The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
The report is here.
My ability to do basic maths must be faulty:
“The Body noted that Exchequer pay bill costs fell from a peak of €17.514bn in 2009 to €15.712bn in 2010, or €14.990bn, when the effect of the pension related deduction is factored in – a 14.4% reduction.”
The effect of the pension tax is to reduce pay by 4.6% (722 mn); I thought it was on average at 7%? Indeed, the document refers to this:
“the pension related deduction of an average of nearly 7% which was applied to all the earnings of all public service staff, which in 2010 saved around €945m”
Is it just a part-year effect?
Some bits are good, though:
“The value of the reported non-pay savings detailed in the Report (which are not exhaustive) is some €308m.”
I’m a little concerned, though, that removal or alteration of work practices are being monetised as savings? For example:
“Elimination of bank time in the Civil Service:…Based on estimated pay rates, a value of around €5.5m can be attributed to this reform.”
Is this where the 308mn comes from? If this is the case, it is a little disingenuous. While changes to work practices will enable the quality of service to be maintained and improved, despite reducing numbers, there is no monetary saving that will reduce the deficit.
The headline figure of 289mn on paybill is a little misleading – 58mn in savings on local authority costs are included, but a footnote reveals:
“Local Authority staff costs are not included in the Exchequer Pay Bill and are funded separately”
From Page 7 – small footnote.
The gross cost of the Exchequer pension bill has risen by 14.3% in this period. This increase is associated with the payment of superannuation benefits (pensions) in the normal course to a growing number of retired public servants. A relatively small element (and one which declines over time as the early retirees reach the age at which they would have retired in any event) of the total is attributable to early retirement programmes, such as the ISER, which operated in this period.
Is it just me or is 7% per annum increase a frightening rate of growth? How many of the headcount reductions are now just jumping into the never-ending PS pension.
Why has the Implementation Body got nothing to say about progress on implementation of paragraph 1.28 of the agreement, which states:
“the implementation of this Agreement is subject to no currently unforeseen budgetary deterioration”
The agreement dates from March 2010.
There is a section of “Status of the Agreement” which makes no mention of the budgetary deterioration since March 2010 that led to the IMF EU bailout and recent speculation from a government ministers even, about the possibility Ireland will require a second bailout (not to mention the bond market which has been rather more unambiguous than that) Nor does the Implementation Body even see fit to mention the existence of paragraph 1.28 never mind comment on the failure to implement it.
Have they not read the agreement, or is it a conspiracy of silence?
“The estimated total sustainable pay bill savings made through reductions in staff numbers and other savings in the public service pay bill is in the order of €289m per annum in respect of the 12 months under review.”
Along the lines of JeromeK’s comment, does the €289m include the costs of shifting PS workers or PS pensioners etc?
have you spotted how is the redundancy cost amortised?
“Overall, the pensions bill has increased from €1,350m in 2005 to €2,235m in 2010 representing a 65.6% increase over the period (pay in contrast rose by 10.8%) (Tables V and VI). The pensions bill has increased by 35% since 2008. This is mainly attributable to an increase in retirements in 2009 including those under the Incentivised Scheme for Early Retirement.”
Even just taking the increase in the pensions bill from 2009 to 2010 and stripping out the local authority savings, the fiscal benefit from the measures reduces to 7mn euro…
Croke Park is working alright on all the wrong levels.
Hospital closures, shortage of doctors soon, reduced nursing care,…
If you get ill, just dial one of the nearly 100,000 HSE bureaucrats for advice.
Welcome to reform, Irish style.
Want to know about the Croke Park Agreement? Try this:
With specific acknowledgement of the effects of paragraph 1.28 as follows.
” Q Is there a ‘get out’ clause that would let the Government introduce more pay cuts even if we co-operate with change?
A No. Clause 1.28 of the agreement says: “the implementation of the agreement is subject to no currently unforeseen budgetary deterioration.” There were similar clauses in all previous national agreements. The Croke Park clause reflects the reality that an unforeseen shock to the economy – like the collapse of the banks around the world in 2008 – would create a new economic and budgetary situation.
The clarifications IMPACT got from the Labour Relations Commission confirm that the implementation of paragraph 1.28 “will be applied in a bona fide manner by the Government side” and that “it is not envisaged that, on the basis of any currently known facts, that the clause would be utilised.” The clarifications also confirm that, if such a situation were to arise “the parties would meet at central level (i.e. Government/ICTU) to discuss the circumstances that had arisen and the implications for the Draft Agreement prior to any decision being taken that would adversely affect the pay provisions of this Agreement.”
So, unless I am mistaken, there should have been high level meetings to discuss the “new economic and budgetary situation”.
Has anybody managed to find a report on these meetings and discussions, or conclusions thereof in the Implementation Body’s report?
Isn’t it telling how often in Ireland anything inconvenient is studiously ignored. Bertie’s LSE education, false market in Anglo shares, questionable solvency of insurance companies / banks……
What is it about little old Ireland that makes it so serially ready to attempt to ride roughshod over reality.
“What is it about little old Ireland that makes it so serially ready to attempt to ride roughshod over reality.”
It happens everywhere. It’s just that, in Ireland, there seems to be a greater willingness to suspend disbelief. (To an extent it may come from centuries of the exercise of external power and authority and feeling unable to do little about it – but this is contentious.) But what, unquestionably, there is is a general reluctance to direct a focused critique at the locus of power and authority and to engage in adversarial disputation based on analysis and evidence. And on the other side, those in positions of authority do everything in their power to close down debate, to avoid engaging in debate that might compel them to change course and to smooth over any genuine conflict of interests that might arise.
It’s all “Tóg bog é an saol agus tógfaidh an saol bog duit”.
But it only takes a few public representatives to decide ‘enough is enough’, to start making life awkward for the cosy consensus, to begin attracting the attention – and then the support – of ordinary voters. Ordinary backbench TDs fail to recognise it, but this rotten edifice would collapse with a few well-aimed kicks. And they could enhance the respect in which they are currently held by voters – and improve their re-electability – overnight. But they would need to have the courage to defy the party machines – and that’s a scarce commodity.
A complete and utter sham – one hopes that the IMF/Eu are not taken in by this flim-flammery.
What an appalling country this is – even when most of us,in the private sector, are terrified that whatever pensions – private sector ones – or savings we have are going to be wiped out overnight or over some long weekend coming up shortly, this sort of nonsense is trotted out as if ‘achievements’ have been made on public sector pensions/payroll.
They actually do take us for fools…and indeed we are as long as we accept this complete tosh.
Strange or maybe not – – the pay bill is separated from the pensions bill.
So there is a pay saving of €289m and the pensions bill rises by 145 because of lump sum payments etc
Oops, I had a fat finger typo above, instead of “or” should have typed “to”. i.e. “does the €289m include the costs of shifting PS workers to PS pensioners etc?
I didn’t spot amortisation of redundancy payments. I wouldn’t take issue with it as long as these (future) costs are included in future versions of this report.
Re Croke park – I think you’ve called it Croke Pork in the past. I wouldn’t disagree. We tolerate obfuscation, throughout all sectors, far too much in Ireland. There is a tendency to distract the citizens until an issue falls off the agenda. For example, supermarket prices in Ireland; the supermarket blames X,Y and Z. X pipes up and blames supermarkets. Y blames supermarkets, X and Z. Z blames A, B anc C. And so on until we lose interest and nothing gets done.
Perhaps, now that the IMF and EU are involved, actionable assessments of the PS will be made. Whether they use numbers from this type of report or come up with their own numbers will determine very different courses of action. If they twig the members of the implementation body, they’ll have to do their own work.
@hoganmahew the pension levy reduces the taxable income of the employee for income tax, I imagine this is the difference between 4.6% and 7%?
@vinny if government outgoings on pay have been reduced by 14.4% then this is not quite flim-flammery, even if you wish to argue that more should be done.
@Michael Hennigan to assess things you’d need to distinguish money outgoing due to early retirements etc of pension lump sums that will not recur and the increase in annual pension outgoings. The increase in pensions is also somewhat higher as most of those retiring are pre ’95 and so are not entitled to the regular old age pension. Any person reaching retirement is a cost to the State.
Respectfully as I can be, this is another load of tripe.
When you see the PS workers/Pensioners on the streets that is when you will know something is being done. Untl then it is as you are: stagnation and decline.
All Croke Park does is move people from positions where they get state money for working to positions where they get marginally less state money for not working.
I wish somebody in govt had some sense. You deflate wages (and social welfare) before cutting numbers because there’s a much greater chance of keeping services that way.
Everything is being done to protect wages and pensions. Therefore the cuts to frontline services that should not be happening are made in a crude fashion so that the state keeps on giving.
Example 1: Home carers allowance: how much money is going into health service annually? Where is majority being spent? Answer: Payroll
Example 2: Freeze on garda recruitment, surely a bad idea in the medium/longer term. Where is majority of Garda budget being spent? Answer: Payroll
I could go on.
I posted on the other thread but it might better here-
Reading today about the protesters in Greece one aspect caught my attention. A nurse with 25 years service in a State hospital earns 1100 euro a month and it is now going to be cut to 900 euro. How does this compare to Ireland?
It looks like real austerity to me as compared to us.
“If you get ill, just dial one of the nearly 100,000 HSE bureaucrats for advice”
Wow, that is some uneducated shit, man.
Question: Do you really, really, in your heart of hearts, believe that this volume of HSE staff (close to 100%) are bureaucrats?
While there are a variety of reasons behind the general belief that the Croke park agreement won’t work, one reason seldom mentioned is that in the absence of specific targets for reductions, no targets can ever be achieved. Therefore people who trot out nonsense such as this can always say “the cuts didn’t go far enough”
We havnt had real austerity here, if we had, there would be strike action. The theory that irish workers are more understanding or more restrained is rubbish. The eighties taught us that. Your average state worker in Greece is experiencing real, to the bone, cuts…your average state worker in ireland is having to choose cheaper holiday destinations.
@dearg doom – I refer you to postings by Hoganmahew and JeromeK re the ‘14.3%’/€289 mn ‘saving’/monetising changed work practices/7% per annum increases in pension provision etc to reply.
Reading the report it is full of the usual nonsense and hypocrisy about delivering improved services with fewer staff and less cash – while they are actually slashing frontline provisions – not a word about getting rid of the ‘silo mentality’ that dominates departmental practices and processes,eliminating ‘muggins turn’ promotional practices,freezing increments,establishing real accountability for decisions ,actions or non-actions as the case may be,vastly improving management skill levels,eliminating the current performance improvement sham system,allowing ordinary staff to contriute new thinking without the fear of being regarded as a ‘renegade’ etc/etc/etc…
We are on a ‘burning fiscal and spending platform’ and the only people who have a genuine sense of fear are people outside of the public sector whose jobs have been lost/threatened or businesses ruined by a wildly overspending sector who cannot even regulate a banking sector or project manage the proverbial ‘p—s-up in a brewery’………..
This report simply is incredible within the above outlined context – far too little – far too slow – and far too late….
Who’s for yet another ‘high-level’ committee being formed to report ‘whenever’ – produce a ‘report’ leading to – no action that upsets vested interests?
“Wow, that is some uneducated shit, man.”
If that is your example of an educated response, I stick with my uneducated lexicon. No need for vulgar language to a make a point.
Targets were set for Croke Park. Listen to Minister Howlin and associates praising the achievement of targets today. SMEs have a very different take on the validity of those targets. Too little.
In 1987, the late Dr FitzGerald worried that the numbers in the health service at 40,000 were rising too quickly and out of control. Between 1997 and 2001 the health service added 25,000 to the payroll only 800 of these were front-line staff. Ahern vetoed any redundancies when the HSE was created.
The previous HSE CEO opined that the the back office had a surplus of staff running well into four figures.
PPARS ranks among the most egregious overruns in state history – from an €8 million project thereabouts initially to €200 million. Purely a creature of the bureaucracy.
When I go to a hospital I don’t want to be treated by Governance Officer, A Freedom of Information Officer, a Safety Officer or one of ten dozen patient record keepers. I want to see clinical staff about the place and they are increasingly in short supply.
My, how sensitive you are to mild vulgarity, but not to the actual question posed I notice.
Here it is again – do you believe that there are 100,000 bureaucrats in the HSE, as you stated above?
A follow on question would be, how many of these so-called “bureaucrats” do you believe an organisation like the HSE should have? This is a genuine question which needs to be addressed by anyone who supports the position you’ve taken. I presume you have an answer, as it is simply not logical to adopt a position that there is too much/many of anything, if you do not know how much/many there should be, optimally.
You cite “the previous HSE CEO opined that the back office had a surplus of staff running well into four figures”, yet you appear to object to an agreement (CPA) which allows for this surplus to be shed over a controlled and relatively short space of time. How can you reconcile these opposing stances of yours? Do you want staff reductions or not?
Its bizarre how often the opponents of the CPA call for it to be scrapped and replaced by…the very same initiatives which it pursues? (Changes to work practices, reducing periods of premium pay, reduction in employees etc)
There’s an odd belief out there that the proportion of government money spent on pay is too high, when the fact is that for many if not most government departments, staff are the primary units of production and almost all non-staff costs are overhead. For those departments, proper cost control measures would almost certainly increase the proportion of money that is spent on payroll.
@ Kevin Walsh
You’re missing the real agenda here. All that lovely lucre could be going in (bigger than present!) spades into that wonderful paragon of efficiency and public-minded altruism, the Irish SME sector.
The report says the total cost incurred on the project [PPARS – EWI] at August 31 of this year was around 131 million euros. Out of this, 57 million euros went to consultants and contractors, 20 million to project infrastructure, 17 million to national administration and 37 million euros on local agency costs.
The Deloitte firm was paid 38.5 million in respect of advice and support, according to the report.
So, you complain that no more Guards are being recruited, then complain that (according to you) too much of the Garda budget goes towards employing Guards! With this level of genius…
My understanding is that at least up til January 2009 the HSE employed around 130,000 people. In its 2010 annual report it employs something called ‘whole time equivalents’ around 108,000 of them. All for a population the size of Milan. No one can deny that the agreement with IMPACT which guaranteed continued employment to Health Board staff in the HSE left many occupying non-jobs. The important issue within the context of the budget deficit, which seems to be drifting out of control, is how much is being spent on management and administration across the areas of activity?
I favour reducing the public sector to the barest of minimums and in the process creating space for private enterprise. There is inefficiency throughout the whole of the public sector to varying degrees. The guarantee of a recurrent budget is partly but not entirely the culprit. Few private companies could have afforded the folly of PPARS without serious payroll consequences. Several front-line clinical organizations and at least one Dail committee have complained about bureaucracy and inefficiency in the HSE.
In terms of numbers, let me give you this anecdote. A developer acquaintance of mine sought treatment a few years back in the US for a (terminal) condition. The state of the art hospital where he received treatment had 812 beds. It had three patient records keepers. A local hospital near me has 170 beds and 20 patient record keepers.
There is inefficiency throughout the whole of the public sector to varying degrees. The guarantee of a recurrent budget is partly but not entirely the culprit. Few private companies could have afforded the folly of PPARS without serious payroll consequences.
Your faith in the supposed efficiency of the “market” is touching. No doubt you also believe that the private sector actually welcomes competition and abhors sucking at the teat of fat government contracts like PPARS (see above).
You know the saddest thing about the Irish Crisis – some people thought cute hoorism was a strategy
Patrick Honohan thought he was a cute hoor not telling the truth about bank losses and landing the Irish taxpayer with a bill it could never afford to pay
Brendan Howlin thinks he’s a cute hoor sucking everything out of Croke Park until it stops yielding job cuts at which stage the little cute hoor will say that we have to invoke pay cuts.
If I could see one good thing out of this crisis it would be the skewering of the cute hoor on barbed wire.
There is only one way out of this crisis (only one!) deflation of wages and social welfare to the point where the deficit is eliminated. It is much much better to start the wage/social welfare cuts now than to wait until the country has no services left because of Croke Park.
This country just needs balls
I don’t think we have an excessive number of public servants in the country. The problem is one of misallocation of resources, including staff. Sadly I’m not convinced that management is capable of arranging transfers from areas like the HSE that are overstaffed to areas like Social Welfare, Foreign Affairs (passports), the State Laboratory, the PRTB etc. which appear to be seriously understaffed in any kind of sensible manner.
It’s a process that would be complicated by decentralisation in any event, but the same people who presided over the mess in the first place are still at the top.
This is just Benchmarking Mark 11 by another name – How to con the Taxpayer without them knowing it. I have heard of absolutely ridiculous changes being counted for productivity gains i.e. teachers taking the Schoolchildren to the play on the curriculum etc etc. For Gods sake you can fool some of the people some of the time but not all of the people all of the time.
If somebody wants a real change to the Pay Bill in the Public Sector then cease the system of Incremental Salary Scales fortwith. With all of the whingeing about pay cuts etc most employees have seen increases in their Gross pay through these totally outdated pay structures. You are either a competent teacher day one or you are not. If you take on more responsibility then you get paid extra for that responsibilty,which in the Private Sector is known as promotion.
It would be fairer to cut pay than to abolish increments. Abolishing increments would leave high earners, people with 20+ years of service, and the incompetent untouched, and would particularly impact jobsharers and COs.
Many of the comments made by public sector critics are extremely worrying.
1. A complete lack of any insight into the public sector “100,000 bureaucrats”.
2. The private sector is primarily about selling. The comments above show an inability to understand their customers. You advocate cutting pay then whine that public sector workers are now saving too much. What did you expect? That they suddenly embark on a spending spree?
3. Private Sector reliance on anecdotal evidence and dismissal of emperical evidence e.g. “I have heard”. The latter is popular among fantasists and postmodernists.
4. There are indications in some of the comments that bullying and threats are the main motivational tools in the private sector. This harms productivity and stifles innovation.
5. “It would be fairer to cut pay…” no, it would harm the low paid and the hard working, who are in the majority.
6. “get paid extra for that responsibility, which in the Private Sector is known as promotion.” Many public sector workers have taken on extra responsibility and have received pay cuts. What is that known as?
7. Referring to public sector wages as a “bill”. Where does the money go? Do public sector workers eat rocks and put their money under the beds? Or put it into a rocket and jettison into space? Lack of understanding of money flow by some of the above comments.
There seems to be no innovative, dynamic, thrusting comments on how to create wealth and jobs which should be the primary focus of the private sector. Yet it indulges in self pity regarding the unemployed and pay cuts rather than seeking a solution to resolving these problems.
Very worrying indeed.
Yes – there is an ignorance about the public service and what it does.
It provides the services the private sector couldn’t be trusted with.
Anyhow there’s no point in paying 50% of our income tax on interest repayments. The pay cuts should be enough to cut our borrowing requirement to 0 to allow for default of 100%
That way there is much less actual change in the money in circulation in the domestic economy
I’m a public sector worker myself. I’m not volunteering for a pay cut. I’m using the word ‘fairer’ as a comparative. Stopping increments would be entirely unfair.
Your belief that the government departments would be able to spend more on payroll if they managed the non-payroll costs is mistaken. The government departments do not get a lump sum to spend at will. Their budgets are a result of planning process and have to be spent accordingly. If a department saves (i.e. underspends) on non-payroll costs this results not in bonuses for staff or extra manpowerf – the only result is that their budget for next year will be reduced and they will return the saving to the exchequer. This is why Fingal Council was redoing some perfectly sound roads in Castleknock last summer – to avoid savings. The way the government spends money is mad.
When IBM or Deliotte write their own cheques and make monkeys out of incapable project managers, are they being inefficient or are they simply serving their darwinian purpose of divorcing fools from their money? The only trouble is that those fools are spending your money and this is where you should aim your criticism.
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