Recent Trends in Earnings and Employment

The CSO released its latest survey on Earnings and Labour Costs on Thursday.

The following summarizes the changes in the main aggregates between Q3 2008 and Q3 2009:

Whole economy:
Employment: -8.4% Average weekly earnings: -0.8% Average hourly earnings: +1.8%

Private sector:
Employment: -10.3% Average weekly earnings: -2.7% Average hourly earnings: +0.6%

Public sector:
Employment: -2.2% Average weekly earnings: +1.9% Average hourly earnings: +2.2%

(The earnings figures are gross, and take no account of income taxes or levies.)

Hourly earnings in the private sector peaked in Q1 2009 and declined by 4.7% over the following two quarters. In the public sector, hourly earnings continued to rise until Q2 2009 and declined by 1.1% in the following quarter.

71 thoughts on “Recent Trends in Earnings and Employment”

  1. (The earnings figures are gross, and take no account of income taxes or levies.)

    Shouldn’t you be giving the net figures then, really?

  2. And this:

    Public sector:
    Employment: -2.2%

    is surely missing something, somewhere. There’ve been a hell of a lot more reduction in public sector numbers than this.

  3. @ Brendan Walsh,

    Apologisese in advance for the length, but rather than separate issues apart, can I see, if I can attempt to draw some issues together? Anyone feel free to insert sub points, to my main points 1.0, 2.0, 3.0 and 4.0 if needs be. 1.0 I read Garret Fitzgerald’s column today in IT, he sounded fairly pleased with Ireland’s gains in terms of productivity and competitiveness vis-a-vis other nations out there selling to similar markets. To be honest, when I look at the figures that Brendan Walsh has portrayed above, I am wondering if they tell us anything about the Irish economy, when there is a little more pressure placed upon it to perform. Garret Fitzgerald in his column in the Irish Times, has some hopeful projections of growth in the Irish economy based on research published by the ESRI. I have my own fears about Ireland’s renewed growth, which may lead to the exact same problems we saw during the boom years, with regards to its labour organisation. 2.0 I will concede there will be many different opinions about this. But I am not convinced Ireland was blazing in all cylinders, as far as output goes, even during the boom times. Our production output could have been a lot better, and a lot more diversified than simply developing more property we cannot utilise. If the Irish economy had more of a chance over a longer period to benefit from stable growth, rather than inflated growth, Ireland might have sorted its production problems out better. Former Taoiseach John Bruton I think, brought up the point in one of his more recent opinion pieces for the Irish Times. Garret Fitzgerald in today’s IT talks about difficulty with the negotiations with trade unions. But it seems to me, the union talks revolve around issues of employment stability and related clauses, as much as they do around real wage levels. Which is a bad place to be when you think about it. I would be a lot less worried, if the talking points were only on wage levels. 3.0 I wonder was the wage inflation and so forth in Ireland during the boom years, a product of the fact Ireland has never had many decades of sustained, stable growth? I think it was Philip Lane who used the phrase once, slump, slump, boom, slump. Given that pattern of economic behaviour in Ireland, it is hard to find the periods of relative calm during which we can all work out better agreements for all sectors. I mean, even when GDP was rising in Ireland, it was still a mad scramble to find fair distributions of Ireland’s new found wealth. I think Stephen Collin’s column in today’s Ireland times, Greedy actions of rich elite undermining national will, attempted to tackle the issue I refer to. Kevin O’Rourke on the Irish Economy blog site has linked to papers at Voxeu in the past, where the question is posed, will global trade imbalances simply return once production ramps up again with renewed economic vigour. Similarly, will Ireland’s inability to organise its workforce intelligently and productively simply remain, even if you take Garret Fitzgerald’s predictions for growth in 2011-16, at face value? I can only think of the example of my own industry, construction, where enormous effort and time was expended by all sides to try to agree terms with brick-lay-ing labour during the boom years. Now all of that work seems entirely relevant, and quite frankly was a waste of effort. I am still not sure what point we managed to prove for all the effort and time, and general hot air we created. 4.0 While talking about the employment statistics, Garret also discussed budget deficits. I listened to Newstalk radio some time ago, after the 46 economists published their signed letter, to which Garret took exception to. The matter of contention for Garret at the time, was the way in which others will view Ireland, by its published budget deficit figure. Garret didn’t care for the way in which the 46 economists published figures on their letter, which didn’t specify exactly what they referred to. I know that Karl Whelan came on the brunt of some criticism from Garrett on Newstalk radio. However, today I am wondering if Garret’s in the Irish Times column, had to eat some crow. I know there is a lot more at stake at the present other than trying to win arguments, but I said I would mention it in passing. BOH.

    http://www.irishtimes.com/newspaper/opinion/2010/0424/1224269034350.html

  4. @Frank
    “An average doesn’t mean a whole lot.”

    Not so keen on averages myself but in the case of the public sector given they tend to be affected by one overall policy on pay etc it may be a bit more reliable.

    The private sector drop of -2.7% will be a huge mix of experiences from those who’ve seen pay rises (e.g bank employees!) to those on freezes to those who have seen a big drop.

    It’s a pity they can’t come out with x% got pay rises, y% on pay freeze and z% pay drop. It would be more useful.

    @EWI
    It is comparing Q3 09 to Q3 08 so a bit out of date. You will probably find more public sector job losses since as the recruitment freeze was in place fully Q4 09 and Q1 10.

  5. @ Stuart

    I’m wondering how they’re counting. Those numbers are surely misleading (I was going to say wrong), given the known numbers over the last year in losses of staff in the Guards, the local authorities etc. (both to the large numbers of temporary staff being let go, and the Government blackmail used in getting senior people to retire early under threat of substantial pension hits).

    And I feel the need to clarify that by “you” I hadn’t meant Brendan Walsh personally. I had clicked through to the CSO document, which indeed doesn’t provide these (rather important, really) modifiers.

    @ tull mcadoo

    Here’s to you losing your shirt in the near future. Chinchin!

  6. I don’t think there is any reason for surprise about the public service job numbers, or if there is it should be slight surprise that they have fallen by that much. QNHS data for the same period (Q3 to Q3) shows employment in public administration and defence down by 1.0%, that in education up by 0.5%, and that in human health and social work activities up by 5.8%. Taking all three sectors together, there was an increase of 2.6%.

    Public service employment dominates these three sectors.

    Q4 to Q4, there was a decrease of 0.2%, taking the three sectors together.

  7. @ EWI

    classic response…the numbers are wrong. There is no evidence here of significant “pain” being bourne by the public sector…so it must be wrong.

  8. Since the decrease in employment was significantly larger than the decrease in weekly earnings it seems clear that the ones being let go are the lower paid employees.

    So, it might be possible to assume that the job/function these lower paid employees filled is now either filled by their remaining colleagues or their managers. Leading on from this it seems that either the managers had too many people employed for the same function or they are now getting a managers salary for doing a lower skilled job. A manager with too many employees might not be such a good manager deserving of high salary.

    Either way, it seems more value for money can be achieved.

    My personal opinion is that sustained economic recovery will only happen when employment picks up. I believe a sign of employment will picking up is when average earnings have bottomed out. The way I read these statistics, I don’t see that for Ireland just yet.

  9. If I understand correctly, these numbers don’t take account of the so-called “pensions levy” (a pay cut by another name) which averaged something like 5% across the public sector. As such they are meaningless.

  10. @Jesper – “My personal opinion is that sustained economic recovery will only happen when employment picks up. ”

    I wouldn’t hold my breath while waiting for that.

    @Others

    What is it with the public service people-bashing in Ireland?

    Surely even the blind can see that it originates from government PR teams – ‘get them to blame someone else for our cock-ups, etc.’? Creating a private/public sector divide is perfect for them.

    Anyone who gets sucked into it/buys it must be… deficient somewhere. Ditto ‘all those lazy good for nothings drawing the dole’ etc. etc. that ‘we’ are all paying for. Ignore it.

    It’s all manipulation. Bring your focus and your ire to the right place. What’s the lovely Americanism… “keep your eye on the donut, not on the hole.”

    …says he, sitting here writing a paper on how the over-65’s will be victimised when a future government’s spin campaign tells the working population that it’s all the fault of the aged that taxes are so high and services are all being swamped by crinklies. Soylent Green anyone?

  11. @ Tull mcadoo: Pain??? Do you mean that Financial and Economic Waterboarding is a ‘sport’?

    Since when has unemployment, poverty, or destitution become an effective ‘Fiscal Target?

    You are referring to actual human beings Tull (and possibly their immediate families). Could you engage in some meaningful intellectual engagement with the ‘aggregate’ ? Its dire! Our ‘economy’ is virtually doomed – unless there is a massive increase in income all round – without having to borrow one extra cent! Do you believe this is possible?

    B P Woods

  12. @ tull mcadoo

    classic response…

    Well, I feel no sympathy for someone like yourself, who by your own account has gambled massively and now expects the PAYE taxpayers to bail you out (and spend a couple of generations doing so) – and you regard it as your due!

    the numbers are wrong. There is no evidence here of significant “pain” being bourne by the public sector…so it must be wrong.

    The numbers are hard to believe, given the headline figures of the past few months of the substantial falls in numbers in parts of the public sector. That the CSO add a somewhat reluctant note noting that they haven’t counted the (rather important, one would think) “pension levy” in their figures is damaging to their credibility. The ESRI virus is catching, I fear.

  13. @ EWI
    I have not gambled massively and I do not expect anybody to bail me out, nor do I need a bail out since I have no gambling losses, other than some beated dockets from Punchestown.

    I am sceptical of the “woe is me, renting of garments” attitude from the PS. Their employment is still secure, their DB pensions are still in place and while they have suffered two pay cuts they still probably earn more than their counterparts in the private sector. Moreover, they still get to retire earlier. You get to go as a Garda, teacher in your early 50s.

  14. I have not gambled massively and I do not expect anybody to bail me out, nor do I need a bail out since I have no gambling losses

    Strange, because I do recall someone beating their breast about bonds recently.

    Moreover, they still get to retire earlier. You get to go as a Garda, teacher in your early 50s.

    Also as a fireman. But nowhere else, as you undoubtedly know but don’t care to acknowledge (I’ll personally be working into my sixties).

  15. Only working into your sixties. I would predict many Private sector workers will not be in a position to retire until their 70s, that is if they manage to find a job again.

    Such is the burden imposed on one by carrying a broken banking system and a bloated public service on the back

  16. @ Tull macadoo: “I am sceptical of the “woe is me, renting of garments” attitude from the PS. Their employment is still secure, their DB pensions are still in place and while they have suffered two pay cuts they still probably earn more than their counterparts in the private sector. Moreover, they still get to retire earlier. You get to go as a Garda, teacher in your early 50s.”

    Tull, please engage in a meaningful intellectual manner with the ‘real’ issue. I know it is now politically correct to target and blame victims. They are 100% responsible for their predicament.

    Please direct your ire at the enablers and their commercial sponsers, not the victims. Any increase in un-employment and a decrease in wages/salaries will doom our economy to a return to the 1950’s. You DO want this?

    B Peter

  17. @ B Peter,

    You have a strange definition of victim…somebody with a secure job, DB pension, incremental pay increases and the right to retire between 50-65.
    What does that make the person that lost their job, living on SW, if they have entitlement to it, probably going to lose their home.

    I do direct my ire at the “enablers” of our predicament. I include one political party, their commercial sponsors and their allies in the Public Sector Trade Unions. Each carved up the national cake as insiders and left little for the outsiders.

  18. Only working into your sixties. I would predict many Private sector workers will not be in a position to retire until their 70s, that is if they manage to find a job again.

    And on what, pray, do you base such predictions?

    (I’m assuming that the extraordinarily unfair schemes being considered by FF to raise the pensions age to fund the banking and developer bailout will not come to pass, that saner and more patriotic heads will prevail)

  19. @ tull mcadoo

    Perhaps I misunderstood what you meant by this:

    “I am a citizen of the state who bought into a bank at the senior bond level on the assumption that I was on the same footing as a depositor.”

  20. @Joseph,

    you’re right, waiting for employment to pick up looks like its going to be a long wait. Only way that could happen quickly would be with the creative destruction by some bankrupcies freeing up resources and that scenario seems very unlikely.

    @others
    Deficit spending could in theory help economic recovery. However, the current deficit spending is on paying too high salaries to specialists, managers and executives leaving not enough money to spend on people who do the actual work.

    Spending money on efficiency experts is only profitable up to a point, past that point it is sub-obtimising the use of resources as it costs more money to increase output by increasing efficiency of usage of units of input than simply increasing the amount of input. In this specific case I’m referring to labout units.

    If the senior people in public sector are worth what they currently are being paid, then it would be better for all if they moved into the private sector to be part of the wealth creation instead of just managing the resources of the public sector.

  21. I do direct my ire at the “enablers” of our predicament. I include one political party, their commercial sponsors and their allies in the Public Sector Trade Unions.

    Now, now. Please justify your claims that (i) the public sector = the trade unions (many aren’t, on both sides) (ii) the unions are “allies” of Fianna Fáil and (iii) the unions were running the country in any way, shape or form (if they were, they’ve been doing a particularly poor job of controlling the media for many years, unlike the government and IBEC).

  22. @ jesper

    If the senior people in public sector are worth what they currently are being paid, then it would be better for all if they moved into the private sector to be part of the wealth creation instead of just managing the resources of the public sector.

    “Senior people” is very ambiguous. Do you mean administrative, technical, professional or all of the above?

    And the blanket assumption that the public sector cannot benefit the private sector is ludicrous. Sectors such as engineering and ICT could hardly exist without public works and services commissioning them.

  23. @ EWI

    You did. I was merely stating the legal position. Unsecured Senior Bank debt ranks parri passu with deposits.

  24. @ Tull

    many people cannot see that senior bonds are far more appropriately described as long term funding rather than risk capital. EWI is obviously among these. By “many people” i include some very vocal academic and press commentators. This isn’t meant as a criticism at them by the way, simply pointing out where they have a fundamentally different view of things.

    @ EWI

    if we all live into our 90’s going forward, do you think it is in any way sustainable for people to retire in their 50’s or 60’s? Suggesting that private sector workers will retire in their 70’s is becoming the consensus probability. The onus is actually on you to suggest how we could come up with a public pension system that could prevent this without creating marginal tax rates in the 60-70% bracket for most workers. The pension levy is actually an attempt at this, yet you also view it as seemingly unfair. Bizarre.

    Also – you direct your ire at “middle class tax breaks”, but you forget that those in the upper and middle classes pay around 95% of all taxes, and that a huge portion of the public sector could be accurately described as “middle class”. Unless your definition of middle class somehow begins at a far higher income level than what most people view it as?

  25. The numbers of people employed in the public sector was never accurately counted.

    Institutions such as colleges had contract staff that weren’t showing up in headcount. Similarly when they left the number employed in the public sector didn’t drop as a result.

    Contractors with 3 years service or less typically lost their jobs last year.

    Some staff with close to 4 years were given contracts that took them over the limit where they have to be made permanent.
    These staff are effectively permanent now, but don’t have contracts signed – as BL needs to sign off but hasn’t done it yet, they’re entitled to a contract of indefinite duration but don’t actually have one.

    It’s possible that these people haven’t been added on to numbers employed in the public sector. Why delay the contracts otherwise?

  26. @ Eoin Bond

    many people cannot see that senior bonds are far more appropriately described as long term funding rather than risk capital.

    “Many people” clearly could see for some time that the Irish banks were in fact, a very serious risk (as was property).

    if we all live into our 90’s going forward, do you think it is in any way sustainable for people to retire in their 50’s or 60’s?

    If you really think that other than a minority of us can really continue working beyond our mid to late sixties (which is when I expect to be retiring), then I admire your faith in the future. The laissez-faire approach to pensions in the private sector is clearly utopianism (and the recent FF proposals are more of the same) doomed to fail time and time again, so a comprehensive new deal on old age pensions is necessary – and the unions, as the only voice of working people in this country, need to press on this.

    By the way, can we get some acknowledgment here that the fifties (at earliest, mind you) retirements are a feature only of very specific professions, which have eminent justification in at least some cases? Thank you.

    Suggesting that private sector workers will retire in their 70’s is becoming the consensus probability.

    That’s yet to be lost for the wage slave PAYE class (and may not be, should the unions grow a pair). And very difficult not to believe that for the vast majority of public sector workers, the age of retirement will be increased substantially to keep pace with setbacks on the private side.

    The onus is actually on you to suggest how we could come up with a public pension system that could prevent this without creating marginal tax rates in the 60-70% bracket for most workers.

    Cut the (many) giveaways to the middle class and the super-rich. Dismantle the oft-plundered private pension schemes. And yes, some taxes will probably have to be imposed, but the trade-off of not being in financial difficulties in your final years of life isn’t a hard sell to people (as alien as such calculations may appear to the better-off).

    The pension levy is actually an attempt at this, yet you also view it as seemingly unfair. Bizarre.

    The “pension levy” is pretty universally recognised as a stealth wage cut, another stroke of cute hoorism from the masters of such. Not even the most generous interpretation of it can cover over the deep contradictions in the logic (not to mention the implementation) of it.

    Also – you direct your ire at “middle class tax breaks”, but you forget that those in the upper and middle classes pay around 95% of all taxes

    Tax breaks are at about €8 billion a year at the present moment, from memory – and I’m sure that there’s all kinds of things not included in that pot. So mewling about the oppresive tax burden of the richest parts of society doesn’t cut very much ice with me.

    and that a huge portion of the public sector could be accurately described as “middle class”. Unless your definition of middle class somehow begins at a far higher income level than what most people view it as?

    Well, that’s a discussion and a half, isn’t it?

    Easiest to say what they’re not. Undoubtedly, a lot of Irish people may even regard themselves as middle-class, but aren’t. Having a good wage doesn’t necessarily make you middle-class, and especially not when it’s mired in servicing the black hole that your house (bought at vastly inflated prices financed by banks playing both sides of the transaction).

    If it isn’t commonplace in your family to go to private schools, to enter university, or to have ambitions to become a professional, then you’re probably not middle-class.

    If members of your family commonly use the services of an accountant for tax-avoidance or substantial tax refunds in their personal finances, then you’re probably not middle-class.

  27. If members of your family don’t commonly use the services of an accountant for tax-avoidance or substantial tax refunds in their personal finances, then you’re probably not middle-class.

  28. You did. I was merely stating the legal position.

    Thank you. It wasn’t at all clear from your phrasing that it was meant as such.

    Unsecured Senior Bank debt ranks parri passu with deposits.

    I think my response to that could be best summed up as “bankers can go f*ck themselves”. Or something similar.

  29. @EWI

    Your manifesto reads like Robin Hood in reverse-take benefits from the insecure and lowly paid in society to preserve the lifestyles of the noveau riche in the public sector

  30. @ EWI

    “If members of your family don’t commonly use the services of an accountant for tax-avoidance or substantial tax refunds in their personal finances, then you’re probably not middle-class.”

    Complete b*ll*x. Ill cite my own parents as an example. They always complained (jokingly) that they were never offered any of those offshore savings accounts, and trust me, im middle class – private and publicly schooled, university educated (although i dont quite get the reference here, 3rd level is still extremely cheap relative to “true” costings).

    Please, enlighten us as to what sort of wage levels you consider makes someone middle class?

    Also, please explain why a teacher or a garda should be able to retire in their mid 50’s?

    And i noticed how you didnt address the point that the middle and upper classes pay 95% of taxes as is – again, only an interpretation that middle class begins far higher in terms of wages than generally accepted could deny this point. Please address via my first question above.

  31. @ EWI

    You are confused. I agree with your sentiments on bankers. However, I was referring to senior bonds of banks which are issued by banks to other banks, to pension funds and to you and me.

    If these debts are not serviced while under the guarantee then there is every chance that the NTMA will not be able to borrow the money to pay the wages and salaries of your beloved public service.

  32. @EWI,

    by senior people I meant the people in senior positions in the public sector, i.e. people high up in the organisation.

    I never said and I will never say that the public sector cannot benefit the private sector.

    I am saying that the optimal situation is to have people who are capable of generating jobs and wealth in positions where they can generate jobs and wealth. I believe that the wealth and jobs are created in the private sector. I believe that the salaries of some senior people in the public sector can only be justified by immense talents and I believe those talents are wasted in only administrating wealth that has been created. I believe those talents would be better employed in the private sector as they there could in fact generate wealth and jobs.

  33. @ Ernie,

    I would not say the figures are meaningless. If you adjust as you suggest for the pension levy of 5% -weekly wages in the public and private sector fell by 3% in the year to Q3 2009. Post Q3 there was a further cut in gross pay in the budget. So the gap between public and private narrowed by abot 7-8%, assuming private sector wages remained intact.

    Last if you factor in the progressive tax system, the fact that PS workers are higher paid implies a bigger hit.

    Do the data imply that public sector workers were more likely to keep their jobs but suffer a bigger cut in pay while private sector wages fell less but employment levels fell by more.

  34. @ tull mcadoo

    Yeah, right. Maybe the Sindo readership might accept your brand of bullsh*t.

    @ Eoin Bond

    Please, enlighten us as to what sort of wage levels you consider makes someone middle class?

    I’ve already been over that one.

    Also, please explain why a teacher or a garda should be able to retire in their mid 50’s?

    I know nothing of teachers, but I do know a good deal about the guards, the army and the fire brigade. By their mid-fifties they’re simply unable to meet the physical demands of their jobs, and not suited to anything else.

    And i noticed how you didnt address the point that the middle and upper classes pay 95% of taxes as is – again, only an interpretation that middle class begins far higher in terms of wages than generally accepted could deny this point.

    I’m going to accept your “95%” as a given (yes, I’m a too-generous sucker). I’ll mention again that €8 billion or so (at least) of subsidy to the middle class, and their possession of wealth far beyond their proportion of the population.

    If these debts are not serviced while under the guarantee

    Defaults happen, whether you’re a small businessman or a country (and some surprising countries have in the past). And hey, bankers accept that this can actually happen in their business, and live with it.

    (By the way, it’s delicious to see Lenihan & Co. recently being hoisted on their own “patriotism” petard. Couldn’t happen to nicer folks, who deserve to be kicked out for their calamitous ‘guarantee’ if nothing else).

    @ Jesper

    Thank you for that. I disagree with you that there isn’t a need for talent and experience in the public sector, and I don’t find “because they could be earning money in business!” to be a logical reason – and neither do they, obviously enough. I suggest that you take a better look at the breath-taking diversity of the range in what the public sector actually does.

  35. @ EWI

    the 8bn (actually 7.4bn according to TASC) figure is the TOTAL amount of tax breaks/exemptions accruing to the entire country. They include, among a lot of other things, personal tax credits, exemption of child benefit, capital gains exemption on principal private residence (which im sure was a fairly huge portion of this amount), tax deductability of charitable donations, and redundancy payments. All evil middle class tax breaks im sure.

    http://www.tascnet.ie/upload/file/TASC%20Pre%20Budget%20Statement%20on%20Tax%20Breaks%20FINAL.pdf

    Put simply, your contention that there is “€8 billion or so (at least) of subsidy to the middle class”, is complete bulls1t. Your incredibly vague definition of middle class seems more down to your own view of social hierarchy and personal choices rather than any empirical evidence or fact-based reference.

  36. @ Tull mcadoo, EWI,

    On the point of teachers, they have to work 40 years before being eligible for a pension etc.

    It is possible to retire early, maybe late 50’s or early 60’s etc. But to do this one has to carry out one of two actions.

    1) Buy years from your dept at actuarial cost.
    2) Join some savings plan which offers AVC cabability. With this option one is dependant on the stock market as past performance is no guarantee of future returns.

    Either way a teacher wishing to retire early has to pay for it. They don’t get something for nothing.

  37. Sporthog,

    thanks for the clarification. I had forgotten that. Their base pension though is not fully funded though..is that correct?

  38. @EWI,

    I am getting the impression that you consider any slight towards anyone in the public sector to be a slight towards all.

    I do believe that many people enter the public sector with the motivation to make a change and do something good for the community. However, it does seem as people move higher up in the organisation they are more motivated by making money for themselves. The senior civil servants who got their pay cuts reversed would be a prime example.

    You are defending them very strongly, however, your arguments are all about accusing me of saying things I did not say.

  39. @EWI,

    The other benefit of retiring early is that you get to go back and work for the Public Service as a consultant or if you’re a teacher you get to do temporary work – which means that recent teacher grads can’t get the experience they need to get a permanent post.

    And, the argument that poor young teachers have to work for years on a temporary basis before they receive a full-time contract is a damning indictment of their Unions who sought to get pay-rises for themselves while neglecting the most vulnerable in their profession.

  40. @ Jesper

    ‘I believe that the wealth and jobs are created in the private sector.

    So do I. But jobs are frequently destroyed in the pursuit of profit. SR Technics was a local mess, and the unemployed of Detoit are not exactly celebrating Schumpeter’s creative destruction theory.

    Wealth is also routinely destroyed in the private sector. As we write, governments are still desperately filling in the hole which was dug with CDOs and other casino inventions. That is ‘intervention in free markets’, but Wall St is not complaining. Neither are our banks.

    Wealth takes all sorts of forms, and it has to be protected as well as created. How do you price air traffic control ? Many public sector activities are of a wealth-preserving nature, and social goods may not reasonably be compared with private goods. Apples and oranges.

    The public sector/private sector divide is a sham battle. Just like Dubs v Culchies, Rangers v Celtic, or Men v Women, Natives v ‘Non-nationals’ and many others. All good for a bit of crack, but toxic if taken seriously. We have has too much bigotry on this little island.

    There are powerful individuals on both sides of the public/private divide, but mostly there are ordinary folks, with hopes and dreams and bills to pay. It is in our general interests to to reform all our institutions, in such a way that everyone gets a fair crack of the whip and an opportunity to contribute their best.

  41. @Paul,

    you’re correct.

    & using the example of air traffic controllers:
    If they were paid as much as bankers or senior public servants I believe that the people who at present are bankers or senior public servants would do everything they could become air traffic controllers.

    High price does not guarantee high quality. High quality does not always demand high price. High pay will always attract chancers & chancers in positions of high responsibility is a recipe for disaster.

    If something is too important to be run by chancers & the chancers can’t be filtered out then the salaries has to come down.

  42. One of the great things about being self employed is the ability to carry on working for as long as you feel able. My father who is 80 this year still goes into work 3 mornings a week. My grandfather did much the same. I hope to carry on working well after 65.

    The reality is the retirement age of 65 was set when life expectancy was basically 70. Most of us would now hope to reach our 80s. It is unlikely any private sector pension (defined contribution) will be able to fund that while defined benefit schemes will go bang. I certainly couldn’t afford to fund a pension that allows me retire at 65.

    Most people I know who “retire” between 60-65 get another job and this includes Guards. We don’t just work to earn money, we do it to keep ourselves and our brains active.

  43. Ostensibly this post and its comments are about trends in earnings – it has descended into bashing and defending public sector workers.

    The assumption that wage cuts are good, in economic terms, is on a par with the “share the pain” claptrap. In truth, if I convince my workers to accept less, it’s more for me. Yippee.

    What do I do with the money I save? Do I expand the business, reduce my prices, hire more workers? Do I sniff more cocaine or take another holiday? Do I decide the property market has bottomed out and take a punt on a cheap house on a boggy housing estate in Leitrim?

    Trends in earnings, taken in isolation, are meaningless – except to people who want to bash/defend public sector workers.

  44. @ Tull mcadoo,

    Apologies for not getting back to you before now. Things have been busy!! I would have check a payslip of a teacher for deductions etc. So I am not able to answer your question. From my memory I believe there are several deductions, but how big they are I don’t know.

    Perhaps if there is a teacher contributing to this blog they might try to answer your question.

  45. @Peter

    The division of the profits between bosses and workers is one issue. International competiitveness in unit labour costs is another.

    As we are competing to provide goods and services in in the global market place, we do have to think about our unit costs. We’ll probably be less bolshie about that when our bosses (public and private) start demonstrating a bit more more competence and social responsibility.

    The current media pressure around fat pensions seems like a good start.

  46. @tull.
    Earlier you said “I was merely stating the legal position. Unsecured Senior Bank debt ranks parri passu with deposits.”

    Can you perhaps point me at a source for this position?

    I’ve asked on here before, but no-one’s obliged yet. I’d greatly appreciate it.

  47. The real pain has yet to hit. There will be more taxes and existing taxes will rise. There will be fewer employments available as the depression deepens. The government will continue to bash the public service, counting the permanence and pension prospects as worth even more than now.

    Idiots will still rant about the merits of public service vs private sector. The private sector resent the greater tested intelligence of the public sector and their conditions, when times are bad. When times are good, they sneer at the low rates of pay in the public sector. When the economy recovers, the public sector will lose many thyousands of workers as they transfer to the private sector. Everything overshoots especially when a government is involved as it fears the voters. This fear is healthy and is going to increase.

    Wnat to know any more?

  48. Amazing how clueless BL is to the depth of change required in the country – or perhaps how devious he is in defending his and his friends’ interests. “Legal advice” serves as the reason why people cannot be stripped of double pensions. Matters not that individuals and businesses are going under at an alarming rate. He is in government. Can he not bring forward legislation to cancel all double pensions? Or will it hit his friends and party-mates too hard?

    http://www.irishtimes.com/newspaper/breaking/2010/0426/breaking18.html

  49. Isn’t the reality that faced with a collapse in revenue most employers will seek redundancies over wage cuts, in both the private and public sectors. So in the public sector temporary workers and those on fixed contracts have been let go just as in the private sector.

    When all redundancies that can be made have been made, then employers go for wage cuts. In the private sector there is greater potential for redundancies, while in the public sector, permanency means the “ceiling” for redundancies is much lower and therefore wage cuts have to be introduced earlier in the process. Also the size of the wage bill and the scale of the deficit demands savings which simply cannot be postponed. Collapse of revenue = wage bill cut.

    As usual the issue of the pensions is sidelined despite the size of that bill.

    Those in the public sector have to accept, as the pay review of higher civil servants did, ( and as severals I talk to do) that security of tenure is once more a factor in pay. That’s not “public sector bashing” – its just accepting the harsh reality of a “jobless recovery”.

    As for Garda giving out because they can’t have TWO jobs. Holy God. Would someone send a PR in to teach them how not to alienate the half million unemployed? Never mind the security implications and the cushy early retirement.

    In any event, I think the deficit that looms means that we ain’t seen nothing yet – for both private and public sector. It’s time to hunker down and find a way to function instead of wasting time denying the maths.

  50. “It’s time to hunker down and find a way to function instead of wasting time denying the maths.”

    @Sarah: Bingo. But unfortunately, the longer these double pension give-aways and ridiculously easy terms for pre-1995 public servants continue, the bigger the deficit will keep getting and the tighter the eventual squeeze will be.

    BTW, I am surprised that in all this public sector bashing no one talks about the two-tier public sector system in which employees who joined before 1995 pay almost nothing into their pension funds and get better pensions at the end than the post-1995 employees do. Of course and then there is the third tier of contract workers – which by the way includes a significant proportion of Ireland’s PhD graduates of the last 10 years.

  51. @Sarah
    “Isn’t the reality that faced with a collapse in revenue most employers will seek redundancies over wage cuts, in both the private and public sectors. ”

    Or change the way they trade. I see Dunnes Stores Cornelscourt is no longer 24 hours but closes between midnight and 7am. Will save them a few quid on wages and they will hope cost no turnover at all.

  52. @garro,
    Ye that was a terrible example of existing employees screwing future employees for their own self interest. Then again its the only way governments can secure reform.
    Apparently the pension levy currently covers current pension costs. They should now set up a ring fenced public sector pension fund so that this situation is maintained into the future. Like everyone else they can fund there own retirement. This would also focus minds on the unfair pension provision for the low paid public sector minority

  53. @sam @garo
    “Ye that was a terrible example of existing employees screwing future employees for their own self interest.”

    It astonishes me how this isn’t highlighted more. The pensioners and the older employees are the ones putting the knife into the younger ones – even though its the younger generation who got hammered with the property costs – yet the row is consistently painted as unions vs gov or public vs private instead of young vs old.

  54. This CSO report is based on 13 different occupational categories and it is within the fine detail of these sectors that we can analyse the changing nature of labour costs (even if they are already significantly out of date).

    It is far better to analyse Irish employment and labour market statistics by occupation or sector. Using broad generalisations like public and private are useful snapshots on particualr trends but in reality they tell us very little about the configurational specifics that take place within these two areas of the economy.

    If one really wants to examine insiders and outsiders, beneficiaries and losers in the Irish economy then it is far better to examine the differences across the following categories:

    – Managers, professionals and associate professionals (528,000)
    – Clerical, sales and service workers
    – Production, craft, transport and manual workers

    It is the first category that are the clear winners

  55. @All

    OK. So what type/form of labour market would we like? How do we go about getting it? Present direction will be extremelly unbalanced … and a good few miles from the so-called ‘smart economy’. Cutting wages in a race to the bottom, as in too many neoclassical equations of the Anglo-Hiberno-American variety, is the wrong direction for a small open piece of development property once known as Ireland.

  56. @ Dave,

    then how do you narrow the deficit and adhere to Frau Merkel’s demand for fiscal discipline.

  57. @Aidan R

    I think its more about industry rather than sector by which i mean not clerical or manager or craft but pharma or service or software. So if your industry (and your employer of course) is doing well, then your wages are safer – so medical devices vs retail.

    @Dave

    I think its back to equality i.e. the gap between top and bottom. The Tiger was as much about a widening gap rather than overall wage inflation. The pity was that benchmarking sought to replicate that gap rather than challenge it.

    Ultimately though, this is back to the manual devaluation discussed here before….and the problem is the different rates that this happens in different sectors, E.g. this joke about the ESB not having to reduce its prices as long as they are in line with their costs – but no incentive to reduce their costs as long as there’s no serious competition. Others are Gp bills, insurance costs, fuel, etc. Wages are easiest cut, but the rest have to follow.

  58. @Dave, Sarah.
    The question is much more how would you like to convince business (start up or established) and high skill workers to either come to or stay in Ireland. Equality or neoclassic economics are lovely discussions, but complex and inclined to carry baggage.

    Another way to look at it is to consider what you’d do if you were a potential investor or high skill worker looking to invest in Greece or move to Greece, or to stay in Greece – or Ireland for that matter.

    You’d probably be pausing right now because you’ll be looking at a scenario where your investment or skills may well be “exploited” by the state to pay for pre-existing problems, among which Ireland’s bizarre benchmarking must rank pretty highly. After all, to use the phrase that the left loves so much, you’d have a high “ability to pay”.

    Instead of Greece (or Ireland) encouraging success and investment, these states are likely to punish it by increasing taxes on successful business models and on in-demand skills, thereby reducing the amount of investment and employment they’ll see. Oh goody! While the impact on investment can take effect and can be reversed reasonably quickly (less than a decade), the impact on employment and people’s training decisions can take a long time to undo.

    Unfortunately, apart from the times that inequality is a symptom of cronyism and corruption (as in Ireland recently), it’s also a symptom of some people doing things that are useful and marketable and valuable, and other people doing things that are not.

    Other than that, entirely agree with Sarah re the categories of “employee”. A “manager” in retail and a “manager” in pharma/medical devices/tech are entirely different beasts. There’s no ex-ante higher value in either, but there may be wide variances in the outcome value.

  59. http://www.kondratieffwinter.com/kw_fiat_currency.html

    I suggest a quick look at this site will help many.

    One interesting thing, there are more: oil has never been so cheap!! In terms of gold that is. USA is fully stocked. So demand is falling. The whole point of inflation and fiat currencies is that malinvestments mean price and value distortions make rational investment difficult. Until confidence is re-established, new investment of any kind, will be scarce. Due to the distortions, people are really confused as to how much something is actually worth. Hence the Renminbi/$ debate among others. Food and other commodities will increase in terms of fiat currencies. Banking is an essential instrument of distortion and skillfully used is legal theft!

  60. @Sarah Carey – “Others are Gp bills, insurance costs, fuel, etc. Wages are easiest cut, but the rest have to follow.”

    Hmmmm. Agree. Despite all talks of deflation, I notice in recent months that my car insurance, house insurance, tv licence, weekly petrol spend, health insurance, car tax, (I could go on but I won’t) – what I call the ‘serious’ bills – have all gone up while my earnings/prospects seem to be dwindling. My mortgage has risen too!

    Sounds like a cause for social unrest to me. Molotov cocktail anyone? ‘On the rocks’ of course.

  61. @Hugh

    Well, I think cost of living is a bigger factor than taxes. e.g. the cost of buying a house being a major one – and hey, that’s coming down 🙂 So I think the manual devaluation project, as amorphous and difficult as it is, fits in with your priority to attract high skilled workers.

  62. @ Hugh Sheehy

    ‘Unfortunately, apart from the times that inequality is a symptom of cronyism and corruption (as in Ireland recently), it’s also a symptom of some people doing things that are useful and marketable and valuable, and other people doing things that are not’

    Most inequality arise from an accident of birth, in that it derives from the position of one’s family in a hierarchical society. In addition, there are issues of gender and other consequential social differences. Rethinking Equality by Chris Armstrong is a nice overview.

    We can acknowledge tthat living standards have risen as a result of the growth of traded goods and services, but we don’t have to accept that things which are not tradeable have little or no value. We are currently suffering under an ideology which tends to reduce value and utility to ‘marketableness’. That’s a recipe for a plastic universe.

    The swings and roundabouts of economic change are fine as long as they are not knocking the guts out of you. When that happens, folk start looking to get off. Croneyism and corruption are the greatest obstacles to recovery in Ireland, because they breed cynicism and hopelessness. They give both business and government a bad name.

    I suppose there is still a choice between getting out and sticking around to put the place in order. We need enterprise, but not the variety which has bled us dry. Finding constructive ways to ‘name and shame’ the most egregious abuses of power and position is a critical task.

  63. @Paul.

    There are kids and families that suffer unfairly from bad circumstances, and there are many that perpetuate their circumstances. A valuable step a society can take is to eliminate circumstance as an excuse/reason for inequality. Education, from pre-school up, is one major tool, but unless you’re prepared to take kids from their parents there’s only so much you can do.

    Many things that have value are not tradeable, but almost all of the things that can improve living standards are. Other than that, the utility of social insurance is that it allows change without causing people to be flattened by it. The problem occurs when it turns from insurance to assurance, allowing people to “get off” but still to collect. This has become widespread, and is very costly in money and in value.

    Also, what was happening recently in Ireland was theft not enterprise and we should find ways to jail or impoverish a bunch of people.

  64. paul quigley
    Hugh Sheehy
    + 1

    One solution to the families that cannot cope is community housing where the kids can be cared for by the “village”. Kids know very well who actuall love them and they above all know their parents. The superego overdevelopment of the child forced to take care of a parent often makes Gardai, nurses or Tax Inspectors of the kids.

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