On budget day, the Minister for Finance announced that civil servants earning between €165,000 and €200,000 would take pay cuts of 12% while those earning over €200,000 would take pay cuts of 15%. Yesterday, with the public focusing on their pre-Christmas preparations, the government announced that this would not be happening after all.
These pay cuts have been rolled back for two reasons. First, the government announced that it was going to take into account the elimination of “performance-related awards” which had averaged ten percent of their salary. As a result it reduced the new pay cuts for some civil service grades to reflect the loss of this ten percent.
Second, it was decided that the differential rates of adjustment, with higher cuts for those over €200,000 would introduce anomalies in which there would be overlaps such that those on higher points in lower scales would have better salaries than those on lower points of a higher scale.
The statement points out the implications of the decisions taken:
The resulting adjustments including the effect of the termination of the scheme of performance-related awards produce reductions in remuneration of 14% in the case of the grade of Deputy Secretary and 11.8% in the case of the grade of Assistant Secretary.
Or, in other words, given that the bonuses were gone already, these measure will imply a cut of only 3% for Assistant Secretaries and only 5.4% for Deputy Secretaries (based on 0.882*1.1= 0.97 and 0.86*1.1= 0.946).
The Irish Times reports that a government statement said that it would have “been unfair” to these grades not to make these adjustments.
A couple of comments about this.
First, these performance-related awards were, as their name suggests, not guaranteed but (at least in theory) related to performance. This move appears to be an effective admission from the government that these payments were not in fact performance-related bonuses but part of the core pay of these civil servants. For a government that claims to be keen to introduce reform into the civil service (something that should include bonuses as incentives for good performance) this is a very unfortunate precedent.
Second, these bonuses were not pensionable. Because civil servants’ pension obligations are still based on the full pre-pension-levy salaries, this means that the pensionable salary of an Assistant Secretary has only fallen 1.8% this year. Senior civil servants close to retirement have been almost completely protected from the consequences of the fiscal crisis.
Third, the Review Body on Higher Remuneration, whose recommendations the Minister had claimed to be implementing, explicitly made its recommended cuts in terms of regular salary. This is not because they were unaware of bonuses. They stated:
the continuation of performance-related awards cannot be justified in the current climate. Having said that, it remains our view that such awards will have an important role to play in the future when economic stability has been restored.
In other words, their recommended cuts were in addition to the suspension of bonuses, which they recommended re-introducing at some point.
Fourth, it appears that senior civil servants are the only group in Irish society that get to count earlier cuts as part of their current cuts. For instance, the cuts to social welfare payments announced in the budget are in addition to the 2% cut related to the elimination of the Christmas bonus. Would the government consider changing its cuts in social welfare rates to take account of this?
Finally, perhaps it is cynical to suggest that this information was released just prior to Christmas in the hope that the public would not notice. If this was indeed the intention, somehow I don’t think it’s going to work.
58 replies on “A Christmas Present for Senior Civil Servants”
ah, clearly given the time thats in it we need to remember Mark 4:25 “For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.”
as exemplified by Luke 19:26 “For I say unto you, That unto every one which hath shall be given; and from him that hath not, even that he hath shall be taken away from him.”
Maybe they are working on the precepts of 2 Kings 12:10 “And it was so, when they saw that there was much money in the chest, that the king’s scribe and the high priest came up, and they put up in bags, “
shurely “these would NOT be happening after all” ? (in first para.)
Shure ’tis the Christmas spirit, but this seems a bit confusing too:
“Or, in other words, given that the bonuses were gone already, these measure will imply a cut of only 3% for Deputy Secretaries and only 5.4% for Deputy Secretaries (based on 0.882*1.1= 0.97 and 0.86*1.1= 0.946).”
Note also that they are concerned about the prospect of narrowing pay differentials on the different scales if the pay cuts + bonus cut were implemented, but not about the anomaly whereby some current retiree pension now nears 70% of salary of current position in the job since they didn’t cut pensions.
The 0.882 is the 11.8% cut. The 1.1 reflects the fact that they’re applying the cut not to the actual salary but to 110% of the salary, including the old bonus. The result is that they earn 97% of the their old salary — a 3% pay cut.
Thanks Karl, but the confusion arises from the fact that you refer to Deputy Secretaries twice in this paragraph – presumably one of them should be Assistant Secretaries?
BTW: University Professors are linked to Assistant Secs!
Thanks — typo fixed.
On the last point, I think we can say now that University Professors were linked to Assistant Secs but are not now. I never got a bonus in the first place I could hardly use this excuse to get my pay cut down.
Thank goodness for this return 2 normality – since budget 09 MkII for a moment (apart from lowering the price of alcohol) I thought the govt had actually thought through something before anouncing it in a budget.
Do we know whether there is actually any variation in the level of bonuses paid? Although, of course, all their performances could have been equally superlative.
One could imagine the youth of today whose sense of the world is being formed by the events.
There may be a corp who view the Irish state as unredemable and unconstitutionable and react accordingly.
We should probably be prepared for some real May day action in years to come.
The Greeny ‘reclaim the streets’ types will disappear and the Spartacus gang will hold the line.
I intend to be chaste over the next few days,
So… hopefully wont be online for a few days
Best wishes to all
In the bonus system, the beneficiaries self-assess themselves and each Department’s Secretary-General checks how “specific goals” have been achieved.
The aspirations/goals are likely to be so woolly that they are always achievable.
Then a body called the Committee for Performance Awards, made up of two top civil servants and three representatives from the private sector, including a former head of Bank of Ireland and the head of a big law firm – – selected by the beneficiaries for approval by the minister – – gives it imprimatur.
Subject to the total awards not exceeding the 10% pool limit, individual participants can receive performance-related awards of up to 20% of basic pay.
In 2008, 221 individuals received an average bonus of €13,500.
While nobody was given the maximum 20%, 85 were given between 10% and 15%. Twelve others were awarded even more.
At local government level, 270 applied for bonuses and 270 bonuses were paid.
So in a system where there were no credible targets to achieve, besides national wage agreement increases, these people got the average benchmarking payment of 9%; a top-up of about 15% in 2007 and annual bonuses.
They simply haven’t had their pay cut at all!
As you all know (!) I am an ex-Inspector of Taxes. Capitals borrowed from statutes! I am on the pigs back with a pension of less than 30,000 Euro! Whoopee! I am sure you all agree I am worth it?
I have pointed out the frequent conspiracy between permanent pubic servants and pollies. And banking! This is more of the same. The creature from Jekyll Island was also brought into being at Christmas! Clearly christians are evil!
But one thing occurs: the FF actually, sincerely believe that the present troubles are temporary and probably will last only a few years at most. Hence all this short termism, except for those nearing the end of their nefarious career!
How can we get through to these people that they are wrong?
Take care of one another especially as the world cools.
The devil, quoting scripture!
My previos post shows why. As retired CS are not productive, there is no real anomaly? We do not work less hard if pay varies!
He who blinded by ambition, raises himself to a position whence he cannot mount higher, must thereafter fall with the greatest loss.
Karl thanks for highlighting this.
One wonders why they didn’t just take 12% from earnings €165,000-€200,000 and 15% on earnings over €200,000, to avoid said anomalies..
What I’m wondering is how do we beat this newsdump? Wait till January 2 and start blogging about it again?
I agree with Pat Donnelly’s Christmas morning post to some extent, but surely this is a sign that the Government’s fallback position is to scrape the bottom of the gravy boat out, in the event that their fantasy of an early recovery doesn’t happen ?
A small number of senior civil servants in the Department of Finance have been in centre of on all of Lenihan’s dealings with the banks. They need to be rewarded for their extraordinary willingness to jump through hoops when required.
In extraordinary times, the loyalty of key public servants can be a survival issue.
We will do our best to beat the newsdump by all means available and have a new forum at TOK
[…] Christmas Present for Senior Civil Servants The Irish Economy Blog Archive A Christmas Present for Senior Civil Servants […]
In the budget speech the minister stated that ministers would take a pay cut of 15% .
He said previously they took a 10% voluntary pay cut and this was to be accounted for and another 5% deducted to bring the cut to 15%.
We need to watch how they do this.
For indicative purposes suppose a ministers salary was 200,000 euro and he takes a voluntary cut of 10% .His new salary is 180,000 euros.
A 5% deduction of this salary would give a new salary of 171,000 euros.
However a a straightforward,once off 15% reduction in his original 200,000 salary would result in him receiving 170,000 euros.
Theres a difference of only 1000 euros but knowing the track record of these guys every movement,every blink of an eye ,every word spoken should be held up and turned over and over until the deception is revealed.
I think that some of the posters are being cynical and paranoid beyond belief in suggesting that ‘this information was released just prior to Christmas in the hope that the public would not notice’. Do they seriously think that sneakily timing this relatively trivial anouncement, so as to keep the public from noticing it, was high on the Minister’s priority list last week?
The date on the document is 22 Dec, which is 3 working days before Christmas. Plenty of opportunity for it to be discussed in the media. Christmas week is generally a slack week for news. If you want some piece of information to be unnoticed by the public, you release it in a week when there are lots of news items, not in one when there are few news items. The budget was only on 9 December, for heaven’s sake. This clarification has come 13 days later. Are those complaining about the Minister timing the announcement so the ‘public would not notice’ of the view that it should have been announced earlier? Yeah, well maybe it should have been anounced last week, but, as we now know, the Minister may have had other priorities last week. Give me a break!
To many of us, this is not a “relatively trivial announcement”. There has been repeated calls for decreases in the salaries of some civil servants, particularly over the past year. These decreases certainly appeared to be promised quite explicitly in the budget. That it now appears only small fraction of the decreases will actually be executed is surprising. It is suggestive of (at best) confusion and (at worst) dishonesty. It is therefore reasonable to be curious or even suspicious about the nature of this particular announcement. And seriously, I hope you’re not invoking the minister’s reported illness as a defence against criticism of the DoF.
It’s seriously worrying that they’ve gone to such extreme measures to correct a discrepancy that could easily have been avoided by shifting a couple of percentage points around. Superficially, it looks a lot like senior civil servants have just decided to put the squeeze on to protect their packets.
[…] of the Week goes to Karl Whelan of IrishEconomy who caught the newsdump and threw it back, thank god for blogs because I…. In other words, their recommended cuts were in addition to the suspension of bonuses, which they […]
John, see an optometrist. And an ENT consultant.
Although your newsdump paradigm holds some water in that normally you pick a time with a lot of ‘noise’ to drop your story, you seem to be suggesting that life is all-connected and we, as sentient beings are all-seeing and all-knowing. That privileged status belongs to God and to Brian Cowen.
No, we all have busy lives and, as my multiple website stats confirm, traffic went down the toilet for the 24-27th so far. In other words Johnny boy, people are stuffing their faces, getting drunk, looking after family, watching the weather forecast, visiting family, trying to get some sleep in order to keep up for the few days back at work.
NOISE Johnny Boy. Just as good as the noise of a big news story if you wanna do a newsdump.
And as MarcusOC notes, I also hope you’re not bringing sentimentality and emotional blackmail (that is not yours to wield) to the fray…..
This is BIG news. As a number of posters note, the key is to keep this alive until the Big Guns roll in after New Year.
Well done. Great article Karl.
No surprise to me!
What concerns me more is the fact that so many of you were unable to avoid this shit just for one day. Can’t understand how anyone could be posting such depressing trite on Christmas day.
By no means should the Minister’s illness stop people criticising his or the Department’s decisions. That is normal political debate. I hope those opposed to the present Government’s policies continue to open threads here attacking them and I’m sure even the Minister himself would not wish otherwise.
Karl Whelan is perfectly entitled to open a thread criticising the decision to modify very slightly the pay cuts announced in the budget. If he had left it at that, there would be no problem. However, he couldn’t resist sexing it up with claims that the Minister was trying to sneakily hide the fact from the public by announcing it just before Christmas. Even leaving the Minister’s illness aside, there is no evidence to support this. As I said in my first post, the date on the document is 22 December, which is 3 working days before Christmas. It is not as if it was announced at 5pm on Christmas Eve. The national newspapers were published as usual on 23 and 24 December and had plenty of opportunity to report and comment on the anouncement. The only relevance of the Minister’s illness is that it could certainly have delayed the announcement and also that it makes it unlikely that news manipulation was high on his list of priorities last week.
In defence of Karl Whelan, he was probably unaware of the Minister’s illness when he threw in this added claim about news manipulation. However, the same can’t be said for all subsequent posters. By all means, continue to criticise the decision itself, but the charge of trying to hide the decision from the public doesn’t stand up.
1. The document is dated 22 December but it does not appear to have been released until the 23 December. See here http://www.finance.gov.ie/ViewDoc.asp?fn=/home.asp
2. A document released on 23 December can only be covered in newspapers published on Christmas Eve. I doubt if people spend too much of their Christmas Eve reading newspapers.
3. Yes, the Christmas Eve newspapers could report this story — the Times did. But that is quite different from commenting on it. The newspapers appear to give their columnists time off over the Christmas. The opinion columns that are published appear to be pre-prepared stuff such as reviews of the year. By the time the opinion columnists are back there will be newer more “newsy” stories.
So, all told, I think there are grounds for thinking the timing of the release was, em, strategic. But, look, as I said I don’t think that will prevent the story from causing some controversy.
And, by the way, John the Optimist is the only person here that has mentioned the Minister’s illness as being relevant to this discussion.
JtO, I think I recall, doesnt live here? Apologies if I am wrong. Maybe he takes the US view that you take off the 25th and thats it. Good for him.
And lets leave the personal details of a decent man with whose professional actions we may be at odds with right off the table please. For good or ill.
The timing of this announcement is certainly a detail – what matters more is the substance of the announcement, which is twofold:
1) The promises made to lead by example are being reneged upon. This is most unfortunate, particular for those among us who were relatively impressed by the Budget, because of this feature of the austerity programme.
2) It shows, yet again, how this govt is unable to coherently respond to the fiscal crisis, and brings into question other aspects of the austerity programme which might be jeopardised by incompetence or dishonesty.
There has been repeated calls for decreases in the salaries of some civil servants, particularly over the past year. These decreases certainly appeared to be promised quite explicitly in the budget. That it now appears only small fraction of the decreases will actually be executed is surprising.
You can have every confidence that the small and middling fry in the public service – the home helps, the road sweepers, the clerical officers, the primary teachers, etc. – will still be getting walloped as promised. Only a small and very select band will escape.
in fairness, it was the lead article in both the S-Indo and the SBP yesterday, so its not as if it went unnoticed. I think the timing issue was more a ‘nice’ coincidence rather than some pre-meditated act of the government. As JtO noted, the budget itself was less than two weeks before this release.
Of more relevance is the substance of the matter, which is irritating and depressing in equal measure. Any one know how much this will “cost”/”un-save”? I doubt its a particularly significant amount, but the higher end of the civil service really needs to lead by example if we’re going to overhaul the public sector.
On a related (-ish) note, i thought i read somewhere that the Unions bosses typically have their pay benchmarked again senior civil service pay grades (though i could be wrong?), so does this mean that Begg, O’Connor & Co will also gain as a result of this decision?
“It’s discouraging to think how many people are shocked by honesty and how few by deceit.”
This story wasn’t on the front page of the Sunday Indo that I read yesterday. Perhaps you read a different edition.
But I agree it’s the substance that matters and that this substance is not the amount of money this costs (relatively small) but the other issues. We have been told so many times that those at the top will take the biggest hit and here we are finding that some of these people will receive pay cuts of only 3% as a result of the budget while those on lower incomes are getting cuts of up to 8%. If you’re looking for people to accept the process as fair, reasonable and well-thought out you simply have to do what you say you’re going to do.
The claims to be following the advice of the Remuneration Body turned out to be false. And the attitude that this reveals to bonuses in the public sector is also worrying.
Finally, who knows about the decision to time the release for Dec 23rd but you can’t tell me that the media-savvy people in the government press office didn’t know how this would look to those who did notice it.
Lads, did you really expect the elites to take pain like the rest of us.
This was always going to be the case. These people are insiders and therefore untouchable.
FF are the party of the insider, they created the monster that is the civil service. Civil service jobs are family heirlooms, handed down from one generation to the next just like dail seats.
Only a revolution will bring about the type of real reform needed to end this gravy train and I do not see that happening anytime soon.
So expect this type of in your face self serving protectionism to remain the order of the day.
They don,t think we care enough to do something about it and so far they have been right.
Do the Union leadership have a view on this? Could we have a comment from dome of the Taliban on this. Is is a) good that some public servants have had their effective pay cuts reduced presumably due to lobbying or b) bad that the lower grades have been shafted again by a union leadership that treats them as cannon fodder.
I have read the Report of the Review Body on higher public-service remuneration. It seems to be a seriously flawed document. The Review Body distinguish between “basic salary” and “adjusted income” which is supposed to include the value of benefits (eg, car), adjustments for income tax and pension-related items, and relative purchasing power. In the case of the United Kingdom the Review Body include, as part of “basic salary”, short-term bonuses which were paid in 09 in respect of 08 while no such bonuses were paid in Ireland or the other countries considered – (see page 26 footnotes). For the UK, therefore, they do at least admit that they are making adjustments to BASIC SALARY even before they come up with the final UK ADJUSTED INCOME. This skewing of the results in the case of the UK seems unreasonable.
How about other nations? I suspect the same principle of adjusting BASIC SALARY before deciding on the final ADJUSTED INCOME is happening. For example, on Page 27, para 4.3, the Report states: “The salary earned by the Taoiseach was found to be second highest of the comparators, slightly behind Austria and significantly ahead of that of the other five head of government positions.”
The monthly salary of the Austrian Chancellor is €19,762.60 giving a 12-month salary of €237,151.20. The Taoiseach’s pre-budget official 12-month salary is €285,583, that is, €48,431.80, or 20.4%, greater than the Austrian Chancellor. The Report could only come to its conclusion given above when you multiply the Austrian Chancellor’s monthly salary by 15 to get €296,439. I checked again with the Austrian Embassy in Dublin who informed me that the Chancellor would have received a month’s bonus in June and again in December, giving a 14-multiple of €276,676.40, still short of the Taoiseach’s official pre-budget salary by €8,906.60. Again, the Review Body are making adjustments to BASIC SALARY even before they come up with the final ADJUSTED INCOME. The Review Body need to explain their figures in greater detail. (NO TABLES OR COMPARISON FIGURES ARE SUPPLIED IN THE WEB VERSION OF THE REPORT)
Given that the Review Body were making comparisons with other European nations, I find it difficult to comprehend why they did not choose the gross monthly income to achieve initial like-for-like comparisons for BASIC SALARY. Subsequently they might have made adjustments for total earnings over 12 months to arrive at the figure for ADJUSTED INCOME.
MORE REVELATIONS TO FOLLOW IN DUE COURSE
What I said above is all the more extraordinary when you reflect on the fact that Austria with a population of over 8 million has twice as many taxpayers as Ireland to “chip in” to the Chancellor’s salary.
Ah, the timing is more than a detail. Despite being dated 22 December, the document was released on 23 December, as noted by Mr. Whelan above. A cursory view of the Department of Finance reveals that. As to what time it was released? Well, at this stage, we just don’t know…
A cursory view also reveals that the document is a departmental circular and not a press release. That does not bode for it to be “discussed in the media”; it bodes for “damn, I have to release this, maybe if I do it on this day, no-one will notice”.
Finally, you have said a number of times that you are from north of the border. I put it to you that cynicism with regard to both the government and the senior civil service serves us well here in Mexico. Indeed, many of us who have lived through more than one crisis of the state will probably consider that we have been insufficiently cynical heretofore.
On the substantice issue, do I feel let down?… see cynical comment above. ‘Course I do. Liars and thieves.
The google cache of the document was created on 23 December at 20:03:56 GMT
Now, I don’t know how long it takes Google to index pages on the Department of Finance website… but even at 4 hours, we’re down to only 1 working day before Christmas, a working day where even Norad are tracking Santa…
When I saw the relatively heavy pay cuts in the budget for lower paid public sector workers I have to say I wondered if the government was giving an implicit pay-off to senior civil servants for their continued silence and co-operation. Now they’ve made it an explicit pay-off. For the most senior civil servants – especially in the DOF – who are potentially the greatest threat there is a special santa (confidentiality) clause:
“Senior civil servants close to retirement have been almost completely protected from the consequences of the fiscal crisis.”
The government has therefore scrapped the Christmas bonus for those on social welfare so it can pay-off senior civil servants to keep quiet about its bailout of developers/bank investors.
Merry Christmas from FF/PDs!
CONTINUATION OF MY CONTRIBUTION FROM YESTERDAY
I am surprised that the Review Body should have chosen Austria for comparison purposes. On page 28, the Report considers the equivalents for the posts of Secretary General, Levels I and II, in Ireland. In each case the Report discloses: “An appropriate comparator for this role could not be found in Austria”. However, when comparing with Finland, the Report admits the following in relation to the Level I and II posts: “The rate for the equivalent post in Finland, with which the Irish post is banded, is 50% of the Irish rate.” The Report never reveals actual salary amounts for the comparator countries or the manner in which adjustments were made, so I will refer only to BASIC-SALARY comparisons. Finland with a population of 5.4 million is the nearest in population size to Ireland.
PAGE 33 For Ireland, the pre-budget salary of Secretary General, Level I is given as €300,358 and for Level II the figure is €266,985 with a recommendation for a 15% cut, which, based on recent news reports has been almost entirely revoked. This decision is astonishing when you consider that the posts in Ireland are being rewarded with salaries 100% higher than in Finland, the country closest to Ireland in terms of population size.
On pages 28/29, the Report reveals that, in the case of the position of Assistant Secretary in Ireland, “the rate for the equivalent post in Finland, with which the Irish post is banded, is 74% of the Irish rate. The maximum point on the pre-budget 4-point scale given for ASSISTANT SECRETARY on page 33 is €158,644 with the lowest point given as €138,683. I am confused: To which one of the 4 figures does the 74% comparison apply? Does it apply to an average? I suspect that it is a comparison with the lowest figure; but it is not possible to check from the Report in the version released. In any case, it is safe to say that the Assistant Secretary in Ireland is paid at least one-third more than his Finnish counterpart.
MORE TO FOLLOW
The Report recommended an 8% salary reduction for ASSISTANT SECRETARY – see page 33
ONE COMPARISON WITH UK WHICH THE REPORT CHOOSES TO OMIT
TAOISEACH’S REDUCED SALARY:
The Taoiseach’s salary is to be reduced by 57,117 euros giving a new salary of 228,466 euros. Based on current exchange rates this will be 11,000 euros more than Gordon Brown’s Salary.
Gordon Brown has been entitled to a salary of £197, 689 (including MP’s salary of £64,766) from 1 April 2009. He has elected not to take the pay rise for 2009-10 either in his ministerial or parliamentary salary.
197,689 British pounds = 219,471 Euros
People should also bear in mind that the UK has 15 times the population of the Irish Republic
LATER I WILL MAKE A COMPARISON WITH NORWAY, EUROPE’S RICHEST NATION, WITH 4.5 MILLION INHABITANTS, THOUGH NOT MEMBER OF THE EC AND NOT INCLUDED IN THE REVIEW BODY’S REPORT DESPITE ITS HISTORY OF COMPARATIVELY SUPERIOR GOVERNMENT
ERROR: In paragraph 1, above, I should have rounded to c. 9000 euros more than Gordon Brown
[…] Late on December 23rd, the Department of Finance announced it will not cut senior civil servants’ pay. On budget day, we were told civil servants earning between 165,000 and 200,000 Euros would take pay cuts of 12%, while those earning over 200,000 Euros would take pay cuts of 15%. These pay cuts will not take effect in January. The justification for the decision by the Department of Finance is baffling: senior civil servants will not be awarded their `productivity’ (or performance-related) bonuses this year. The proposed cuts, on top of the loss of these bonuses, would have created an overlap between civil servants on different grades. That isn’t fair, so the cuts are not to go ahead, and much smaller cuts–on the order of 3-4%–are mooted instead. Much discussion on the announcement has been had over at Irisheconomy. […]
@ Stephen Kinsella
“Late on December 23rd, the Department of Finance announced it will not cut senior civil servants’ pay.”
Eh, just for clarity, they announced the cuts, in reality, will be a lot less than expected. But they did not announce they would “not cut senior civil servants pay”. Not trying to downplay it, but no need to overegg the actual decision either.
Very good point, you’re quite right. I’ve rephrased. Thanks.
When the Review Body on Higher Remuneration presented their Report to the Minister in mid-October, he immediately had it placed “under lock and key” without any opportunity for a public perusal of the document prior to the Budget. In fact, given that all the appropriate figures are omitted from the Report (as released), I have to assume that the original as undergone extensive editing.
I proceeded to produce my own mini-report using Europe’s richest nation as my comparator. Unlike Austria and Finland, web-based material on Norway is easily accessible.
My mini-report was sent to all members of the Oireachtas and to our Madam President in 2 stages, 4 to 6 weeks prior to the Budget. I had a number of acknowledgements including from the Taoiseach’s office and a confirmation from certain TDs that they would be forwarding the message for the attention of the Minister for Finance.
AS YOU WILL REALISE THE MESSAGE WENT UNHEEDED (as I expected it might; but I consider that we are in the earliest stages of what will be a long haul). AT THE TIME I USED 257000 EUROS AS THE TAOISEACH’S SALARY, SO YOU WILL NEED TO MAKE YOUR OWN ADJUSTMENTS FOR THE FACT THAT THE OFFICIAL SALARY WAS CONSIDERED TO BE 285,000 EUROS SO AS TO ENHANCE THE “CUT”.
While there are one or two basket-case countries I can choose to compare with Ireland, the example I will use is Norway, the richest nation in Europe and the richest on earth in terms of per capita income.
Norway has wealth-generating resources in oil and gas and 4.5 million citizens. It is the nearest in population size to Ireland. So what might politicians expect if they were public representatives in Norway?
Norwegian MPs are paid an annual salary of €79,000 (1.5 times average earnings in Norway), compared with a TD’s salary of €122,000 (over 3 times average earnings in the Irish Republic which is NOT SUSTAINABLE). The average TD also claims up to €70,000 in expenses. This is NOT SUSTAINABLE.
I do not have details of expenses for Norwegian MPs, but those who are from constituencies more than 40 km from the Storting receive free accommodation assistance within Oslo. The Storting owns 140 flats for this purpose.
Norwegian government ministers earn about €100,000 per annum (less than 50% of their Irish equivalents who earn a NON-SUSTAINABLE €225,000 per annum).
The Prime Minister and the President of the Storting earn approximately €110,000, only about 40% of the salary of the Taoiseach, €257,000, a sum which was never justifiable and certainly NOT SUSTAINABLE in the present emergency.
The Prime Minister of Norway drives himself to work in his own car. He is only permitted to take a State car, from a pool, on State business. After State business is concluded, he must return the car to the Government pool, and make his own way home. In Ireland every minister is provided with a high-spec motor vehicle and chauffeur at an estimated cost of €140,000 per annum, NOT SUSTAINABLE. I also understand that each Irish minister receives constituency office expenses of around €180,000 per annum, NOT SUSTAINABLE.
Irish ministers are the most highly-paid executives of state in Europe. For ministers to have their pay brought into line with Norway, their salaries would need to be cut by 70%.
Ordinary TDs, also, are to be counted among the most grossly-overpaid members of the public-service community. The lack of leadership and genuine self-sacrifice on the part of both Ministers and TDs, puts them in no position of moral authority when preaching cuts for others.
Choosing Norway for a comparative study was not unreasonable, and my findings suggest that an immediate 60 to 70% cut in TD’s salaries would be in order just to bring them into line with Europe’s richest nation.
In future years, other factors will need to be taken into account when determining cost-cutting measures for Ireland’s political elite.
· Ireland’s relative poverty
· Our small population with political over-representation
· The fact that the average TD is claiming up to €70,000 per annum in tax-free expenses – up to 2 times pre-tax average earnings. Unlike the UK, no leader of an Irish Political Party has called for his party colleagues to reimburse taxpayers for unwarranted claims
· TD’s salaries and benefits in kind are often supplementary to other major sources of income
· Irish “populist” politics fanned the flames of UNSUSTAINABLE GROWTH and brought about the greatest economic collapse in the Anglo-American world. Questions must be raised about the competence of all our politicians and the need for reform which will allow for highly-qualified specialists, from outside the Dáil, to fill key ministerial posts and take tough, responsible, non-populist decisions in good times as well as bad.
The Taoiseach earns 8 times Irish average earnings and has a full-time chauffeur. His counterpart in Norway is earning just over 2 times Norwegian average earnings and must use a car-pooling arrangement when he needs to be chauffeured.
The Taoiseach must recognise that the situation, as I have described it, is NOT SUSTAINABLE. The Irish political gravy train simply has to end!
Can I get my taxes back? I have been working on the assumption that the government actually wants to tackle our deficit and behave responsibly. This was the kind of hopeful nonsense that allowed me to stomach more taxes and lower pay- the idea that there was a serious attempt underway to keep us from taking the last few steps towards the abyss. Aparently this is not the case, so can I just have my money back and I’ll leave?
When the cut in net pay is considered, the contrast is even more stark.
For a bottom-of-scale clerical officer, the 5% cut in gross would translate into a cut in take home pay of more than 4% (given that so little tax and pension levy is paid at this level).
Whereas the marginal rate of deductions (pension levy included) for an assistant secretary would be in the low sixties percentage-wise. So their 3% cut in gross maps to barely a 1% cut in net pay.
[…] it turns out not everyone in Ireland is sharing the pain (H/T The Irish Economy) On budget day, the Minister for Finance announced that civil servants earning between €165,000 […]
KW said: “First, these performance-related awards were, as their name suggests, not guaranteed but (at least in theory) related to performance. This move appears to be an effective admission from the government that these payments were not in fact performance-related bonuses but part of the core pay of these civil servants.”….
Generally unions and the law sees bonuses as an entitlement. If they are not performance related then they must be paid. If they are performance related then they must be paid if performance is satisfactory or meets the defined criteria. Bonuses are pay for work done, not a gift. A cut of a bonus is a pay cut.
KW said: “Second, these bonuses were not pensionable….
Unless I misheard, the Minister’s said on Radio One today that the bonuses were fully pensionable. Can somebody clarify the actual position?
Lastly, I think the Minister said that the reduction in cuts only applies to about 200 people and that most higher grade civil servants will be taking the full cuts in their basic pay. Do we have exact figures on this?
[…] earn a minimum of €85k. These are not those who escaped the pay cuts as highlighted over on Irish Economy and picked up by journalists over the Christmas holidays. Only those earning over €165k will […]
You cannot take anything our Minister for Finance says at face value; and you have to suspect what has been going on behind the scenes at the Department. Since the Report was released in mid-October, senior civil servants have had plenty of opportunity to contemplate what the consequences might be for themselves. Might these people be the very ones who are paid 100% more than their counterparts in Finland? For them, “cuts”, like taxes, are for the little people. I will be returning to Ireland next week and will try, in my own way, to pursue matters further.
The Report is probably at its most disingenuous when considering the remuneration of a High Court Judge. The Review Body would like to make a recommendation for a downward adjustment in the salary for this position. However, on page 29, they remark: “There is a constitutional prohibition on a reduction in the pay of members of the Judiciary . . . . As a result we have not made a recommendation.” Why the reluctance to make a “recommendation”, as an absolute minimum, and let the judge’s conscience be the arbiter? But also, why did they not go a step further and highlight the need for an amendment to the Constitution? In terms of “sharing the pain”, Brian Lenihan could have insisted on a “recommendation” which would be fully enforceable and have a retrospective effect pending the constitutional change. I note that one journal pointed out that Brian Lenihan’s wife, Patricia Ryan, is a Judge of the Circuit Court.
I saw the union Leaders on Vincent Brown TV3 last night- those guys have no interest whatsoever in defending anyone except themselves. They are fatcats as well. I have paid a union sub to IMPACt for 38 years. Tomorrow I will resign my membership.
[…] the New Statesman writer has missed (or ignored) the recent u-turn on elements of the ’progressive’ pay cuts proposed for the public sector, which would add some context to that paragraph. Overall though, worth the read, and a damning […]
[…] the lack of interest may reflect the original timing of the announcement—just before Christmas Eve and three weeks before the next meeting of the Dail, by which time other issues (such as banking […]