course, these regressions are hardly perfect either since they likely hide substantial unobserved heterogeneity but they certainly beat a series of pair-wise comparisons.)

It is possible that these premia widened between 2006 and 2007.  However, without running the appropriate regressions on the updated survey data, we simply don’t know.  Also, even if we did, a lot has happened since October 2007 including the application of the public sector pension levy, so we can’t be sure where these differentials are right now.

Let me conclude by saying something that will probably have no effect whatsoever on our commenters: I am not saying public sector pay shouldn’t be cut.  My point is just that when discussing important policy issues, we should at least employ the most useful evidence available.

63 replies on “Public Sector Pay Differentials: Regressions Can Actually Be Useful”

I suspect that public sector workers are more likely to be employed in Dublin as the Civil Service (are they part fo thepublic service for this purpose?), NGOs and specialist services are more likely to be located in Dublin. The cost of living and wages are higher in Dublin. I did not see this in the ESRI report.

Hi Karl,
I agree with your final sentiment – hence my reference not only to the Davy material but also to the ESRI paper you describe.
Incidentally, my blog post was as much about ability to pay (the union line of ‘hit those who can bear it the most’) as it was about deservedness of higher wages. Consider the implications for public sector pay where you have an economy with 300 public sector PhD male economists over 50, each earning €200k, and 300 private sector economist-back-masseuses under 30, each earning €20k… All the regressions in the world won’t explain away that economy’s fiscal gap!

“Public Sector Pay Differentials: Regressions Can Actually Be Useful” – too true, and may I be the first to suggest they should regress to pre-benchmarking levels.

i know many people in the public sector (a lot in the CB mainly) and they get degrees/accountancy qualifications in order to advance up the salary scale because there is a basis for that within the system, in the private sector it is often about performance and productivity rather than academic merit.

the proliferation of higher education is often tied to reward and this is likely the case in the PS.

is there a way to compare output? because really its a utility argument as much as anything else. is it worth paying a person more for having a degree that doesn’t increase productivity or have a bottom line effect?

The public sector have it easy in comparison to those of us in the private sector:

1. they’re paid more now;
2. they’ll be paid more later; and
3. they probably work shorter hours.

No truly meaningful comparison is possible wthout factoring in the huge benefits implied in public sector pensions. Regressions are useful and advance our understanding of the issues but why are public sector pensions not included in the analysis? Is nobody capable of the sums involved?

Ronan actually brings up a pretty important point: while the average public sector worker is apparently far more likely to have a college degree, do we actually need such a highly qualified public sector? Doesn’t this indicate that the public sector is perhaps draining away all the high talent workers from the private sector? I mean, would we have a more vibrant and entrepreneurial private sector if public sector wages were brought down to private sector levels? Bit of chicken and egg dynamics going on here, no?

Also, i’d like to know, are many of these degrees paid for/subsidised by the public sector in the first place (ie part time study etc), and if so that should surely be taken into account here?

This is without touching on the rather enourmous elephants in the room that are job security, working terms and conditions, pension security etc etc.

Maybe you’d like heart surgery performed by someone without a degree. Maybe you want someone without a qualification teaching your children. I don’t.

@ Ernie

well done, obviously i was referring to doctors and teachers, and not the rather vast amount of ‘administrators’ who unfortunately need to be employed alongside them. Whats the HSE figures for admin vs front line staff, 6:1 or something insane like that?

Cormac, if you look at footnote 16/17 of the ESRI working paper Karl refers to, you will see that the second benchmarking committee allowed for a 15% discount on private sector wages to allow for the more generous public sector pensions. So you could start off with this rough rule of thumb, but you also have to bear in mind the pension levy.

For what its worth, my guess is that even allowing for the pension levy, the gap has probably widened recently (if the figure of wage cuts of about 8% in the private sector which have been referred to in this blog are accurate). There is also probably a selection issue which has applied in the last year – the private sector workers who have lost jobs (and who would not figure if the survey was carried out today) are unlikely to be a random draw from the pool of private sector workers. So some form of selectivity adjusted wage regressions are what are called for – hard to know what that would show. My guess is that such an exercise would probably reveal a bigger public sector premium – but we really are in speculative territory here.

Shock, horror! Doctors in Ireland get paid more than night-club bouncers. Nurses get paid more than waitresses. Teachers get paid more than hotel receptionists.

But, if public sector wages are indeed higher than private sector wages even after discounting educational qulifications, why should it be assumed that it is the former that are out of line and not the latter, or a combination of both? Why should it necessarily be assumed that any gap must be closed exclusively by slashing public sector wages, and not by in part increasing private sector wages?

Recent figures show that Ireland’s export sector is highly competitive. This was denied until recently, but the most recent export figures show it it to be true. Even Alan Ahearne admitted that last week. Figures also show that private sector wages in Ireland are lower than in comparable EU countries, no doubt in part due to half a million immigrants from poor eastern European countries working in the private sector here and who, according to these CSO figures, are very badly-paid.

So, how about this for a solution?

Instead of slashing public sector wages by 20% to 25%, which the lunatics on the Sunday Independent want, and which will only have the effect of reducing consumer demand in Ireland still further, how about:

(a) Allow private sector wages to rise at the same rate as in comparable EU countries (4% to 5% annually acording to the latest Eurostat figures).

(b) For a number of years, until the public sector/private sector gap has been eliminated, allow public sector wages to rise at only half this rate (say 2% annually).

This would be the sensible way to go about it. The gap would be elimated at the same time as maintaining competitiveness and keeping purchasing power in the economy growing. Far better than the slash and burn policy being advocated by right-wing commentators on the Sunday Independent.

@John: I don’t understand your use of the passive tense “Allow private sector wages to rise …” Who is to do the “allowing”? Surely the point of this whole debate is that private sector wages rise and fall according to supply and demand (largely). Your solution to the gap seems to require government intervention in setting all private sector wages. This will lead to further private sector job losses. Or are you referring to the social partnership wage agreement process. Or are you suggesting wholesale nationalisation so that we are all public sector workers?

@ John

you call the supposedly “right wing slash and burn policy” lunacy? Your suggestion basically amounts to a combination of (a) inflating the problem away and (b) carrying on with the truly collasal fiscal gap which currently exists (assuming you’re not looking for 10-15% tax increases??).

What you’re suggesting doesn’t take into account the wages of the non-exporting private sector. It would also imply having some sorted of hyper-inflation, massively indebted Ireland coming out the other end of your 10-15 year plan (cos thats what it’d take to close the gap at your suggested 2.5% p/annum plan). And, as Conor noted, you seem to be looking for some sort of government-set wages levels in the private sector, regardless of any actualy, eh, you know, economic rationale behind it! I’ll take the slash and burn policy over you’re cloud cuckoo land one anyday please…

Interesting that these results don’t appear to be being debated anywhere other than here. Even the IT hasn’t had a poll on it and it’s just the kind of bloody bone they like to throw to the dogs in their BB’s. Government trying to keep it tight until they need to use it later this year when they start on the justifications for wage cuts in the public sector?
Re. the business of PS workers obtaining more/higher qualifications – might be due to those in the private sector tend to get sucked into their jobs and daren’t try/can’t find the time to obtain other qualifications. I know many MSc’s who would love to take on their PhD but know that the career would suffer massively so they just never get round to doing it.

25% to 75%

I look forward to certain academic economist bloggers who find themselves over-excited by this magic figure leading the way in voluntarily reducing their own wages by this amount, so as to lead by example (yes, I know, play the ball…)

I agree with Karl’s core point that the best evidence on this issue is the ESRI work recently which updates somewhat the work done by Anthony Murphy and others for the Benchmarking II. While it is the best evidence, it is still pretty basic and I am still unfortunately in the dark on a lot of the issues. I do accept that public sector workers earn more on average than private sector workers. But I don’t like the simple ‘lower the wages’ argument on everyone. I think it is much more likely that we need to lower the wage by 100% for some (i.e. the jobs should be folded, or at least not replaced in a natural wastage model) instead of a simplistic argument that all should take a % pay cut of some level. Some observations:

1. We know that as usual we lack the data to do this work properly so we badly need the Household Budget Survey to get income data into the field, like every other major labour force survey in the world! As an aside remember that all the evidence is based on so called ‘prime age’ (25/59) full time and permanent workers and excludes the semi-states. So any whiff of the market is kept out of this analysis, the impact of increasing use of fixed term contracts in the public sector is out of this analysis. Put another way, what I suspect the data analysed in the ‘regression’ studies zones in on is the well established, core public sector full time employee. This is for many now the ‘target’ group. But there has been great variation in the type of contract used in the public sector in recent years (including around pension contributions etc) and none of this is captured in the studies. This mainly addresses the idea that the gap observed in studies like the ESRI one is a ‘lower bound’ on the likely gaps – I am not sure that can be said with any degree of certainty.

2. We also know that Public Sector workers are paid more than the private sector workers in many countries and that this bonus continues into retirement and other benefits (see Dutch evidence of the impact of a benchmarking exercise at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1071190) so Ireland is not that unique. We need to more seriously take on board the arguments as to why Governments pay more on average and take on board the daft stuff that the Benchmarking process created not just in terms of the outcome of increased wages but also the bizarreness of the exercise to begin – we have to imagine what the normal process would have delivered over the past 8 or so years without the benchmarking mechanism, a counterfactual we don’t observe unfortunately!! The public wage premium, particularly at the lower end of the conditional wage distribution, might be due to the more effective implementation of equal opportunity and anti-discriminatory policies in the public sector since the government may use public sector pay to achieve objectives and to be a ‘good’ employer (seems a weak argument in Ireland but it is perhaps true that a lot of the sectoral differences in employment tenure for women – and hence experience and earnings- could be due to the implementation of employment and work-practice laws in the public sector as compared to the private sector). At the other end, public wage penalties at the upper end of the conditional wage distribution may be due to public opposition to high pay for public servants (weak too for Ireland maybe!!). UCD’s Olivier Bargain in research on French data in 2008 attribute the sectoral wage differential to the sensitivity of private sector wages (and the lack of sensitivity of the public sector) to macro shocks (a result that Benchmarking dealt with in Ireland by bringing the economic cycle into the public sector wage setting process!). All in all I do think we need to actually think about what we want from the Public Sector, and what we expect Public Sector workers to be and to do (like finally bringing the productivity and flexibility that Bord Snip appears to push) and move forward from there.

3. Very recent evidence based on great data from Australia (http://ideas.repec.org/p/auu/dpaper/581.html) also shows the idea that the the public sector premium is not uniform across the wage distribution – Oz results show the same thing as the ESRI and Murphy et al that female public sector workers pretty much always earn more across the distribution but that there can be a penalty at the higher part of the distribution and indeed that can differ between men and women. The gap between public/private are more uniform now in Ireland, at least based on the 2006 NES data, but as contributors have pointed out the higher earning pub sector workers may have not received later benchmarking payments and the pension levy also kicks in here so we are back in the land of speculation. But this does suggest that equalising the public/private wage gap on average will possibly mean lowering the wages at the bottom end of the wage distribution more than at the top!! That is a bit like the ‘broadening of the tax base’ argument – unlikely to happen as what that would really mean is increasing the base rate of tax not the top.

4. We have no evidence at all within sectors even after two benchmarking report – so given that some posts are 100% public sector (like teaching, or at least in Ireland University Professors!), are administrative staff in the public sector paid much more than the private for example? Even if we are to do a ‘reverse benchmarking’ exercise we do need public data on this stuff.

5. The concept of overskilling is a real concern that needs attention – one of my PhD students has been working on this a great deal in terms of the PhD market (see http://gearybehaviourcenter.blogspot.com/search/label/skills-matching) and this is a very important point. Saying that admin staff in the public sector earn more because they have a degree is a complete non-argument if they do not need the degree.

@ Conor G,

“…@John: I don’t understand your use of the passive tense “Allow private sector wages to rise …””

I think you mean ‘passive voice’ not ‘passive tense’, but this is not an example. Tense is strictly a matter of how the subject matter of the sentence is related to the utterance in time (past, present or future). The active/passive dimension relates to whether the subject of the sentence does something or has something done to it. Here the subject was implicit, hence your question, was it we allow, one allows, the Government allows, the market allows,… In any of these, it is an active statement.

As a temporary public sector worker (pension levy but no pension rights) with a PhD, I feel compelled to point this out. You can have the last laugh when I join the dole queue.

Karl

Similarly a bilateral comparison of public and private sector workers in the same education grouping won’t control for different levels of experience.

Is there a good reason for experience levels in the public sector diverging significantly from society at large?

It strikes me that under those circumstances swingeing income tax rises on less well off younger workers to pay higher wages for older protected workers is deeply unfair. If the public sector is top heavy, perhaps they need to rebalance?

@John
You probably need to read a little wider than your CSO statistics. Keep an eye on the business pages of our newspapers and you will see quite a large number of our private sector businesses struggling. In the last week we have had downbeat news from Glanbia, Grafton, C&C & Britvic. O’Briens Sandwich Bar has gone into administration. Advertising revenue is down, media businesses are struggling, the motor trade is on its knees. Visitor numbers were down 18% in May. Not everybody exports and even in that sector there are vastly different experiences. The idea that the solution to the perceived wage gap between public and private sector workers in the current circumstances is to give big pay rises to the private sector is madness.

The difference is the private sector has to make a profit to survive. It cannot resort to a compliant group of taxpayers to increase its income or indeed borrow as much as it likes. It cannot afford overpaid, overqualified employees in the wrong positions. Non productive, non performing employees are managed out one way or another. Businesses cannot carry passengers.

The public sector seems oblivious to the message going loud and clear to those in the private sector – “We are better educated than you, have more experience than you, work less hours and deserve more pay and we need you to cough up more tax to pay for it. And by the way don’t expect anything like a decent service in response”.

@all

I can’t see where I wrote: “give big pay rises to the private sector”

What I actually wrote was:

“Allow private sector wages to rise at the same rate as in comparable EU countries – allow public sector wages to rise at only half this rate:”

What exactly is the objection to private sector wages in Ireland rising at the same rate as in comparable EU countries? How would private sector wages in Ireland rising at the same rate as in other countries lead to hyper-inflation? ? Do those who want wages in Ireland cut, while rising everywhere else, have an ultimate destination for where they want wages in Ireland to settle at once the cuts have been implemented? Is it to Mediterraenean levels they want wages in Ireland reduced? Or to eastern European levels? Or less? And do they never ask themselves why other countries are not trying to cut wages by the 15% figure quoted by Messrs Cowen and Lenihan recently, even though, as Alan Aheane admitted last week, they are all experiencing far greater falls in exports than Ireland?

As for the problems of Grafton, C&C & Britvic and O’Briens Sandwich Bar, these are mainly due to the collapse in consumer spending in Ireland. Indeed Britvic reported today that their sales in the UK are rising, but still falling sharply in Ireland. How exactly will cutting wages in Ireland help? Might this not be partly due to the fact that wages in the UK are rising, while they are being cut in Ireland? Brown and Darling might not be up to much, but at least they aren’t daft enough to propose 15% wage cuts as the solution to the current problems of the British economy.

Conor and Eoin quibble at my use of the word ‘allow’ and suggest that
‘supply and demand’ should be the sole determinant of whether wages rise or fall. But, unemployment is rising everywhere. Why aren’t economists in other countries advocating massive wage cuts there?

Translated from economics-speak into English, what is really being advocated by some posters here is the following:

“Use the current increase in unemployment and reduced bargaining power for workers to slash the wages of private sector employees to the levels of the poorest countries in the EU. When this predictably leads to a fall in tax receipts, demand that public sector employees follow suit. Then, for good measure, sack lots of the latter so that taxation as a percentage of GDP can be kept at the 25% or so level its currently at”.

@ john,

How do you allow labour costs in Ireland to rise at the same rate as EU countries when a weak labour market & lack of cost competitiveness in Ireland on top of a weak labour market internationally is pushing unit labour inflation down to zero or below.

moreover, if unit labour costs in Ireland an internationally swing into negative territory to say -1 or -2% are you advocating -4% declines in public service unit labour costs? Or is public service labour cost inflation to be prevented from falling below zero.

@jl

There is no evidence of a lack of wage cost competitiveness in Ireland. That’s why both manufacturing output and exports from Ireland have hardly fallen at all in 2009, while they are both down about 20% in nearly every other EU country. Even Alan Ahearne now admits this (see Irish Times for Monday of last week).

There is no evidence that unit wage cost inflation in other EU countries is zero or below. Can you supply any? The most recent figures (published on this site a couple of weeks ago and emanating from one of the employers’ organisations) showed y-o-y wage rises in all other EU countries in the most recent quarter. They ranged from around 4% in EU15 countries to way above that in eastern European countries.

However, I’m glad you introduced the concept of ‘unit wage costs’ rather than just ‘wage costs’, which I had restricted myself to in order to avoid overegging my argument. Because, the reality is that when ‘unit wage costs’ rather than just ‘wage costs’ are used as the yardstick, it is clear that in 2009 Ireland is becoming even more competitive. The reason is that, not only are wages being cut in Ireland, while rising elsewhere, but productivity is falling far less in Ireland than in most other EU countries. This derives from the fact that, because of our more flexible labour market (even Morgan Kelly now agrees that we have a more flexible labour market – see Irish Times of Friday week last), it is much easier to lay off workers here when output falls. As a result, in Ireland the fall in employment almost matches the fall in output (-7.4% y-o-y v -8.5% y-o-y in 2009 Q1), leaving only a tiny fall in productivity (-1% y-o-y in 2009 Q1). In contrast, in most EU countries, because of their much less flexible labour market, the falls in employment have been much less than the falls in output. If memory serves me right, in Germany employment did not fall at all between 2008 Q1 and 2009 Q1, even though GDP output fell by 6.5%. As a result, their unit labour costs are going through the roof, up something like 10% to 12% y-o-y in 2009 Q1. There is a similar pattern in most other EU countries. The scenario you put forward of unit labour costs falling in other EU countries is miles away. They are actually going through the roof as productivity collapses in the recession. Only in Ireland do unit labour costs appear to be falling.

There is a danger (of which I’m as guilty as anyone) of getting bogged down too much in the nitty gritty of figures. So, I’ll repeat the main points of my argument without repeating the detailed figures.

(a) Given our far superior manufacturing and export performance in 2009, Ireland is clearly highly competitive relative to other EU countries.

(b) We can maintain this competitiveness by private sector wages in Ireland rising at the same rate as in other EU countries. Actually, that’s an under-statement. As pointed out above, productivity in Ireland is currently falling by much less than in other EU countries. So, we can actually improve this competitiveness by private sector wages in Ireland rising at the same rate as in other EU countries.

(c) Any gap between private sector wages and public sector wages in Ireland can be eliminated by a combination of (b) and public sector wages rising at half the rate of private sector wages for a number of years.

(d) Doing it this way will do far more to keep purchasing power and consumer spending up than the alternative being proposed here, which consists of first slashing private sector wages and then slashing public sector wages by even more in order to eliminate the private sector/public sector wages gap that will actually have increased as a result of the cuts in private sector wages. These cuts will destroy consumer demand in Ireland. Not just ‘will’, they allready are destroying consumer demand in Ireland.

Does any one disagree with these four points? If so, why?

@karl
public sector workers may have higher levels of education but on its own is that a reason for higher pay.in a competetive private workplace do other factors have more importance?

@John
Cuts in private sector pay have not destroyed consumer demand in Ireland. Most businesses went for a pay freeze rather than cut and some still gave pay rises (lucky them). That means their employees get paid the same as before or more. And as you pointed out yourself in an earlier post we have deflation so the euro in their pocket is worth more. The government pushed up taxes in 2009 which has cut take home pay but many have benefited from lower interest rates.

What we do have is a lot less people at work. Businesses tend to cut numbers not pay. It seems to be only the public sector that hates the idea of cutting numbers. Cutting numbers is more efficient as you point out yourself – it increases productivity. Businesses discover better ways of doing things because they have to, they stop doing things that were not producing anything, shut down loss making sectors and so on. In fact in many ways downturns are necessary to weed out the inefficiencies and get rid of businesses that were never going to work or were just hanging on. It is the Darwinian theory of business survival. Having the same number of people on less money does not increase productivity.

The private sector will sort itself out and find the natural level of pay it can afford. It may be we will see pay rises next year but it won’t be 5%. As long as there is a high level of unemployment it will keep the lid on pay increases. If we get back to full employment private sector wages will rise more quickly. First principles of economics – supply & demand.

The public sector on the other hand does not look like it will sort itself out. It is involved in monopoly services in the main. It needs more money, it increases tax or the price charged. There is no incentive to cut costs or weed out inefficiencies. We need to see the public sector pay bill cut – I believe it should be less jobs. Get rid of the useless quangos, the pointless reports and paperwork, remove people who don’t appear to do anything, remove incompetent ones.

By the way all businesses ultimately rely on consumer spending. I’m trying to think of a single significant Irish business who annouced good results (including those in exports) and I can’t. Run down the full ISEQ and I’m not aware of one increasing profits. The pain had begun over 12 months ago well before talk of pay freezes or cuts or higher taxes.

John, I bet you could make the Titanic sound attractive!

@ John

as you said, you did indeed write as follows: ““Allow private sector wages to rise at the same rate as in comparable EU countries – allow public sector wages to rise at only half this rate:”

As i suggested, you are going to rely on fairly chunky wage-inflation (4-5% pa) to cut this gap over a 10 year period. Well how about we consider the possibility that wage-inflation over the next decade in Ireland, due to previous excess pay increases curbing competitiveness in the non-export private sector (for the sake of argument, i’ll leave the export sector out of this), and combined with average unemployment above 10% (not unreasonable), isn’t actually going to keep going at this 4-5% figure. I’d actually wager that it comes in far closer to 1% and more or less stagnates for the next few years.

In this scenario, how exactly are you going to cut the public-private pay gap without cutting public sector pay? How exactly are you going to close the fiscal gap without cutting public sector expenditure? Your suggestion amounts to nothing more than some ponzi-type scheme where inflation causes higher private sector wages, which in turn will hopefully be able to pay for the still-too-high public sector wages! Sign me up!

For the record, im not, and never have, advocated for massive pay cuts in the private sector. I think wages as they are right now are probably slightly high, but not massively out of whack. As Stuart noted, the private sector differs from the public sector in that it cuts jobs as a means to address a downturn, and generally doesn’t cut wages by all that much. The problem is that the public sector generally does neither. Assuming no one on this is advocating a 10-15% tax increase, the public sector wage bill simply must be reduced by a minimum of 15%, and probably needs to come down by closer to 30%. I’d prefer wage cuts, but if it requires job cuts as well, than so be it.

@Eoin: “while the average public sector worker is apparently far more likely to have a college degree, do we actually need such a highly qualified public sector?”

I think we should be careful here. One of the major cultural problems with the public Sector, ( I speak with most knowledge of the Civil Service) is an inherent anti-intellectualism. This is changing slowly via supports for third level education and more open recruitment but has a long way to go. The auhthoritarian/anti-intellectual culture of the Catholic church and FF has been replicated in the CS and is at the heart of dysfunction within the Public Sector and governance in general. I, for eg believe that third level qualifications should be madatory from HEO level in the CS and equivalent grades in the PS. LEts not use the fiscal crisis to culturally regress the PS.

David,

My personal calculations indicates that – using conservative assumptions – the gross value (NPV) of accruing public sector pension entitlement ranges is at least 20% of annual salary.

Varying the assumptions can generate results in excess of 50%.

My conservative assumptions are:
1. final pension = 50% salary. In many cases it’s 66.7%.
2. public sector worker is male and has a life expectancy at 65 of 17 years (CSO average for males is 16.6 years at that age). Many public sector workers retire earlier, many are female and, being better educated, many will live longer than the average.
3. real annual pay increase over career = 2.0%. I would say that this is low.
4. no pay increase due to promotion.
5. discount factor (to compute NPV) = 1.5% (geometric mean real return on Irish government bonds 1900 – 2000 as per Dimson, Marsh & Staunton).
6. no final lump sum payment assumed.

These assumptions generate annual NPV additions which vary from 21% to 25% of base salary per annum.

If you vary the assumptions you can easily reach much higher values. If you opt for the following assumptions:
1. final pension = 66.7% salary.
2. public sector worker is female and has a life expectancy at 65 of 20 years (=CSO average for females). Many public sector workers retire earlier and, being better educated, many will live longer than the average.
3. real annual pay increase over career = 2.0%. I would say that this is low.
4. 1.7% annual pay increases due to promotion. This would be the equivalent of doubling real starting salary over the course of a 40-year career, a not uncommon event.
5. discount factor (to compute NPV) = 1.5% (geometric mean real return on Irish government bonds 1900 – 2000 as per Dimson, Marsh & Staunton).
6. no final lump sum payment assumed.

With these assumptions, one generates annual NPV additions which vary from 36% to 85% of base salary per annum.

If this second person went into the civil service as an EO and finished up as a PO, they could easily see their salary triple (i.e. enjoy annual salary grade inflation averaging 2.8%) over the course of thier career. That would generates annual NPV addition which vary from 37% to 128% of base salary per annum.

BOTTOM LINE
Until we have an authoritative analysis of public sector pensions, any discussion of public sector pay differentials with the private sector is wholly incomplete.

Maybe an economics doctorate candidate could forego a subject involving Greek hieroglyphics and instead do the – relatively straightforward – number-crunching required for a comprehensive analysis of the benefits of Irish public sector pensions to their recipients and the costs to the rest of us.

@ Vincent

im not at all looking to de-intellectualise the CS. Indeed the opposite, i would sincerely expect, and support, a well-qualified, competent and resourceful CS to be far more able to provide value and quality service to the taxpayer.

However, i take issue with your suggestion that third level qualifications be “mandatory” from HEO level up. That would appear to be requiring qualifications simply for the sake of it, rather than being based on some actual reasoned requirement. The resultant problem with this is that the qualifications are then used to justify the higher wages on offer, as they are in the above analysis of the CS pay levels. My fear would be that this filters down into the whole system and we end up with a situation, purely as a theoretical example, where we have fairly basic admin work being done by a college-degree-holding civil servant, who earns 50k/yr based on the fact that they hold a degree, rather than being based on what their actual job entails or requires. If we take this to extremes, we could end up with a load of PhD’s processing driving test requests in Ballina and earning 100k a year because they are so highly qualified. I’m being somewhat facetious, but you see my point.

What im looking for is people to be employed and paid on the basis of their merits and productivity, rather than on how good their CV looks.

@Eoin.

My point is that there are far too many senior civil servants who have been in the service since 18 and have nothing more than a leaving certificate. That in my view is not good for either the policy making or implementation process. This would not be acceptable for management in the Private sector.
I know that the general point being made is in relation to income differentials between the Public and Private sectors but it should be noted that there is no income premium in the civil service for those with third level qualifications vis a vis their same grade colleagues without.
I repeat my fundamental point that the PS is constrained by an anti-intellectual culture that is at the heart of its dysfunction. We need to be careful not to accentuate it.

@Cormac

I’m not an expert on pensions but I think there is one element you’re missing.

I just took a look at my last payslip. It contains two pension related deductions worth a combined 6% of my gross salary and a new one called “Pension Related Dedn” worth 8.9% of my salary. Like private sector workers, I also pay PRSI for another 5.4% of my salary. As I understand it, this entitles me to a standard old age pension but this is then “integrated” with my public sector pension, i.e. they subtract that amount off my occupational pension.

Taken together, these three contributions add up to 20.3% of my salary. Perhaps these should also be factored into the relevant calculations.

It’s all quite simple really – whether we have a public sector who are academically qualified to a higher level than their ‘equivalents’ in the private sector or the numbers employed are lower than the European average – what we now have in the current and immediate fiscal circumstances is totally unaffordable – borowings of 30m per day to keep the current show on the road – madness!
There is a serious productivity crisis in our public sector and it is not being meaningfully addressed.
When you work with small companies in the private sector at the moment, the stark differencess of the approaches to adjusting to the appalling business climate and the denial of the utterances of public sector leaders and workers is mind-boggling!

@Karl

That sleight of hand with your PRSI being taken entirely as a pension contribution is commonly echoed throughout the public service, but I’m very surprised to hear it from an eminent economist.

PRSI is like any other type insurance, effectively an exercise in the pooling of risk. Though with the important difference that there is no account taken of one’s individual risk in determining the premium paid by an individual. Think of it like car insurance without a no claims bonus or a young-male-driving-a-Honda-Civic loading. And by the way, even if the risk of a public servant finding themselves unemployed is low, it is not zero.

So your PRSI contribution is most certainly not solely a contribution to your state OAP. Rather it is paid into the Social Fund that covers current benefit payments made to private sector workers who find themselves unemployed or former public sector workers on fixed term contracts that haven’t been renewed.

@john
It is mind boggling to say that there is a lack of cost competitiveness in Ireland. Since 1998, hourly labour costs in Ireland have all increased by 68% while that of the Eurozone has increased by 5% in total. Since the end of the 20th Century our current account has moved from broad balance to a deficit of approx 10billion in 2008.
Moreover, labour costs in the EZ are down close on 10% q/q from Q4 and the same is probably true of the traded sector in Ireland. In all likliehood, wage cost inflation will be extremely muted over the coming years. A zero per cent rate of increase should not be ruled out.
Even in your little model with 0 pay increases in the traded sector , the rate of wage inflation in the public sector is going to have to be in negative territory to close this gap between the privilaged and the new under privilaged in the traded sector. Even then on your numbers it would take about 10-15 years to close the gap.

@Stuart, Eoin.

To be precise about it, I never said that private sector wages should rise by 4% to 5% annually. I said: “Allow private sector wages to rise at the same rate as in comparable EU countries”. That’s my criterion: “parity with comparable EU countries”. I did then put in brackets ( ) the Eurostat figure for what annual wage rises in other EU countries actually currently are, which is indeed around 4% to 5%.

If the situation in other EU countries changes, and annual wage rises in those countries fall to 0% or 1%, then, using my yardstick of “allowing private sector wages in Ireland to rise at the same rate”, I’d have to concede that the same should happen here. And, in that eventuality, it would probably be necessary to cut public sector wages to bring them into line with private sector wages.

However, I think this is unlikely. Wages in other EU countries have been rising by around 4% to 5% annually for decades. That’s the average. Some are below, many are above this figure. The following link gives details of annual wage rises in EU countries in the past decade. I don’t see why things should change in the next decade.

http://www.eurofound.europa.eu/eiro/studies/tn0804019s/tn0804019s.htm

In addition, given the usual productivity increases of 2% to 3% in most EU countries, annual wage rises of 4% to 5% are consistent with the ECB target of 2% annual inflation. If annual wage rises in the EU as a whole fell to 0% or 1% long-term (as Eoin hints), there would probably be negative price inflation long-term in EU countries, and its very unlikely the ECB would allow this. In fact, I’d say a higher rate of both wage and price inflation is far more likely in the next few years not only in the EU, but in the UK and US, because of the mega-billions they are printing to get the global economy out of recession.

So, I think that my working assumption that wage rises in other EU countries will be in the region of 4% to 5% annually in coming years is fairly sound. That leaves Ireland! If it is being suggested that, because of unemployment, wage rises here will only amount to 0% or 1% annually, even if 4% to 5% annually in other EU countries, then this would be totally unacceptable. It would be up to the Trade Unions to prevent it. For the record, I would be equally opposed to wage rises in Ireland significantly exceeding those in other EU countries. My suggestion that wage rises in Ireland simply match those in other EU counties is perfectly sound and sensible and, on the reasonable assumption that wage rises in those other EU countries continue at their recent rates of 4% to 5% annually, this would allow ample scope for private sector and public sector wages in Ireland to be brought into line.

I notice a change in emphasis from those advocating massive wage cuts in Ireland. Until recently, we were being told that they were required because exporting companies had lost competitiveness, that exports had collapsed and that we could no longer export our way out of a paper bag. This is what we were told by the two Brians (Cowen and Lenihan), Alan Ahearne, and the two Fitzgeralds (Garret and John). But, Ireland’s export performance in 2009 has destroyed that argument. So, now we are being told that its non-exporting companies that most need the wage cuts.

In fairness, Stuart and Eoin are not the ones I have most in mind when I attack those advocating massive wage cuts. Stuart seems content with a pay freeze this year and a small rise next year. Eoin concedes that private sector wages in Ireland currently are “not massively out of whack”. Both these points of view are quite reasonable when compared with those of the two Brians, Alan Ahearne, and the two Fitzgeralds, all of whom have called for 15% pay cuts right across the whole economy (even when, as I pointed out above, they are rising by 4% to 5% in other EU countries).

Even the mere threats of such massive cuts in wages, let alone their implementation, are having a very damaging effect on consumer confidence and consumer spending in Ireland. As Davy point out in their Morning Bulletin today, one of the reasons for the collapse in consumer spending in Ireland is the unprecedented increase in the Savings Ratio. People are afraid to spend, and are simply saving instead. Part of the reason is down to unemployment, but its not the sole reason. Another part is due to people being told 24/7 by all the power-that-be that everyone must accept massive pay cuts in order to restore competitiveness when, as the manufacturing and export figures show, we are perfectly competitive at current pay rates. Quite naturally, if everyone is told by government ministers and sundry economists that they must accept a 15% pay cut in the coming months, they’ll probably immediately cut their spending to bring it into line with their perceived future and reduced income. This seems to be part of the reason for the increase in savings and the collapse in spending. Whatever about public sector wages, which is a separate issue, the two Brians, Alan Ahearne, and the two Fitzgeralds should now admit that they got it wrong about Ireland’s competitiveness and that there is no necessity for across-the-whole-economy pay cuts, although some individual companies might require them.

@jl

Your figures are bonkers. Supply a link to the source for them, the same as I’ve supplied a link to my source.

@jl again

And I mean a link to a true source like Eurostat or the CSO, not to some claim made by the IEA, IBEC or ISME.

@Prop Joe

No sleight of hand intended. My point was that my public sector pension is integrated with the PRSI system.

You’re right though that counting the PRSI payment as though it is the contribution to the state pension isn’t quite right, since there are other types of social insurance (though the idea that we have a separate social insurance fund is a bit of a myth anyway). However, it’s not clear which direction this observation goes in. The question here is what would be the cost to workers of putting aside enough money to make up for the loss of the state pension—it might be less than the PRSI contribution, it might be more, it would depend on the person’s income.

@John

Your argument in favour of parity of wage increases with comparable EU countries is undermined by the fact that during the boom wages here increased much faster than the European average.

If we only now revert to the European average, then the previous increases above-the-odds are permanently burned into our cost base.

So effectively you appear to consider the European average as a floor for Irish increases … i.e. we may well significantly exceed the average for a sustained period, but when the hard-times roll, we cannot countenance falling below the average.

Another way to look at it would be to admit to ourselves that we over-shot average wage growth by a significant margin and we need to give up those “gains” as they were based primarily on credit-feulled inflation. Once the “froth” of the boom has blown away, we can then revert to sustainable wage growth somewhere around the European average, based on real economic activity as opposed to a debt-driven house of cards.

@John

sorry my IT skills are poor but my source is Eurostat and the time series is Eurozone Labour Cost Index Work day adjusted -showing the development of hourly labour costs incurred by emplyers. It is a quarterly index which includes wages, salaries and other labour costs.

@Proposition Joe

Might I suggest that you read the Deloitte Remuneration Survey for 2007. I have provided a link below.

Even at the height of the boom in 2007, total employment costs in Ireland (average of private and public) were well below the EU15 average. They have undoubtedly come down since. They are certainly higher than in the much poorer Mediterraenean and eastern European countries. But, among the 12 or so countries of northern Europe that have similar GNI to Ireland, they are among the lowest, far below levels in Germany, France, Belgium, Sweden, Finland and Denmark.

http://www.finfacts.ie/biz10/Rumuneration2008.pdf

@jl

When I typed “Eurozone Labour Cost Index Work day adjusted” into google, I got this link.

http://sdw.ecb.europa.eu/browse.do?node=2120787

I think you have misinterpreted the figures. And they are in fact broadly in line with what I claimed. However, I’m obviously biased. Given that this is an economics website, there is bound to be someone else with statistical expertise and less biased than me who can confirm that.

From what I can see, the figures in most of the columns are the y-o-y increases, not the total increase since 1998. And they are mostly in the range 3%, 4%, 5%. So, the 5% increase (actually 4.4%) you say is the increase since 1998 is actually the increase between 2008 Q1 and 2009Q1.

Regarding the big fall of 10% q-o-q in 2009 Q1 which you detected, these are in the columns where it specifically says ‘not seasonally-adjusted’. There is is similar fall shown in Q1 of every year, followed by an equally large rise in Q2 of evey year, then a small fall in Q3 and a bigger rise in Q4, leaving the y-o-y increase at around 4%. So, the 10% fall q-o-q in 2009 Q1 happens every year and is clearly something to do with seasonal employment and meaningless for analysing the long-term trend. The quarterly y-o-y increases, for which seasonal adjustment is irrelevant, are as I mentioned above.

If anyone with staistical expertise thinks my analysis of the figures is unfair, feel free to point out my errors.

@ John

please note that when i say that current private sector wages are “not out of whack”, i also clarified it with “as they are right now “, by which i mean to include the adjustment that they have already taken this year, which i believe was badly needed. This would refer to either the outright pay cuts taken by some workers, as well as the wage freeze taken by an awful lot more. Moreover, i believe that these actions by the private sector, in the midst of ballooning unemployment, will also see the employers under absolutely zero pressure to raise wages by any significant amount for the next couple of years at a minimum. Most people will view keeping their job at the same pay level as a very acceptable outcome from their year end review.

However, in addition to this, what is probably key to the problem (in my view) with John’s plan, regardless of the merits of closing a pay gap as a policy measure rather than as a result of economic forces, is that John assumes we can let the combination of inflation and productivity do the job for us, and that we can assume rather than hope for these factors to be prominent in the coming years.

All i can say that if you look back at the banking crisises in Sweden, Finland and Japan in the 1990’s, all of which have stark similarities to us, inflation collapsed in their aftermath. In Japan inflation is still anaemic almost 15 years after the crisis first hit, and they’ve basically printed and borrowed government debt almost non-stop over that period. And we don’t even have the option of devaluing our currencies like these countries did. Also to consider is that the ECB hasn’t even suggested its willing to consider printing cash to inflate our way out of this problem.

To assume inflation runs at historical averages, in IRELAND, when so much economic activity revolved around the property, construction and financial sectors, over the next 5 years, is based more in hope rather than on reasoned argument.

@ John

actually, the more and more i think about this, the more nonsensical your theory/plan is. Basically its win-win-win for the public sector employee:

-they start out with the positive pay gap in their favour
-the private sector suffers pay freezes and jobs losses
-the public sectory sees no jobs losses
-if inflation goes up, they get at least some benefit of it
-if inflation goes down, then nothing happens
-we assume there’s constant and never ending productivity gains
-we base upward only pay reviews on the basis of how the rest of the EU and the Irish export sector get on, regardless of whats actually happening here in the Irish domestic economy.
-all the while there’s a massive fiscal deficit being run up to pay the public sector pay bill, which the private sector is forced to fund (on account of most employees being private sector)

In any of your suggestions and scenario’s, is there even a minor downside to the public sector employee???

@John

“Given our far superior manufacturing and export performance in 2009,
Ireland is clearly highly competitive relative to other EU countries.”

What is striking about the US-owned pharmaceutical/medical devices sector is that it is responsible for almost all the increase in industrial output while most other sectors have had double digit losses.

However, thus far, the increase in pharma has had little impact on employment.

Enterprise Ireland said today that client companies grew exports by 3% in 2008.

The food sector accounting for 57% of exports from the indigenous sector, had a 1% growth.

As about 50% of exports go to the UK, the drop in sterling had an impact on performance but companies like Glanbia and Kerry had bumper years in 2008 because of the food commodity boom, which should have provided some offset to lost business in the UK.

Apart from the issue of wages, the total cost of doing business e.g rents and high indirect taxes (the price of a new car in Ireland is 30% above the Eurozone average) , would have made it difficult to sell to the likes of Aldi and Lidl for the German market.

During the boom, I supported the phased introduction of a mandatory pension in the private sector.

The message for private sector workers from this Government, is that without the force of collective power, they are taken for fools.

Could the same be said of public sector workers and farmers?

e.g. benchmarking; the surrender in 2001 to the IFA demands for bonanza compensation for land used for roadbuilding – – many of the beneficiaries were millionaires on EU public welfare!

The Minister for Finance Brian Lenihan said last February that the total cost of a State pension for an Irish public sector worker, hired after 2004, was 26.1 per cent of pay, and the employee paid on average 4.8 per cent of the cost, before the introduction of the Government’s controversial pension levy.

CSO data here shows comparisons between clerical staff in industry and the Electricity/Bord Gais sector.

http://www.cso.ie/releasespublications/documents/earnings/2008/earnlabcosts_q32008.pdf

In addition to the disparity in earnings and the fact the majority of private sector workers have no occupational pension, in the State entreprises, shares have been given to staff.

Eurozone unit labour costs 1999-2007

http://www.ecb.int/press/key/date/2008/html/sp080317.en.html

I don’t believe any well run company would wish to cut wages unless it was forced by market conditions.

My own view is that companies should decide on a lean orgainsation for the crisis, rather than incrementally cut which is a death knell for morale. For the remaining staff, the company could cut the basic but should offer a credible incentive system to fight for new business.

@ the risk of getting bogged down in stats here are the index figures

end 1998 end 2008 % change
Ireland 89.8 151.2 +68.3%
EZ 100.8 106.6 +5.7%

As other contributors have referenced the EZ labour market has seen precious little labour cost inflation over a decade due to high unemployment and competitiveness pressures from an appreciating currency…sound familiar.

In that context, if that is what lies ahead of us, then there is no scope for the closure in the pay differential between public and private wages in the absence of pay or allowance cuts. This adjustment is so neccessary on i) grounds of social solidarity and ii) because the deficit is unfundable in the absence of quantitative easing.

Moreover, I still think you contention that we retained external competitiveness at the end of 2008 is problematic given the deterioration of the current a/c balance from 0% to near -5% by end 2008.

@John

“But, among the 12 or so countries of northern Europe that have similar GNI to Ireland, they are among the lowest”

The point is that our competitive position relative to the those 12 countries disimproved significantly during the boom for no other good than we decided to pay ourselves more, because we considered ourselves worth it.

Our infrastructure continues to lag behind those countries, in fact that infrastructural deficit has widened if anything due to our pathetic level of broad-band penetration.

Our enterprise capability has improved little over the period and we are still over-reliant on FDI and under-performing at indigenous innovation.

So there was no good reason for Irish wages to have caught up on the richer European countries during the period 2002-2008, other than our unsustainable credit-based construction and consumption boom. To try to hang on to those gains now, while hitching our wagon back onto average European wage inflation, is completely non-sensical.

Either we track European average wage growth or we don’t. Realistically, we can’t exceed it for years for no sane economic reason, but then consider it a floor going forward when it suits us.

Note that if our recent wage inflation was based on real, sustainable economic activity, as it was in the period 1997-2001, then I’d tend to agree with you. But the growth that happened since 2002 was built on sand. Let it go, it never really existed in the first place.

@jl

You are making some figures up.

Tell me where on your source are all the figures you quote? Which column?

I challenge you to do that. If you don’t, it will be clear you made some up.

Here’s the link to your source again to make it easy for you.

http://sdw.ecb.europa.eu/browse.do?node=2120787

Two columns do indeed give a figure of 106.6 for end 2008 (2008 Q4).

But, both only go back to 2000 Q1. They contain no figure for end 1998.

For the record, the figures they do give for EZ are:

2000 Q1 73.2
2009 Q1 96.2

an increase 31.4% in 9 years – not 5.7% in 10 years.

The source contains no figures for Ireland.

@ Joe

The figures I quote are from the Bloomberg economic database. The original data source is Eurostat. The Irish figures are from the same source.
I note also these data exclude agriculture, fishing and government.
I did not make them up.
I am interested to note your approach is not to debate the data but to challenge the integrity of the opposition.
moreover, in all the cut and thrust you have yet to answer the substantive questions. Is the public sector overpaid and what should we do about it other than hoping that incomes in the private sector increase at 4-5% and further hoping that we can keep inflation in the sheltered sector below that for a generation.
A respone to eoin’s post above would be appreciated.

@ Karl.

My analysis concerned only the gross benefit of the public sector pension. Your point is well made. But it concerns the net benefit (or cost) of public sector pensions which I didn’t address.

My key point remains. We are discussing public/private pay differentials and yet don’t have an authoritative analysis of the benefits of public sector pensions (gross or net) – that is a pretty large gap in our discussion.

Does anyone have suggestions to fill that gap?

“show that public sector workers are more than twice as likely to have a third level degree, have more years of work experience, and are more than four times more likely to be classified as having a professional occupation. So this issue definitely arises when making these comparisons.”

If it is difficult to fire workers, like in the government, they stay on accumulating senoirity.

The government can decide to hire over qualified people for jobs. While the private sector tries to use the least qualified persons that can get a job done.

Creating restrictive work rules like designating only certain professionals can do certain jobs is something a government can do more easily than a private sector business, where job categories need to make more sense.

Like all differing income streams to compare them you need to adjust for risk. The risk profiles of government workers seem to be very different from private sector workers and hard to quantify. Public sector income streams from the US state of California and the country of Iceland may not be secure, or may be rock solid, who knows. In the last days of the Soviet Union private sector employment was likely much better than public sector employment.

I imagine timing of payments is also important if a present value calculation is to be made.

Who needs multiple regression theories when we are borrowing 65 million Euro every 24 hours and pump 31 million of this money into paying immoral and bloated public service salaries!

The term Public servants has become somewhat of a misnomer as most “public servants” and their unions are blatantly serving their own vested interests first and foremost and then finally, if they really must, the public last.

We have an apartheid system opening up whereby the “public servants” are telling the rest of us that we had better borrow to pay their bloated wages and pensions and jobs for life agreements. Otherwise, if we don’t accept this Faustian pact they will lay down their pens and bring the country to an even bigger standstill that it is at and then the “boomier” times will really be at an end! Simultaneously, those in the private sector have to accept higher unemployment and rocketing taxes and banish the notion that there will be any jobs there for at least a decade for our children.

This borrowing for current consumption is crass indefensible economics and governance and only idiots like Bertie and Brian Cowen believe that we can borrow our way to a “boomier” economy sometime in 2015 or beyond. Who in God’s name would prefer to hide behind mathematical equations when the truth is staring them in the face. What economy pays out 180,000 Euro per day to health “professionals” to stand around and do no work. Yes! no work! At the same time denying cervical cancer vaccinations and vital operations to the nations children at Crumlin hospital and Cowen says the minister is doing a fine job.

The answer to my rhetorical question is, only the very depraved of individuals and only those who refuse to accept the prospect of national bankruptcy staring them in the face.

The system of budgeting in this country is simply criminal it is one where politiciansgive away mega pensions and other privileges to public sector unions as long as these commitments have to be met down the road on somebody else’s watch. Tomorrow Mr. McCarthy will let some light shine on the public sector and we will begin to see where some of the waste is. It is all very fine for Cowen to write whatever cheques are necessary for the banks when he is using somebody else’s cheque book. Maybe he should bite his own bullet and go before he is ejected from office.

Completely agree with Robert Browne!
Am fascinated by the previous contributions arguing about the validity of statistics etc.Talk about fiddling while Rome burns!
IMF getting closer by the day!

@Robert Browne and vincent nordell

You really should try broadening your reading beyond the Sunday Independent.

Sorry guys. I think we should wrap this one up now as it’s descending into name-calling and cliches. Plenty of opportunities to discuss public sector waste over at the brand new An Board Snip thread.

the fact that 12 unpaid leave can be delivered without lessening services means there is a surplus of public servents
mr mcloone has spilled the beans
this means a far greater saving can be made on top of reducing all there saleries in line with the average in europe
A SAVING OF 20% ACROSS THE BOARD IS IN ORDER
re benchmark them and do away with these obscene pensions
funded by the taxpayer
i am now waiting 15 weeks for my first dole payment living on charity of friends and family
every week i telephone them to be treated in a manner like dirt
constantly told that they are streached to the limit
i had to fill in a declaration of habitation
all the questions were aimed towards non nationals
i am irish and had to submit to a humiliating questionaire that was not even relevent to an irish born man having to prove entitlement to assistance from the country of his birth
we should all march to point out to the civil service that they are out of order and serve us and we the citizens who employ them now say no more free ride on the back of the wealth we created and the government including them wasted

People forget to mention they may not contribute completely to the state pensions themselves. As somebody mention it depends on your wages and number of contribution. Until recently you could get a state pension for only fiver years contributions, this was increased to ten, probably to keep every single emigrant from claiming it. But that doesnt mean 10 years accrue to much in terms of funding and on top of that you have a dependant you get extra pension. In the public service its more proportional to the years you work, forty years half the salary, twenty years half of the half of salary, no extra for your spouse. So yes if you are a highly paid civil servant you get a great pension if your wages are low your pension is not very different to the state pension but in return for more years. Apart of that people who havent even contribute those ten years can get a no contributory pension.
So should everybody fund their pensions completely
Just another point the state deficit doesnt only include the public sector. It includes social wealfare, banks capitalitation, subvention to farms and private companies, building of roads and infrastructure, grants, goverment spending, international aid, etcetera.
We like to compare ourselves with other european countries in terms of welfare, services, and wages but we dont like to pay their taxes, thats probably where our deficit is.

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