Manifesto Memories

Destroying human capital to pay interest on malinvested credit.
Its just another manifestation of long term decline.
It does not prevent the internal bleeding in this state.
More leeches I suppose.

Question ?
What exactly are the Garda instructors doing these days ?
Soon all Garda will loose their culchie accents me thinks.
Soon most will be gone.
Although we have had to protect ourselves for some time now……

http://www.youtube.com/watch?v=jPISMWa0SMU

@Tullmacadoo
How about do what any other organisation would do. Not offer such brilliant redundancy packages to staff that are needed and make redundant those that are redundant.

Sam,
An excellent suggestion. These highly paid staff in some cases v highly paid staff are making a perfectly rational financial decision at the tax payees expense.

The normal practice in downsizing CS/PS is to offer time limited severance packages that favour employees that are within five years of retiring. This usually amounts to waiving the penalty that they would normally incur for not meeting the magic number (usually 85) of years served plus age. In all cases the employer retains the right to refuse the offer to essential employees. In order to dislodge staff nearing retirement that have reached the magic number a cash severance of one week per year served is normal. In all cases the threat of layoffs without severance or waivers has to be hanging over the employees. This works where layoffs are based on merit (dismerit) and not last hired first laid off. I expect that merit is not a concept that is highly valued in the Irish CS/PS so the usual tools to efficiently cut the CS/PS are not available to the employer. Our problems are many, long lived and will remain that way long into the future.

@ Samn

One, it’s a principal agent problem. The public interest is poorly defined and lamrentably represented. A stakeholders Fleadh.
Two, management is banjaxed. We had years of mindless expansion. Now we have the mindless contraction, so it’s a case of sauve qui peut.

As the Dork likes to say, we are heading back into the past, except we have forgotten how to survive in it.

The fact that in education people are being encouraged to leave in February and that they couldn’t manage to set June as the date for this sector says a lot about how well this has been thought out.

@ Philip II

If you read my comment you’ll see I said ‘Administration/managerial roles in …’. But, I’m intrigued. What would a front-line role look like in Suicide Prevention?

@Noel
Rehiring staff that got inducements to retire is political dynamite. The first question to be answered was why did you lay off an essential employee and the second is why are you now paying 1.5 to 1.8 times what you paid before the lay off. There is usually a clause in the severance package that prohibits the ex employee from receiving a pension and a salary from the government simultaneously. That leaves a loophole as you stated above in that the gov’t can go through an agency, the ex CS becomes an employee of the agency and the agency has a contract to provide a service. This is a popular tactic when there is political pressure to cut the CS numbers. The contracts can go on for years. The pay is usually less than the CS/PS pay and there are no benefits other than the mandatory levies that every employee is subjected to. The cost to the employer is typically 15% more than hiring direct because of the agency overhead. Since the gov’t is strapped for cash it would be political dynamite in the present straitened circumstances to contract out at higher cost. I am relating here the pros and cons as I experienced them up close. In every case I was involved in voluntary inducements to leave along with reassignment internally removed the necessity to actually force people out the door. I know that Ireland is a special case and the CS/PS is hemmed in by a multitude of rules, regulations and policies that make it impossible to efficiently cut back to pre tiger proportions.

@Karl

Indeed. Well caught. It takes cretin-like sagacity to engineer a redundancy program that takes the most needed critical staff out of an enterprise.

Nevertheless, doughty Minister Howlin will be out defending the reforms Croke Park is delivering. Just don’t get ill. Next chapter of Alice Through The Looking Glass coming soon.

IS there a scheme for assisting the sick to emigrate, or would Minister Noonan classify that as tourism and experience gathering?

@joseph ryan,

The Croke Park Agreement is just so wrong on so many levels;

A) Employment & Demand
In order to save money the agreement seeks to reduce NUMBERS of employees in the public service. This strategy reduces the number of people in employment.
Graduates who may have got work in the public sector are now having to emigrate. Many have defended high wages in the public sector because high puplic sector wages maintain demand in the economy. This is true to a point but is it the most efficient way to stimulate the economy? If for example teachers were paid on average 10% less the average salary would fall from circa 65K to circa 59K. The savings from this could then employ more than 10%-15% more teachers and still leave a significant saving for the exchequer due to the fact that starting salaries (circa 30K) for teachers are less than half the average salary. If the education system employed 10-15% more teachers instead of reducing numbers this would have a significant impact on demand. The demand from the high earning teachers would be reduced but the extra numbers employed would more than make up for this. Also teachers on higher pay are likely to have consumer habits less likely to increase demand in the domestic economy such as foreign holidays, newer cars, extra pension contributions etc. while more lower paid teachers will spend more of there money in the domestic economy.
Apologies to teachers for picking on them. I am just using them as an example as this same argument applies across the public sector. Reducing numbers instead of pay has a much more deterimental impact on demand, and obviously employment levels.

B) Services
Reducing numbers instead of pay will have much great negative impact on service provision. It is often said that there is way too many administrative staff in the public sector but what evidence is there for this. If this is the case why has my medical card taken 7 months to process. My circumstances haven’t changed so it shouldn’t take long, yet they are so understaffed that there is a massive back log.
The impacts of reduced numbers of nurses, gardai, teachers, hospital consultants on services are obvious but it is likely that reduced numbers in other areas of the public sector may also have a major impact.

C) Fairness & Equity
Overall public sector spending on salaries & pensions doubled between 2000 and 2008. Despite the reductions in pay and the pension levy, increments have largely made up for the declines and the average public sector salary is still a massive 50k. Average public sector pay in the UK is 30k euro (40% less). These high salaries were given to public sector workers during a massive credit, housing, and consumption bubble. This bubble has since burst, thousands of people have lost their jobs, tax revenues reduced and this has left a massive governement deficit. In order to reduce this deficit the government is forced to reduce spending and increase taxes. How is it fair that taxes and charges increased and services reduced on low paid workers while a privileged group get complete imunity from the hard times.
One reduction in pay that was allowed under Croke park was the reduction in pay for new entrants. How is this fair? Unions always quote starting salaries when discussing salaries in the public sector because (particularly in areas such as teaching) starting salaries are very small relative to average salaries.
Not only does the reductions in numbers stategy result in newly graduated teachers, nurses etc having to emigrate, seek alternative employment etc, if they are lucky enough to find work in the PS they will be paid less than there colleagues based only on the year they joined. What is the moral justification for this? What happened to equal pay for equal work?

I heard Jack O’Connor on the radio the other day talking about the Croke Park deal. He was singing it’s praises and claimed it would enable us ”to do things with the smallest public service in any developed country in Europe”.
Why is it the objective of the trade union movement to have an extremely small public sector. It seems to be the policy of the union movement to do anything to justify extremely high pay.
I don’t think the public want the public sector to be the ‘smallest in any developed country in Europe’. We want an efficient public service that is affordable.

D) IMF/EU Deal and debt forgiveness
Steven Donnelly was on the saturday night show discussing how we are precieved by the the outside world, in particular officials, politicians from the ‘troika’. He said he heard of officials from a french delegation saying they met their Irish counterparts who were paid more than double there salaries. It might seem petty on their behalf but there is something absurd about european countries lending us money below market rates to pay public sector salaries far higher than they pay their own public sector employees.
It all goes to reinforce the idea in the minds of our creditors that we are profligate. If we are stilling enjoying such a high standard of living why should they countenance debt forgiveness.
If European officials see we are cutting the likes of SNA’s and services to the disabled because we have no other choice then they may consider we can’t pay instead of wont pay. At the moment they see we are cutting SNA’s and service to the disabled out of choice and maintaining the salaries of their counterparts.

The “new entrants” thing might be there because there is no legal way to cut pay for those people already with contracts. Can the govt use an inability to pay argument to implement changes in pay for people who already have contracts?

Am I right in thinking that our government is essentially promoting a policy for the masses to keep working past the age of 65 and be forced to make any real retirement provision via defined contribution schemes but that a select few may be able to retire early with a jolly nice sack of public money.

Does anyone have any figures over the past five years covering what is paid out in public pensions annually and what the predictions look like for the next five years (and how that looks as a % of GNP)? If it’s not a daft question, why can’t employees in the public sector just do the same as everyone else and buy their own pension? A level playing field and all that.

@ PR Guy

For the private sector median earner, the OECD says the Irish worker has the worst deal among developed countries. Net pension relative to net average earnings is 36% in Ireland, 39% in the UK, 41% in New Zealand, 56% in Australia and 77% in Austria.

Real returns on Irish managed funds have been negative over the past decade and returns are likely to remain low for many years.

Despite the public pensions levy that was introduced in 2009, the earnings link makes the actuarial costs of Irish public pensions for higher earners very costly.

The Comptroller & Auditor General (C&AG) estimated that an additional year’s pension, net of employee contributions, for a High Court judge or minister costs 62% of salary.

At 31 December 2008, the C&AG estimated public pension liabilities at €108bn; the accrual rose to €116bn at the end of 2009. There was no update for 2010 from this total in the 2010 report published last Sept.

Pensions now account for 13.9% of the total Pay and Pension Pay bill according to the PER Dept, up from 8.8% in 2006. Overall, the pensions bill has increased from €1.43bn in 2006 to €2.39bn in 2011 representing a 66.8% increase over the period (pay in contrast decreased by 0.3%) . The pensions bill has increased by 44% since 2008. This is attributable in part to an increase in retirements from 2009.

The cash payout cost will soon rise to €3bn.

There are currently 2.5 public service staff for every pensioner.

So, if the expected costs of pensions were provided for in the public accounts, the change in the C&AG’s accrual in 2009 would have been added to the cash payout resulting in a charge of €10.5bn – – it would at least highlight the cost.

The earnings link rather than a link to the consumer price index is an important factor in the costs.

Isn’t it bizarre that say a pensioner who retired 30 years ago would get the same increases as the current incumbent in his last position?

The Irish version of the US Republicans’ howls of ‘class warfare’ is ‘public sector bashing.’

Of course facts rarely change views.

I’m pleased that Karl seems to be a fan of Gladys Knight and the Pips. We must all bow before Aretha, but, imo, Gladys is seriously under-rated.

But seriously, folks, many people here seem to be hung up on this ‘labour theory of costs’ – which may be contrasted neatly with the lingering, but equally deluded, Marxian ‘labour theory of value’. Labour isn’t the only factor of production.

It’s perfectly rational for people to seek to defend pay levels and maximise future pension entitlements when confronted with the impact on their cost of living of rent-seeking, monopoly profit-gouging and woeful inefficiencies perpetrated by those responsible for non-labour inputs in the production and delivery of goods and services.

I have been invited and encouraged by various people to spell out precisely the nature of these additional, excessive and unnecessary costs and inefficiencies – and what remedies and reforms are required. But I can only speak of those areas where I have performed some detailed analysis, primarily in the electricity and gas sectors – but with some more general assessments of other infrastructure and utility sectors, and I have spelled out this analysis continuously – to the annoyance of many. Quite simply the vast majority of people just don’t want to know; and those who do either fear or are vehemently opposed to what a remedy would involve.

There are I don’t know how many hundreds of economists in this country – many working in these sectors or with an intimate knowledge of these sectors that require major structural reform. Why should it fall to me, with limited time, resource – and the necessary detailed knowledge of many of these sectors – to spell out what should be as plain as pike-staff?

But, simply by posing the question the answer becomes obvious. It is far too safe, comfortable and rewarding to continue to ‘live a lie’.

Johnny F
A) net of tax how much will that save.
B) assuming not all ps workers shop in donnybrook fair, but in, oh I dunno, lidl and supervalu and the local pub etc, what will the second round VAT etc losses be from the gross cuts above
C) Given that there won’t be new hires, what effect do you consider this will have on service delivery
D) how many people of voting age would this affect, and how likely would rhey be to vote for the party that did it

Answers on an electron please. I think it behooves this.blog to not devolve into p.ie levels of commentary.

The story in the Sindo today of high level Gardai bailing out must be a cause for concern. Apparently the service is short four assistant commissioners and about twenty at superintendent and chief superintendent level. Who’s directing the troops?

JF
Again though based on what facts? Im not disagreeing that everything, including the state pay bill will decline. Im just asking you to show us how you think that for example a worker on 50k will ‘bear’ a further loss over and above the general mill of by your calculation 10k. Second, surely the issue is exactly opposite what you suggest: the whole point, i would imagine, is to see where the state can save, not by how much one sector or another can be hit? Third, your pretty much wildly overstating the issue of the PS as being a countercyclical buffer. Its one vital part of state expenditure which acts as same, but maybe you disagree with that. Oh, and C) an D), the organizational and real politics of this…? Comments?
So, again, share your ‘formula’, and its assumptions or I will have to suggest that your simply pulling numbers from the air….

Couldn’t help but notice this story after reading this thread 🙂

http://www.independent.ie/national-news/senior-garda-fraud-specialist-retires-to-work-for-bank-of-ireland-2996243.html

Dr. philII,

Your mention as to the deleterious effects of PS pension readjustment (in terms of suicide prevention and diminished countercyclical Keynesian potency) have induced symptoms of vomitous nausea. Any advice?

As a redundant private sector worker I’d hoped to cadge a free enema sample or two but I now realise your need is far more pressing than my own!

@ OP

Maybe X Factor (Karley and the PS Wailers) with a reggae anthem for our straitened times: ‘Don’t Cry for Me Argentina’?

Sarah,
Not sure what the point of K post was other than to slag off the govt. In answer to your question, since many of these ‘front line staff’ will be replaced by labour from outside public service it is not obvious what the implications on service delivery or savings will be. I venture zero under each heading.
I also venture that the bulk of the replacement labour will be from ex PS staff.
Btw how many of the 1000 nurses are actually front line. How many are nurse managers etc.

jF
Thanks for the useful clarification. Now, how much will that save , net of tax , and how do you square it with the (some anyhow) evidence that the public/private wedge is actually higher at lower levels?

@Philip II

If the average pay cut is around 8% it would carve around 5% off the pay bill. Probably would save a billion if applied to pensions as well. Not enormous but unlike the bank bailouts it’s a recurring saving.

Imagine trying to close the gap between spending and taxes without making these cuts – what else is left to cut?

@Philip II

The public/private comparison isn’t relevant any more, all that matters is how to cut spending and increase revenues. All sorts of schemes have been tried to raise revenues with little success so now we have to cut. My formula is based on cutting where the most fat exists. So a Professor loses 43k and the average PS worker loses 5k.

Regarding the idea that talent will flee the country I’m not so sure. The people on the biggest salaries are also those who tend to be at a point in their careers when emigration becomes very difficult and unpleasant to imagine. Maybe we’ll lose some of the younger and more talented people who are mobile like Richard Toll, but it’s a matter of degree – we’ll survive and many will return in the future.

There are going to be a small number of areas where skill shortages absolutely have to be addressed and one would hope that the Government is on top of this. A good example would be orthopaedic surgeons. We need them, they provide an effective treatment (unlike so many areas in medicine), they don’t all have to be consultants and we can hire non-consultant posts at an affordable rate. I believe the DoHC is trying to get something done in this area.

There’s no point in having this debate without considering:
1: Is it legally possible to cut pay for workers who have contracts without having to renegotiate the whole contract and
2: Is it a breach of contract (or whatever) to cut pensions for those who made contributions to those pensions in good faith.
These are very important issues

tim
According to the budget.gov.ie site, http://budget.gov.ie/Budgets/2012/Documents/CER%20-%20Estimates%20Final%20Part%204.pdf page 26 there is a 2011 spend of 1,180,m on second level teachers salaries this year, and 2,052 on primary. There are according to the Dept of Education statistics 32489 primary teachers and 26185 second level. So its 1180000/26185 or 45k average for second level and 2052000/32489 or 63k for primary teachers on average. Total average is 3232000/58674 or 55k. Not bad but not 65k. And they mind your most precious resource all day, and educate them.

@ Johny Foreigner
I know it has precedents but does that make it legal? (I dont know)

@ Mickey Hickey
So from what you say this might be how it would work.
Govt: Your contracts will cease to operate in 3 months time. At that stage you can a) leave your job or b) sign the new contract
Union: Ok we’ll take option a) thanks
And effectively you have a public sector strike and a govt in crisis.

I don’t think that this is going to be easy

@Tim

Your initial post (the one suggesting 10% pay cuts), ignores the fact that public service workers pay tax – more tax, in fact, than non-public service workers. The reality is that if you cut the headine pay of public service workers by 10%, you would not be able to hire anything like 10% more staff.

Can the Government bear the retirements? I would argue ‘Yes’. Those retiring are those who have been in the system at least 30 years. In most cases (and I have personal experience of this from my own kids in primary school) the young teachers are more eager and enthusiastic than the older ones (I’ll be accused of ageism here but c’est la vie). Those who entered teaching or nursing in the years up to 2006 (a full-employment economy) are those who REALLY wanted to be teachers or nurses. Unlike my Leaving Cert class of the early 1980’s where teaching was a safe option and chosen by those who, in later years, would certainly have chosen a myriad of different career opportunities. I bet there isn’t a person in Ireland over 30 years old who cannot think of a teacher they had at either primary or secondary level who they thought to themselves “that person should never have been a teacher”. Perhaps retiring the older staff will clear the way for younger, more motivated staff? I know that those admin/managerial staff who retired from the HSE in recent years were those who entered at 18 years with, at most, a Leaving Certificate. Many later got degrees but only with generous funding, travel, and time off for study and they took degrees in business or other with absolutely no relevance to how things are done on a day-to-day basis in the PS. The Boston Matrix anyone with Cash Cows/Dogs/Stars etc. – the standard of every marketing course on a Business Studies degree? Many of the younger cohort are educated to degree level entering the system. My direct experience of the PS leads me to believe that the sooner we retire the older staff the better (personal abuse can follow later).

@ Johnny Foreigner

“All sorts of schemes have been tried to raise revenues with little success so now we have to cut.”

Not true. The income tax rates have been left completely untouched at their historic low rates, a curious omission.

Tim
“Does anyone have accurate figures on the average salary of a full time, department paid, secondary school teacher?”
Hmm.

Mickey
Those are established figures. Here’s the latest OECD data..http://statlinks.oecdcode.org/962010071P1G022.XLS
See table 2.2
Now…leaving thr Pisa data aside, do you think we should go back to the sod of turf on yer feet walking three miles to school cutting the switch to be bate with , or not? And, feel free to adjust this dat and then do a rank correlate with Pisa scores……
Also, Ireland is in post primary 12.3, vs an OECD average of 13.7 and an eu19 average of 12 ..your task is to determine if giving he observed data , at what degree of significance, and apologise if your a Bayesian, 12.0, 13.7 and 12.3 are statistically not different from each other. Resampling, bootstrapping or use of the jackknife are allowed.

@Sarah Carey

“Can the government manage the exodus”

I think by its very nature, an exodus (whether in private or public sectors) can’t be ‘managed’ as such. At best, you do everything you can to limit the damage it will cause ….. assuming you have the will to do that.

I can only speak for the private sector – where there’s usually a will to limit the damage and survive intact – and it’s bad enough when you get a few key people leaving around the same time, let alone a whole team departing.

I dread to think the vacuum that could be caused by several hundred people (e.g. teachers, nurses, etc.) leaving en masse, no matter how large the organisation. It usually puts a lot of strain on those they are leaving behind and its often difficult to find good replacements in the short’ish term.

I’m not sure what the strategy is for replacements in these public sector jobs as I haven’t really kept up with this story but I would imagine they are doing it to keep numbers down (government) and wages up (unions)!

I do know there are plenty of ready replacements out there in teaching (if there are now some openings when these people retire early) given the large numbers graduating from e.g. St. Pat’s and Hibernian over the past couple of years who are still without a job or surviving on 1-2 days substitute teaching per week (that is, when they can get past the retired teachers elbowing them out of the way for sub teaching days – though I thought I heard that practice is coming to an end?).

Bunbury knows what he is talking about. As someone about to retire from the HSE after 32 years I think he is spot on in most of his comments.

Far too many so called managerial grades and not just in nursing; also a lot of made up jobs with trendy titles but little real patient impact. This has happened in all areas of the HSE. There are also a lot of older staff who have burnt out What is required is a new stucture with one management grade above clinical staff, as it used to be when I started, and with a new intake of young well trained enthusiastic staff.

Lastly while PS pensions for those who retire before the end of February are based on their 2009 salary scale they will be subject to pension reductions as per FEMPI Act 2010. Those who retire after February will not be subject to these pension reductions but their pension will be based on the current “cut” salary rate.

@JohnFrancis
500k seems an exaggeration. A person in the HSE who retires after 40 years service is entitled to a maximum pension of half their salary and a lump sum of 1.5 times their salary. Assuming a consultant earns 250k per annum from the HSE their maximum lump sum would be 375k. Most people who retire from the HSE don’t have 40 years service. Also lump sums in excess of 200k are subject to tax (don’t know details).

@Noneu
Thanks for the link.

The OECD figures are reports from individual countries with vastly different ways of teaching. In Europe I am familiar with the German system where half to three quarters of teachers are part time. The reported figure will be correct (Germans do not lie.) but it overstates the number of teachers by 100% at least. Another wrinkle is the use of internships and what are known as Lehrerhelferin (teaching assistants).

Here is a link that will give some insight into German teachers and what the the perception of the German public is.

@Mickey Hickey
“The pupil teacher ratio is way out of whack.”

One of the main reasons our secondary pupil teacher ratios are low is that we’ve a compressed school year. It’s a very deceptive ratio, because in reality the average number of students crammed into a class room is much higher than the ratio would suggest.

We’ve more hours for students per week, and fewer weeks per year than most of the countries we’d be comparing ourselves to. This is a highly unproductive way to use skilled, well paid teachers. Hard to explain in a couple sentences why it’s such a poor use of talent. Essentially however you need to hire extra cover for staff who can’t due to timetable restrictions cover all the classes in a week that that our school year demands.

Lengthen the school years, shorten the school week and you’d have a significantly more productive secondary system. Less teachers can then teach the same number of hours of classes per year.

Put another way we’ve a low student teacher ratio, however we also have significantly more teachers than classrooms they can teach simultaneously in. Or another way the greater the difference in the number of hours a teacher per week can be expected to teach and the number of hours per week a student is expected to be taught; the fuller the school staff room.