ISME is not credible and one can only presume their contributions are deliberately propagandist.

The issue of public service pay is one where assertions can be supported by selected statistics and much of what is argued extrapolates from particular cases to a generalised conclusion which is misleading. The extent of the PS premium, how much this was out of line with other comparable countries and how it affects different categories of PS employees is contestable. This is a very complex area and although the available evidence suggests a problem existed here in the recent past, it is not so definite to allow the certainty of conclusion that organisations like ISME put forward. But then they have an agenda.

Incidentally, listening to the radio since the budget it is striking that many commentators seemed unaware that the PS cuts would not be applied to CIE, the ESB etc. No doubt they will now be targeted.

One thing that very much needs to be said is that the PS cuts mark a profound change in the contract between the PS and the government as is marked by the threat of industrial action by the Gardai, surely a development that must concern all interested in the wellbeing of democracy. So much so that it will take some time before public servants can get their collective minds around the new paradigm. Strikes and working to rule are the weapons of the last era, just as the cavalry became redundant during WW1 because of new weaponry. The PS unions will probably take some time to react and it would be a mistake to confuse a lack of immediate turmoil with acceptance.

The outcome of the search by public servants for a new way of asserting real concerns might be sullen and long term trench warfare. Alternatively, perhaps some new weapon will emerge. It is not possible to predict just now what will happen other than to say that if a sense of fairness is not established, Ireland will loose out for sure.

A prosperous society needs quality public services, a lot of which are not as amenable to business management practices as many a businessmen imagines. We need reform of our public services for sure but this will come about best if a process of change is accepted by public servants. A confrontational approach supported by nostrums based on the selective use of contested statistics will make things more difficult.

What will exacerbate the situation is the kind of contribution to the discourse made by ISME to which Karl Whelan has wisely drawn our attention.

Well, thanks for the compliment!

Anyway “But tell me, how is public discussion of our fiscal problems improved by pretending a pay cut isn’t a pay cut? Or a “pay cut” as you’d call it.” the wording is rather insignificant in my opinion, it is the action that matters, the wording is semantics. Fiscal problems aren’t addressed with labelling issues as ‘pay cut’, ‘levy’, or otherwise, they are addressed with actions, and those taken are appropriate.

I don’t think that further pay cuts would make sense, accountability and performance measurement would be far better alternatives, but the unions don’t seem to want that - which leaves the bluntest of tools for fiscal reform…. more cuts, likely with the badly worded labels we have all come to know and distrust.

The drop in income last year was somewhat mitigated, in fact for third level the CSO stats would suggest an increase in the aggregate!

“while you didn’t say it was specifically ‘unfair’ you have instead raised the point that it is a ‘pay cut without additional benefit’ but that isn’t the point.”

But Karl that is exactly “the point” I was making in this post, the only point in fact. You want to make a different point about public-private sector pay differentials which is fair enough, though we’ve had plenty of discussion of this here and elsewhere. And every time it came up over the last year, my position was that cutting public sector pay had to be part of the fiscal adjustment.

But tell me, how is public discussion of our fiscal problems improved by pretending a pay cut isn’t a pay cut? Or a “pay cut” as you’d call it.

The answer seems to me that pretending the first cut wasn’t a pay cut strengthens the rhetorical position of those who want to campaign for more public sector pay cuts, as I assume you do.

Sorry to hear about your mother in law, btw. She sounds mean.

To provide a cop with a pension would cost a comparably waged person in the private sector c. €1,000,000 - that means the public sector have a super pension, before we even get into the guaranteed nature of it!

“the issue isn’t do they get extra pension for what they now have to accept” - the issue is actually paying for what is received, it is the foundation of fairness, while you didn’t say it was specifically ‘unfair’ you have instead raised the point that it is a ‘pay cut without additional benefit’ but that isn’t the point, rather it is a remedy in order to right a wrong.

why don’t you do the actual maths and stop focusing on take home pay being a cut or not, that is an aside, its semantics, you can’t drive a ferrari on a skoda budget but that is exactly what seems to happen in Ireland.

btw: you didn’t have to remove my minor explecitive (which for the curious is mentioned often with the line ‘they killed kenny!’) for the benefit of my mother in law… she refers to me using that term all the time!

@Garo: your logic is faulty - because the value of my bus ride, while perhaps factored into my decision to work in my job, has been over supplemented by the raises I got in the last decade, and in no comparison to the fare paying passengers has this benefit ever been factored into the value or worth of my job. So really, I just want to ride the bus for free, I am paid better than other people who have to pay for the same thing.

@greg: i have a better idea, why don’t we strike and bring the country to its knees?

“And fyi to all — words that would upset your mother-in-law will be deleted.”

You haven’t met my mother-in-law then.

“1. Did your AVC contribution increase the final value of the pension you are going to get?

2. Will public sector workers get any increase in their pension entitlements because they are contributing this “levy”?

The answer to 1. is “Yes” and to 2. is “No”.
”

From the reverse angle - If DBB pensions were discontinued in the PS, would PS workers still have to pay the pension levy?

I understand the concept.

Though I would not use the phrase “tax relief”

As I understand it tax relief means

export sales relief, manufacturing relief, patent income relief, urban renewal relief etc etc tec

of course ers and manu relief are long gone

Point made and taken, obviously some people don’t understand that the less you earn the less you pay in income taxation etc.

One could be optimistic and say well my tax bill has been reduced now that I earn less money etc.

However I was under the assumption that pensioners whose pension is index linked to a existing occupation also have their pension reduced in a proportional amount.

As for “formulation of words that legitimises the Eilis Quinlans of the world to continue going around spouting misleading rubbish.”

Unfortunately Eilis Quinlan is not the only one. Politicians do it all the time, media presenters in TV and Radio also like to act as Judge, Jury, kangaroo court and excutioner all in one. It is all down to how well researched the topic is and if the person has a reasonable, open mind and able to see the bigger picture. Understanding symptoms is one thing, understanding the cause is another.

We should be encouraging people who value the truth, but unfortunately Ireland is a country (like the rest of the W.World) which has little or no value on honesty.

there is a big difference between

i) PS-starting with gross income then deducting the 7% Pension Levy which is a contribution towards something you will get in the future i.e your pension

and

ii) private sector taking a pay cut of 7% off the top line and lowering your pensionable salary full stop

the difficulty I have is with the public sector unions who have portrayed the 7% pay cut as a net pay cut of 7%

“That just made it exactly like any other pay cut.”

Actually, to be fully clear, didn’t it make it worse than other pay cuts, in that you can only deduct 41% off the pension levy, but the full 50% or so (ie paye+prsi+income levy+medical levy) off a pay cut? (or am i wrong with that?)

Go check your pay cheque before and after the pay cut because you would have received tax relief on it!! Unless you are paying tax based on your old salary!

Fair enough. But to be clear, there was nothing special about the “tax deductibility” of the pension levy pay cut. That just made it exactly like any other pay cut.

im agreeing with you that its a pay cut. Im just saying the headline “7.5% cut” (whether in the public or private sector) always sounds worse than the reality. If i went to a 4-day week, i wouldn’t see a 20% cut in my spending power. I get that. A lot of people don’t.

Yes, the government did give you a tax write-off for the pay cut you took! Are you really claiming that the government is now taxing you on income you didn’t earn?

If they could do that, the budget deficit could be sorted in seconds.

But yes, sorry for the patronising tone. Obviously, it’s harder than I thought for people to understand that governments don’t keep taxing people at their higher salary rate after they’ve had a pay cut.

“That 7% pension levy becomes part of the current spending which actually pays public sector pensions. That’s a contribution, not a cut.”

Let me repeat:

Will public sector workers get any increase in their pension entitlements because they are contributing this “levy”? The answer is No.

If your employer takes something away from you without giving anything in return, this is a cut.

But look, you’re a smart guy so you do actually understand this. But rather than admit the truth, you’d prefer to come up with a formulation of words that legitimises the Eilis Quinlans of the world to continue going around spouting misleading rubbish.

no need for the patronising tone at the end

funny though the government did not give me a tax write off for the pay cut I took earlier this year

I really don’t get it guys.

When people talk about pay cuts, they always mean a cut in gross pay. Always.

Of course, because we have a progressive rather than flat income tax system, this means that when your income is cut by x% your take-home pay falls by less.

But it’s still a 7.5% pay cut by the normal understanding of the phrase “pay cut”.

And this point applies whether you pay is being adjusted via a straight cut or tax-deductible pension levy.

It seems that people just don’t want to understand this point because it’s really not so hard.

I’m not being thick here. That 7% pension levy becomes part of the current spending which actually pays public sector pensions. That’s a contribution, not a cut. They get something for it - and it’s a hell of a lot better than what I’ll get from my much larger private pension contributions. Moreover, when my employer cuts my salary, that’s it. It’s just gone. And my pension contributions fall with it, leaving me with even less money when I retire. There is simply no honest equivalence between the pension levy and a real pay cut.

whilst a pay cut it was never a 7% pay cut and for a year at least it had no impact on pensionable pay or service

1. When you took the job, (presumably with Dublin Bus) you knew that a free ride on the bus was part of the perks so you would have calculated that in when considering whether to take this job or another one which may have paid more but required you to pay your bus fare.
2. You are not being asked to pay for the bus ride, it is being deducted automatically from your paycheck by your employer so it is a pay cut.
3. All of your co-workers including those who walk to work have to pay this imputed bus fare.

So it is a paycut.

you’re right that it is pretty much the same as a pay cut (with the obvious exception of it not impacting on their pensions), but i think the problem is how most people view a “pay cut”.

If you tell 100 people they are taking a pay cut of 7.5% for the pension levy, most of them (probably 95 of the 100) immediately think they have 7.5% less money to spend. Because of the tax system, for most people (except those paying nothing at the marginal rate) this obviously isn’t the case. They in fact have around 4.4% less to spend. Obviously a 4.4% take-home-pay cut sounds a bit less severe than a 7.5% gross pay cut. Likewise, this weeks paycut has only reduced most people’s take-home pay by around half of the headline “cut”.

And fyi to all — words that would upset your mother-in-law will be deleted.

“I used to get the bus to work for free”

Was your free ride part of the terms and conditions of your employment?

Did your employer unilaterally change your terms and conditions?

You should get yourself a good lawyer.

But then there wasn’t enough money to let people ride the bus for free and I kicked off a storm about having to pay for the right to ride the bus, I don’t mention the fact that I am receiving transport, nor do I make a case toward the position of everybody else on the bus, I only consider the value in reference to myself, and specifically to the fact that in the past I rode the bus for free.

Charging me to ride the bus is an affront, it is unfair, you are essentially cutting my income by making me pay for a service I receive.

“How can the pension levy be classed as a pay cut? Last year I decided to put some AVC into my pension due to a deficit from working in small private sector companies that don’t pay pension contributions. I didn’t look at it from the perspective of getting a pay cut - only form the reality of having to pay for my pension. It’s just now that the public sector have been shown this same light.”

Ask yourself two questions:

1. Did your AVC contribution increase the final value of the pension you are going to get?

2. Will public sector workers get any increase in their pension entitlements because they are contributing this “levy”?

The answer to 1. is “Yes” and to 2. is “No”.

Ah yes, I’m sure public sector workers are very grateful for the tax relief on their pension levy payments. That makes it so different from a pay cut ….