The 370,000 figure that is bandied about includes:

52,000 employees of semi-state companies of which 41,000 work for commercial semi-state companies
37,000 who work for local authorities

You may think 370,000 is ‘far above’ what is ‘healthy’ but that’s just a statement about your ideological assumptions. In fact, Ireland is and always has been on the low side in international comparisons of public sector employment as a percentage of the workforce.

The real problem is that we are operating in a vacumn of information. Only those on the inside know or have a better idea of how things work paygrades etc. For the general public we are left with scraps that slip through for example TD salaries & expenses.( They are after all only 250 people out of 370,000)

This is a core issue for the future of the irish economy. It needs to be addressed and the starting point has to be a removal of official secrets act regarding basic information on what goes on in the public service. This was a major problem with benchmarking 1.

We all need good public services. The question is how can that be achieved particularly when the finances that were available arenow seriously deficient.

Key to this has to be innovation, change, increases in productivity for less pay.

BTW with regard to the OECD reference this was actually broadcast on the radio, so if you want to check with either RTE radio 1 or Newstalk they might have a clip of it.

part of the problem is the union movements influence on policy, they don’t have a national mandate (while the people they influence do) and they have done a great job in organising what is - in effect- a cartel type situation of labour pricing, well done and great to be part of if you are a beneficiary but not so great if you are not because when situations change the assumed costs are totally embedded and you can’t remove them as quickly as you created them.

there is constant talk of the need to have tighter control over banks, and NAMA is THE debate, but a few years of our current structural deficit (largely public sector labour cost driven) will be just as pricey, perhaps this topic will become the new front line?

sorry, no offence intended. My point was that you can’t compare what is posted on a blog site like this with what senior trade union members are saying on live radio and to newspapers. I agree with most of what you posted, but even if Ernie didn’t, its a hollow comparisson to make.

All that’s taking place on this site is a debate. Blair Horan will i assume be taking actual negotiation positions on behalf of his trade union members, and we the taxpayer will be left with whatever bill there is left to pay. His current mantra is “no way” in terms of pay cuts, and then he backs this up with rants like the one John heard on the radio earlier. It rather scary that someone like this still doesn’t ‘get’ what going on in this country. His answer (towards the end of the Newstalk link below) is natural wastage, no wage cuts, big tax hikes, and an extremely long adjustment process. Basically we’re gonna have to be taxed more, borrow more and spend the next 10 years paying for our wonderful public service. Super. This is the standard, MODERATE, trade union party line.

http://83.138.170.50/podcasts/audio/Podcast_Horan_McCathy.mp3

My criticism of Blair Horan in no way implies that Vinny is correct! My general point is the hostility/ignorance regarding Economics coming from prominent trades unionists. Their democratic credentials are a political matter I’d rather not go into on this site: it’s their lack of economic nous which disturbs me.

first off, Vinny is a random poster, where as Blair Horan will no doubt have a rather front row seat for much of our social partnership and public service negotiations. We have a right to be rather more critical of Blair Horan as a result.

secondly, we again bring it all back to…”That Ireland has very high taxes and that it can’t possibly take any more taxation.” This isn’t about Ireland’s ability to withstand a significant hike in taxes, its about whether Ireland wants to withstand a significant hike in taxes.

As previously asked, will you, your public sector colleagues, and the Public Sector Trade Unions accept the democratic will of the people if they choose to vote in a government that pledges to keep taxes relatively low and to cut public sector pay & numbers significantly?

During the boom we had so much one-off excess cash that questions surrounding what and how much we should be spending in the public service could be ignored and put off for another day. Well that day has arrived, and ultimately it’s not up to the Trade Unions to decide how the taxpayers money should be spent.

No point having a debate then, since any of the grounds for the debate are deemd to be false at the outset. Moreover, it is an act of faith by the public sector that any data that casts doubt on their case is flawed while the data that supports their case appears to be a state secret.

The issue boils down to what the hard pressed above median but below super rich taxpayer with a foot in the private sector is willing to pay for his public sector counterpart. I would say that on the basis of the opionion polls that it is not a lot more.

Then the question defaults to what additional credit the bond market is willing to extend and again the answer is not a lot more.

The reality is that there is no appetite to increase taxes on the traded sector of the economy to further enrichen the lifestyles of the privalaged minority in the public sector. Moreover, there is no more credit. Case closed.

OK, fair enough. And do you think that the other side is reasonable (for example “vinny’s” post above or the views put forth every day in the Independent newspapers?

The Irish people have been led to believe:

1) That their public service is ‘the worst in the developed world’;
2) That their public service is the best paid in the developed world;
3) That Ireland pays wildly disproportionate percentages of GNI on its public service;
4) That Ireland has very high taxes and that it can’t possibly take any more taxation.

Every one of these beliefs is demonstrably false.

Want to have a reasonable debate? I’m all for it. But the starting point cannot be propaganda.

Mr Horan appears to be to Economics what Creationism is to the natural sciences. At least he omitted “neo-liberalism” from his generous effusion of terminology. Very difficult to have a reasonable discussion in these circummstances.

You know well that a gross 7.5% pension levy doesn’t translate into a 7.5% reduction in the net public sector pay bill. Tax relief on the levy itself and the tax foregone on lost consumption would cut that saving in half, possibly more.

Also the cost of current pensions and retirement gratuities were unchanged by the levy. Plus, as is rarely mentioned by the unions, pay-scale increments of 3%-5% were actually paid to the majority of public servants during the past year.

So effect of the levy has been merely to contain the growth in PS payroll, there’s been very little (if any) reduction in 2009.

Now on your logic of “doing your bit” in the public service, should any reductions in public sector pay be (a) matched or (b) exceeded by cuts in social welfare rates? Or, heaven forfend, can you (c) contenance the softening of SW cuts with progressively larger cuts in public sector pay?

can we reduce down the pension liabilities (including lump sum payments) of the public sector by the same measure as well? Including those already retired? Lets put it another way - would you swap the 7.5% pension levy for a 7.5% cut in gross pay? If not, why not? The answer is fairly obvious.

Great news! Well if that’s the case then, at least on salaries we’ve nearly made all the sacrifices necessary. Just another 1.5% in addition to the 7.5% already cut and PS employees will have done their bit. Sounds like a deal.

Public spending may not have matched GNI growth exactly, but your own figures show it tracking within 75% during 1995-2005 (and I’d venture that growth in public spending far out-stripped that of the economy in the period 2004-2008).

Now if it tracked the downturn in a similar proportion, we’d be looking at a decline in public spending of over 9% (assuming a peak-to-trough decline in GNI of 12%).

Look, I deplore any of that sort of horsetrading for modernisation that goes on. But you all seem to think that that’s the rule rather than the exception. Do you have any evidence that it’s not?

As for me ‘contradicting myself’: nonsense. I was refuting Eoin’s contention that somehow the public sector expenditure kept pace with growth in the economy. It did not. His and your argument seems to be that because it kept pace then it should keep pace now. I’ve shown that it did not keep pace then even though, as the OECD points out, Ireland had a lot of catching up to do. But the way your arguments seem to work is that public expenditure as a percentage of GDP (or GNI) should decrease during the boom years and also decrease during the lean years. Which is to say: it should always decrease, no matter what the circumstances and no matter how woefully under-resourced those public services are. That’s nothing but an expression of pure ideology, one that, I daresay, has served us exceedingly poorly these last years.

Finally, the pensions levy most certainly is a pay cut no matter how many times you insist that it is not. If it were not a pay cut, then those in the PS who do not have pensions would be exempt. They are not exempt. Therefore it’s a pay cut. QED

Your understanding of how real economy works is, alas, imperfect. The (creative?) destruction of a bust is but one aspect to the adaptability of which I speak. Businesses fail _all_ the time, even at the height of a boom. Competition intensifies, technology advances, tastes change. All these forces require that successful companies constantly adapt, and for this the agility of their employees is crucial.

Why would these employees show agility when ‘twould surely be easier for them to kick back and insist that everything remains the same? Because they know that their job security, future pay rises, stock option value and even their ability to find another job if necessary are all tightly coupled with the success or failure of their employer. Their interests are _aligned_ with those of their employer.

The problem is that in the public sector, no such alignment of interests exist. New technology is not embraced, rather it is resisted … even when that technology can make the job easier, its introduction is blocked as leverage in other unrelated negotiations on pay and promotions. Similarly modern working practices are not welcomed on the basis that the service will become better, rather such reforms are held up to extort a pay-off. The indirect pay-off of a successful enterprise benefiting all stakeholders just doesn’t arise in the public service.

On the question of the cyclicality of the public service, you contradict yourself with your argument about public spending “keeping pace” with the growth in GDP during the boom. If you expect public spending (and public service wages) to keep pace during the boom, surely that is cyclical behaviour? And surely also, such spending should keep pace with the downward cycle? Unless of coure you’re invoking the magical upward-only logic of benchmarking?

And no matter how many times you say the pension levy is a pay cut, the fact remains that it is not. If it were, your 150% of final salary in tax-free gratuity would be reduced pro-rata. As would your 50% of final salary in guaranteed pension.

at least we agree on the real issue at hand.

“the obvious way to right them is to increase taxes to something approaching those of our European partners.”

Taxes weren’t cut by accident. They were the cornerstone of almost all political parties manifestoes at every election over the last 10-15 years. The public voted for these policies, and by fairly large margins. Sinn Fein even started getting on the bandwagon the last time out.

As such, it could be argued that there is already a huge democratic mandate for the current government to maintain these low tax policies and to close the fiscal deficit via expenditure cuts. However, situations change and the current government may not have that mandate anymore. As such, were an election to be held and a low-tax-low-expenditure government to formed in its aftermath, would you then accept the democratic will to reduce public sector expenditure???

I believe you’ll find that public sector wages did not keep up with either growth in GDP or growth in GNP over at least much of the period in question. Allow me to quote the OECD report on Ireland’s Public Service. Their dates don’t exactly correspond to yours but aren’t far off:

Despite major spending increases over the past 10 years, expenditures in the public domain, i.e. services funded by government and provided by government or the private sector, are small as a percentage of total GDP, compared to other OECD countries. This is because Ireland has traditionally had a small public sector, and so recent increases have been part of a process of “catching up” to more typical OECD levels. For example, amongst 25 OECD countries for which data is available, Ireland ranked third to bottom in terms of public expenditure as a share of GDP in 2005 with 34.4%, above Korea (28.9%) and Mexico (19.5%) (Table 2.2), even when factoring in infrastructure investment.

“Much of public spending in Ireland is allocated to social protection and both the health and education sectors. The public functions experiencing the highest real average annual increase in expenditure over the 1995-2005 period were environment protection (10.34%) and health (9.21%). Given Ireland’s strong economic performance, however, public expenditure as a percentage of both GDP and GNI has actually decreased over the past 10 years. Ireland’s real average annual growth rate in public expenditure between 1995 and 2005 was 5.1%, and was therefore actually growing slower than both GDP at 7.5% and GNI at 6.6%. Although spending on education increased annually on average by 5.52% between 1995 and 2005, for example, its relative share of GDP decreased from respectively 5% to 4.3% of GDP and from 5.7% to 5.1% of GNI over the same period.”

That may not correspond to what you’ve read in the Sunday Independent but it does correspond to my memory of what actually happened. I remember several national wage agreements where what was given to workers did not keep pace with either growth in GDP or with overall inflation but where the unions were bought off with tax cuts to make up the shortfall. So, contrary to the myths put forward by IBEC and other interested parties, it was not the case that Ireland went on some sort of wild spending spree on the public sector. Rather what happened was that Ireland increased spending on the public sector to bring it closer to OECD averages while slashing tax rates to some of the lowest in the developed world. If things went askew during those years, the obvious way to right them is to increase taxes to something approaching those of our European partners.

i’m sorry, but why does the “the public sector is non-cyclical” argument only get trotted out in a downturn? Where the hell was this argument when the economy, your wages and your pension were growing by 5% per year between 1997-2007? Why did the public sector have to keep up with the private sector then, but they do not have to suffer the same consequences of ‘adaptability’ now?

I note with interest that you think that a falsehood becomes true when it is repeated on RTE.

@Proposition Joe

You wrote: The trials of you and your colleagues are not really comparable to what’s going on out in the jungle.

For a start, you can *choose* to pick up the slack, or choose not to, with no real sanction in the latter case. For every conscientious public servant like your good self, you must know that there are many who do only the absolute minimum unless there’s a promotion or pay rise in the offing.

So, let me get this straight: your claim that our situation isn’t comparable is based on the assumption that because those in the public service could slack off, therefore they must be slacking off? And how have you come to that conclusion? Because they have permanent jobs? You think that the only thing that motivates anyone to do a job is the threat of losing it?

It’s an interesting view, one not borne out by my experience.

Now, you also seem to assume that the public sector needs to be ‘adaptable’ in the way that the private sector does. This is twaddle. The private sector needs to be adaptable in that way because the economy is cyclical and businesses have good years and bad. But the public sector, by definition, serves the public: protects them, heals them, teaches them, etc. There’s very little that’s cyclical about this.

Now maybe you think that what we need to ‘adapt’ to is the criminally incompetent mismanagement of taxation and regulatory policy that resulted in a catastrophic shortfall in tax receipts, sick people and children be damned. That’s not a view I share.

As for the pensions levy, it really is the gift that keeps on giving for the Brendan O’Connors and Eoghan Harrises of this world. It allows all of you both to cut the pay (drastically) of the entire public service and to claim, in almost the same breath, that you haven’t cut their pay at all! Which, leaves open the possibility of really cutting it later.

Let the record show, however, that the government’s original idea was to cut the pay of the public sector across the board. They only came up with the idea of the special surtax on those serving the public when it was pointed out that what they were proposing to do would likely not withstand a legal challenge.

The fact is, the pensions levy is a pay cut by another name, no matter what the gullible can be convinced of. If they’d called it a ‘peace levy’ you’d be telling us that it wasn’t a pay cut but just our contribution to world peace and sure we all have to make sacrifices for peace.

Sure, cut away! Mismanagement is rife in Ireland. Poor management education in the public service means colossal waste. Graft means even more. But do not try to find it.

Cut those who do the work instead!

Cos guess who will be doing the cutting? Hint: not Colm McCutty! Then there is public outcry ….. Cut the “top” first. Junior management are about the only ones competent if under 40.

as i said way up above, if we take wage cuts/job losses/significant changes in working conditions off the table, as Ernie seems to be suggesting, there is no carrot & stick equation to make the public sector become more productive. We are left with the status quo of the private sector worker subsidising the public sector worker.

Perfectly correct, but bad government becomes an open conspiracy and will resist all attempts at change!!!!

Most functions of government are unnecessary. More so now we are about to become part of a federal Europe!

Social welfare. Why so many petty rules that require petty buros? Abolish and instigate a positive income tax as recommended elsewhere. Everyone gets money!!! No tax credit as the money IS your credit! Work? Sure! Don’t tell us, we don’t care. If you are employed we will police them. Anything else you can keep. Entrepreneurial spirit will flourish! Small companies will disappear. Large companies will have to be more competitive as their small opposition are leaner and have one less overhead! Lots of public service vacancies! Sorry, redundancies. Much loss of graft replaced by hard graft!
Everyones a winner!

Agriculture. Abolish. If farmers can’t be bothered to learn how to farm, their competitors will do well.

Gardai, Customs and Defence. Amalgamate!

Sack two of the three Revenue Commissioners. There can be only one! The DIRT enquiry, (twist the knife!) said that staff need to answer to the minister now. Therefore there is no need for the supposedly independent Rev Commrs!
HAHAHA!

However, there is actually a history of public service pay declining!!!
I know from somewhere, that pay went down in the last depression. No more than 10% I think, but with deflation, public service pay can indeed decline and they will still be “overpaid”. Reducing the pay of the low earning will affect the real economy, the one that excludes FIRE jobs etc. Soon, we will have very few bank jobs too!
Modern, Smart, innovative Ireland: a dynamic economy, reducing jobs, thousands at a time!