Public-Private Wage Gaps: EU Evidence Post author By Philip Lane Post date November 8, 2013 New paper here. Categories In Uncategorized 97 Comments on Public-Private Wage Gaps: EU Evidence ← New from Department of Finance → Re-Employment Probabilities 97 replies on “Public-Private Wage Gaps: EU Evidence” I guess it’s been awhile. Time for another go-round! Have you told the Independent? The snippets below are some of the bits that German politicians, ECB Governing Council members, potential buy-and-hold long term Irish Government Bond investors, IFAC, hacks at The Independent, and that aweful Michael Hennigan should steer clear of, just in case they start thinking more about about long-term sustainability, rather than short-term counter-cyclical economic management. Avert your gaze now: “Public sector employees are found to enjoy on average higher wages than their counterparts in the private sector in 2010…….. The highest positive wage gaps in the public sector are found in Cyprus, Ireland, Luxembourg, and to a lower extent in Belgium, Germany, Spain, Italy and Portugal…. Figure 6, P19. Among those countries with a positive wage gap in the public sector, hourly earnings in the public sector in 2010 are between 5% and 10% higher than in the private sector in Austria, Greece, Poland and Slovenia; the gap amounts to between 10% and 20% in Belgium, Germany, Spain, Italy and Portugal, while it is higher than 20% in Cyprus, Ireland and Luxembourg. Our estimates for Germany, Austria and Ireland are in line with the values obtained in Giordano et al. (2011),….. …..When considering gender and educational attainment simultaneously, only women with tertiary education seem to enjoy, on average, a better economic position in the public sector when compared with their male colleagues. In this case, private wages for both men and women seem to be higher, whereas such a negative gap seems to be less sizeable for women. In the remaining cases, a positive premia is estimated for both genders, though higher for males (see Table 7). In Cyprus, Germany, Ireland, the Netherlands Slovenia and Italy, the public wage gap for low-skilled females is especially high when compared with both males and higher levels of educational attainment. The public wage gap for females with tertiary education is also particularly sizeable in Cyprus, Ireland, Belgium and Luxembourg. In these cases, their male colleagues also enjoy large wage gaps in the public sector…. ……Despite less sizeable negative public wage premia in the public sector, the picture for professionals and technicians is similar to that of managers. For the countries reporting on “public administration, defence and compulsory social security”, negative premia are found. These are somewhat larger for professionals. The most negative ones are found in Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Romania and Slovakia; for these two job categories in Cyprus and Ireland and for professionals in Spain only public wage gaps are positive and sometimes very high…… …..For clerical workers negative public wage gaps are usually found too, although in many countries these are not significant; positive gaps are only observed in Spain, Ireland, Luxembourg and Portugal….” Although, of course, if Philip Lane had linked instead to this study, also published in the last few weeks, we might’ve come to somewhat different conclusions: In the context of the EU, this issue attracts additional interest, given that its various integration policies involve convergence not only across Member States (MSs) but also within each MS. In Programme Countries (PCs) which have had to resort to Troika support (Cyprus, Greece, Ireland and Portugal), a major issue has been the public-private pay gap: In part, this is due to the fact that public sector wages amount to a large portion of national government expenditures which themselves need to be reduced. In addition, public servants have been easy targets, precisely because (at least in the short-run) the competitive paradigm does not apply and governments can often proceed to cut public sector wages unilaterally. But, more relevant to this endeavour, public sector pay has attracted attention because it is often thought to be excessive, particularly when working conditions and retirement provisions are taken into account. In PCs within the euro area, competitiveness is often an issue and strengthening it may require internal devaluations and wage decreases which can start in the public sector by edict, but may spread to and further encourage private sector wage reductions. We find that Luxembourg, Cyprus, Greece, Hungary, and Portugal are at the top of the public-private pay gap country list, while Austria, Slovenia, Belgium, Germany and Norway have the lowest gaps. When separate regressions in the two sectors are allowed for, the measured pay gap is topped by Latvia, Luxembourg, Greece, Cyprus, and Romania, while Sweden, Denmark, Germany, Belgium and Norway are at the bottom of the list. Luxembourg and Cyprus have the highest unexplained gaps, while those for Germany, Belgium and Norway are actually negative. Of course this study is from 2008 when, presumably, the so-called “public pay premium” would’ve been at its highest. I tried to embed some figures from the article, but it didn’t work. Here they are: http://www.izajoels.com/content/figures/2193-9012-2-15-3.jpg http://www.izajoels.com/content/figures/2193-9012-2-15-12.jpg http://www.izajoels.com/content/figures/2193-9012-2-15-8.jpg Oh, and I meant that the data in that study was from 2008, etc. The study came out at the end of October. Is it not pointless to comment on a study with data from 2010. Show me the study from 2013. No, it’s pointless to draw conclusions about what the gap (if any) must be now on the basis of data from 2010 in a rapidly-changing situation. We know public servants were overpaid in 2010 , we know there have been subsequent pay cuts but we also know there has been upward drift due to increments so we do not know where the gap is now. Furthermore , these studies tell us nothing about the allocation of human resources in the PS. Do we have too few doctors and too many pen pushers? Do we have too many highly paid administrators in university & too few teachers or too many of the wrong sort of lecturers? @tull Increments would have no effect on the comparison as more experienced persons in the private sector would also have experienced career progression in this period. However your point about the allocation of human resources is very valid. Any aggregate difference may result from a different proportion of chiefs and indians as much as these groups being paid differently. And we certainly have too many university administrators with little obvious function, I work in a university which spends more on administration than on teaching staff, a comparison with a previous period would show a big increase in the former relative to the latter. There should be a report showing the salaries, numbers and composition of staff in all public bodies at (say) 2000 and currently and information on the volume of work produced, e.g. university have taught more students in that time. It is notable that no such data has emerged, or at least attracted attention, with all of the Croke Pk etc. DD That data exists in the HEA annual statistical report for rhe third level. Off you go… @Dearg Doom “Increments would have no effect on the comparison as more experienced persons in the private sector would also have experienced career progression in this period.” Is there evidence for that? Guaranteed pay rises irrespective of performance in the private sector? Fair point on the allocation of resources, but a major issue that should be compared is job security. I know there are many temporary contracts in the public sector, but for those who are permanent, the comfort that brings is unmeasurable…. Oh, yes, they have the job security . . . so let us cut them more. There’s a public/private pay gap . . . more cuts please! Did I mention that they have gold-plated pensions? . . . another round of cuts! Hey, they still have job security! . . . Cut them! Wasn’t there a pay gap in 2008? . . . CUT! Wait! Don’t they still have pensions? . . . cuts again for all! And round and round we go. Meanwhile, in the real world (that wouldn’t be the one you inhabit Sarah) parts of the public sector are now barely functional thanks to a combination of 5 years of hiring freezes, incentivised retirements (on gold-plated pensions! I’m told) and an utterly demoralised workforce. The fact is that wealthy people in the private sector have been asked to contribute, basically, sweet FA during this time of “national crisis.” A few derisory tax increases (that, of course, PS workers also have to pay). Whereas, even those on modest incomes in the public sector have been hammered. Repeatedly. The justice of increments is a separate issue. My point was that significant gaps exist in the private sector between experienced people and inexperienced people. The mechanisms by which that difference arises may differ, but these different mechanisms aren’t vital to the aggregate comparison of the public and private sectors, although perhaps important for individuals. The point is made about job security. One reason that the concept of job security arose in the public service was that the jobs are intrinsically stable. People require education every year, crimes have to be investigated every year, people fall ill every year. When I go to a conferring, the best students are not usually aiming to join the public service. And as Ernie Ball says, aggregate private sector salaries risen slightly on average since 2008 while public ones have fallen greatly. The private ones presumably changed different levels in accordance with demand, the public ones according to bizarre formulas at the behest of politicians. @ grumpy Welcome back. You have been missed! @ All From the start of the debate on this issue in 1999, the facts have not mattered for the beneficiaries and this period will be seen as marking the transformation of traditional trade unions to sectional representatives of privilege in common with counterparts in professional lobbying groups. Against the backdrop of the Eircom floatation hysteria and stories in the media of dot-com millionaires, the unions pressed the Government for a special pay rise for the public service as they claimed public service pay had fallen behind that in the private sector. The Public Service Benchmarking Body (PSBB) was established in June 2000. The Eircom share price to May 31 had been below the flotation price on only 38 out of 238 days since the floatation and in the decade ahead, by the time the pass-the-parcel golden goose was almost dead, the public sector workers turned capitalists who got a 14.9% stake in the citizen-owned company in 1998, would collect €1bn tax-free. The PSBB engaged nine “major” Irish and international consultancies to advise and carry out research. However in April 2001, Senator Joe O’Toole, ICTU president, made clear that it didn’t matter what the research showed. The money was forthcoming. “Somebody asked me, `well, what happens if there is no money in the ATM machine?’ Well, if there is no money in the ATM machine, then it is time to take out a sledgehammer, because there is an absolute certainty that we are determined to see this through and nothing is more certain than what we have is an absolute united commitment to delivery on this money.” The PSBB reported in 2002 and recommended an 8.9% rise in average public service pay and the body “strongly recommended” that 75% of the rise be paid in return for real output improvements and it added: “an appropriate validation process be established to ensure that agreements on issues such as adaptability, change, flexibility and modernisation are implemented.” Charlie McCreevy, finance minister, initially said that payment was conditional on the PSBB recommendations but he relented after the unions had put pressure on Bertie Ahern, the acclaimed negotiator. Keep in mind that the politicians and senior civil servants involved had a personal interest in this issue, which fed into their severance jackpots and pensions. What about the claimed private sector premium? The PSBB report said nothing about it and most of its recommended pay increase was related to future productivity improvements. McCreevy banned the publication of the nine reports that were submitted to the PSBB, a move that appeared to please the trade unions. In the intervening period, most of the published research on the pay gap between the Irish public and private sectors has been done by public sector employees or ESRI personnel, and every study has identified a pay premium related to factors such as job comparability and education level. Some are not convinced: Kathy Sheridan of The Irish Times interviewed Bertie Ahern in October 2009: “So for example, while his economic legacy may well be the perceived ATM facility he presented to the public sector, as well as Fianna Fáil’s enchantment with house-building, he cannot see a downside to either. Yes, he was shocked to read how the public sector had raced ahead of the private in average incomes. The thing is, he doesn’t believe it. The authors are not comparing like with like, he says, ‘since private sector people get VHI, car allowances . . .’ Then he’s off – but is suddenly back with a Central Statistics Office study, which shows that national pay agreements between 1997 and 2009 left the private sector ahead by 10%. So the 9% from benchmarking simply bridged the gap. That’s all. ‘So I don’t know what they’re talking about,’ he says, mystified. Well, um, it’s that like-with-like thing again . . . How do you argue with a man intent on burnishing his legacy?” In 2012, it was revealed that about 1,100 allowances including a garda bicycle allowance cost €1.4bn annually – almost 10% of the public wages bill. Last January, an ESRI/UCD paper estimated the pay premium at 17% and the economists took account of the issue of size, which is a also a factor in the different Eurostat data used in the Commission paper and the one cited by Ernie Ball. http://www.esri.ie/UserFiles/publications/RN20120402.pdf Various studies show that lower paid workers in the public sector have the biggest pay premium while in Nordic countries public sector pay levels are much flatter than in the UK and Ireland. The IMF said in 2012: “Ireland‘s share of public compensation in government expenditure and the ratio of average public pay to per capita GNP are among the highest in the OECD OECD‘s at-a-glance reports on the government sector and on education and health find that public pay in Ireland is elevated, especially for school teachers and medical professionals.” According to a 2011 higher education report, payroll accounts for 75% of Irish university budgets compared with two-thirds internationally. As for entitlements of guaranteed work and guaranteed pensions compared with the risk of unemployment and a low pension coverage, anyone who suggests these have no value, should not be taken seriously. Apart from judicial level positions, it’s an anachronism to maintain a system that dates from a time of arbitrary rule when most workers were serfs. In Sweden, all workers have equal rights and it has a more durable democracy than Ireland’s: its 1766 Freedom of the Press Act, remains in force and was the first law in the world to grant citizens access to public information. Even hardline communists such as the Castro brothers belatedly realised that guaranteed work for everyone, is also a guarantee of poverty. China removed the job guarantee at state companies in the 1990s and last year it abolished its “iron rice bowl,” or the system of guaranteed work lifetime employment for most civil servants. We know from bitter reality the chasm between Marxist rhetoric and reality but isn’t it weird that a deputy prime minister’s partner can have a job created when a public agency is abolished, coincident with the development of a dual workforce with different terms for young people, but doing the same work? Brendan Howlin, public expenditure minister, announced last September: “The annual value in allowances that will not be paid to new beneficiaries is in the region of €475m. The Government has decided that there is no justification or underlying business case for the retention of these allowances.” Nevertheless, cowardice dictates that the allowances will be paid for years to come while pay and pension premia will also prevail within the public sector. @DD and BB 1. DD – “experienced people/career progression” = good performance resulting in promotion. This is not the same as people in a job getting an automatic raise irrespective of performance whilst remaining in that job. Is it still correct to say that the impact of increments is such that the public sector pay bill has risen not fallen during the crisis? 2. EB – I suggested that job security was a benefit that was difficult to measure in surveys such as this. I did not say that there should be more cuts. 3. Leaving aside the irony of a commenter with a virtual identity pronouncing on the value of reality, let us agree that each of our worlds is very real. I’m a freelance journalist in a disrupted industry (and with an unemployed husband). It feels quite real. Likewise, the life of a tenured academic is hardly imaginary. If I knew more about philosophy (I think Cartesian Dualism might have a role here?) I’m sure there is some observation to be made about this “real world” so frequently co-opted into pointless harangues. Aren’t all our worlds real to us regardless of their perceived privilege or pain? I think what Mr Ball is trying to say is that those in positions of power must be aware of the consequences of their decisions on the lives of people they don’t know. It is for this reason that I believe the consensualist practice amongst journalist and commentators of abusing TDs for attending clinics instead of contributing to debates in the Dail is misguided. By spending as much time as possible with their constituents they learn about the living conditions and hardship of the “real people” in their “real worlds” rather than absorbing themselves in the more esoteric and decidedly more comfortable – if equally real – world of Leinster House. Most private sector employees we encounter on a regular basis such as checkout operators in supermarkets and convenience stores, newsagents, hairdressers, phone shops, restaurants/cafes, clothing stores, etc. don’t have VHI and car allowances as Bertie Ahern would have us believe. In my experience as a PS employee this is where the greatest pay gap would certainly arise as even a starting Grade III employee in the PS would have pay, and terms and conditions significantly better and would not necessarily have any higher education level and certainly not any of the day-to-day hassle that any of the aforementioned employees. I’m sceptical about any gap at the ‘higher’ levels. If high level civil servants, HSE managers, etc. were poorly rewarded compared to their private sector colleagues surely there would be a flight to the private sector. In my experience the barriers to exit are very high in the PS. People become institutionalised and the pension and job security exert a huge psychological hold. I don’t know anyone in the PS who doesn’t believe PS employees are still better off than the private sector. That is why we all accepted the pay cuts and the increased hours so meekly. My precise feeling after the Haddington Road Agreement was: I can’t believe we got off so lightly. I know I shouldnt.. Facts to ideologues are as pearls before pre-bacon production units “According to a 2011 higher education report, payroll accounts for 75% of Irish university budgets compared with two-thirds internationally” Lets see. Education at a Glance, which looks at the OECD, Indicator B6.1 suggests total compensation of all staff across the OECD is 78.4% mean, 79.64% median. Ireland is at 80.5%, statistically idential to the mean and the median. “n the intervening period, most of the published research on the pay gap between the Irish public and private sectors has been done by public sector employees or ESRI personnel, and every study has identified a pay premium related to factors such as job comparability and education level.” Bloody cheek of these researchers researching. Much better to have people like, I dunno, bloggers or summat looking at the data. Fecking econometric specifications… sure WE KNOW etc etc “If high level civil servants, HSE managers, etc. were poorly rewarded compared to their private sector colleagues surely there would be a flight to the private sector.” Or to other PS envioronemtns worldwide. Look at the consultants, or the lack thereof. Look at the universities seeking staff. These are two cases where the worldwide jobs market is biting hard. And people will actually go for not much more money if they feel that the non pecuniary benefits are greater (Such as additional resources, support for work, GASP promotional opportunities and even such fuzzy wooly stuff as respect for the post. On allowances : here its interesting. Do people think people should be paid more for additional work? Thats at the heart of a series of problems. Conflating all allowances is lazy. But fun. Pay someone 5k pa for 4 years to be a dean of a facaulty = Aran Islands Extra Shoelace Allowance. And the laziest of all are the lads and lasses in DOPE (what a great name) who havent the cojones to say “this is dumb, thats not, so this goes that stays”. Cross board bottom line cuts are so much easier than , yknow, managing. Don’t bother, Brian. The Sage of Kuala Lumpur will trot out that 75% vs. ⅔ figure every chance he gets. I’ve already called him on it but it doesn’t stop him from saying it about as often as my 4-year-old says “poo poo” and with just about the same motivations. But But But… Oh well, back to work editing the journals. Indeed, back to work correcting the page proofs… I’ll leave the relaxing Sundays to private-sector layabouts. @ brian lucey Page 43: “Salaries account for three-quarters of total current expenditure on higher education in Ireland – compared with an international average of two-thirds. This means that Irish higher education operates with lower (nonpay) recurrent expenditure than is typical in other countries.” http://www.hea.ie/sites/default/files/national_strategy_for_higher_education_2030.pdf Rather than play the fool on this issue, the above line comes from an official report. It may not be correct but if you wish to refute it do so directly rather than introducing other issues. The usual online response is to slink away from a challenge: in this case you quoted my line, and what are your facts: payroll as a percentage of current expenditure? Deal with the issue directly. On allowances : here its interesting. Do people think people should be paid more for additional work? What is your point? Did you not read the post which says in respect of €475m more than one-third of the total. “The Government has decided that there is no justification or underlying business case for the retention of these allowances.” Is half a billion euros annually small change? You’re back to editing journals and Allen is “back to work correcting the page proofs.” The claimed victimhood and self-importance of you people is sickening. The facts are bitter! But as busy as both of you claim to be on a Sunday compared with ” private-sector layabouts” it’s of course a fraud given the frequency of accessing this blog. @ All I came across this informative paper coincidentally. http://per.gov.ie/wp-content/uploads/Irish-Presidency-Survey-on-the-Structure-of-the-Civil-and-Public-Services-of-the-EU-Member-States-and-Accession-States.pdf The debate about relative levels of pay between public and private sectors is posited on the assumption that there is necessarily a distinction to be made between them when it is obvious that there are many employments in both which differ in no way other than in the conditions of service attached to them. The more successful economies have faced up to this reality. Finland, for example, has transferred its university staff to the private sector (!). Sweden has less than 5,000 civil servants at a central government level, the wages and conditions in the executive agencies and organisations at the various levels of government below the central being decided by negotiation between the social partners, in the context, of course, of a legal foundation of common basic employment and pension conditions for all workers whether in the public or the private sector. Ireland has a rigid system of public sector pay, allowances and conditions which has no equivalent in the private sector. All working at various levels in the former, largely irrespective of performance, get the same pay. Worse, the overall levels of pay are decided by reference to a nomenklatura at the higher public service level which INCLUDES politicians in the Dáil whose job is to raise the taxes necessary to pay for it. http://www.finance.gov.ie/documents/pressreleases/2001/report38.pdf This worked as long as there was a sufficient level of taxes to pay for it. It can only continue on the back of largely undifferentiated pay-cuts and a draconian embargo on recruitment resulting in the debilitation of the entire public service structure to the detriment of the possibilities of economic renewal for the country as a whole. There is a need for a radical change in direction, including the removal of the obvious moral hazard of linking the salaries of those deciding on levels of public expenditure to those in receipt of a large proportion of it. The basis for the continuing pointless squabble regarding public and private sector levels of pay would be removed in the process. I am not holding my breath. Just to annoy people more … I was talking to a nurse manager in a community mental health residence recently and he was telling me that he will have to retire in the next few years in order to keep his pension as high as possible. He is allowed pick the three highest years’ earnings in his last ten years of service prior to retirement. He must therefore pick the three years before the pay cuts and pension levy was imposed. Obviously this arrangement is only available to the Psychiatric Nurses Association. I was amazed such an arrangement still existed as it means his pension is based on boom time earnings. I wonder how much this would cost to fund and how many other parts of the PS may have this option. @ Elia Can he be replaced or will his post be caught by the recruitment embargo? On the more general unwillingness on the part of the public service in general to stare reality in the face, I would quote Upton Sinclair; “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” @ DOCM: “On the more general unwillingness on the part of the public service in general to stare reality in the face.” Would it be more correct to place ‘blame’ for this predicament squarely where it belongs – on the leaderships (if you can call it thus) of the various trades union involved. Plus of course, their political supporters. The rank-and-file members are simply that – rank-and-file! They go where their leaders drive them! Might it also be a more general economic matter. Increased wages and salaries lead on (usually) to all price inflations. Now that would not be a problem, would it? Getting prices to deflate in parallel might be just as difficult as getting reductions in wages and salaries. I have this kind of quaint notion that all consumption expenditures originate with citizens possessed of incomes – with a disposable element, obviously. Its irrelevant where that income originates. Now what happens when that disposable bit starts to shrink. Oh, yeah! We have this growth thingy! Fine. But the logic is that prices must decline proportionately or we have an un-growth thingy! The deficit target is what? 3% or 5% of G*P? So what happens when we have un-growth in G*P? Or worse, de-growth? That might be interesting. Whose going to worry about any gaps then? @ DOCM I don’t know. Mental Health services though have been prioritised in recent years – part of the policy to move patients out of dickensian psychiatric hospitals into community settings – and so have largely been exempt from cutbacks in capital programmes and from a recruitment embargo. It is quite possible he will be replaced. What is certain though is that his next-in-line will immediately get an acting allowance on his departure and there will be a domino effect all the way down the line. It is quite possible that, after all the chess pieces have moved up (forgive the mixed metaphors) a retired psychiatric nurse will be brought back on contract to fill the basic grade position created. @ Elia How not to do it, in other words! I would quote Upton Sinclair; “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Does this apply to lobbyists and PR shills or just to professors, doctors and firefighters? @ Ernie “Hit me now with the child in me arms!” P.S. Professors, however defined, do not qualify. off topic, any comments on “Na Ciotogis” ? @ brian lucey Awaiting your data Mr Lucey. @ DOCM/ Elia Frances Ruane, ESRI director, has highlighted in recent years the importance of evidence based policy making but it will take a very long time to change the mindset, including the common reaction of trying to drown out dissent. During the bubble when demographic arguments couldn’t zap dissenters, they were accused of undermining the economy. In recent years the eco-system of insiders brushed away warnings about the perils of facilitating massive tax avoidance but now it’s a matter of waiting for what rules will be proposed. Because of the impact of the foreign-owned sector, there is very little of the headline data on the economy that can be taken at face value but by design or ignorance, it is common to have what maybe effectively fiction, presented as fact. Despite what Colm McCarthy terms the “rampant Europhilia that infects the Irish civil service,” both within the service and beyond, there is a striking lack of interest in what the successful small economies of Europe do well. “We have no jobs any more for people with no qualifications,” said Johannes Kopf, the managing director of Austria’s Public Employment Service, or AMS, which helps young apprentices find companies, according to Bloomberg. “Twenty years ago, it was enough for a warehouse worker to be strong. Today, they need to know how information technology functions and manage inventory.” Elia’s pension example is just another illustration where managers don’t manage in a top down system and consider the priority that is given to fixing the failed training and apprenticeship systems; the failed job activation programmes according to the OECD that has familiarity with the best run ones, while there’s loads of money for anything dubbed innovation – the business buzzword of the decade. Trinity on Friday announced an investment of €70m that will include an “Entrepreneurship and Innovation Hub.” Remember when centres of excellence were in vogue? (Note again that the TCD-UCD Innovation Alliance still exists in a virtual sense.) As regards data and facts, what we see here is a typical pattern of Internet users in Googling to find more palatable facts rather than addressing directly what is presented. I would like to think that: if I had foolishly been blind during the bubble to key economic indicators of stress flashing red over several years or if I had during an idealistic phase fallen for an ostensibly positive but brutal ideology, based on an economic crash and global failure, I would show some humility in dealing with unpalatable facts. Dear Michaeal What data, beyond the OECD data to which I linked? Are they not data? @ elia I think there is an embargo on acting-up allowances as well as recruitment, except for a few, shrinking parts of the health service. Temporary agency staffing is used to plug gaps that can’t easily be disregarded. Francis, A ciotoig is a lefty so I doubt you would have much sympathy or empathy towards then . I am a ciotoig. If you’re a lefty, lord help us lefties. @ All FYI http://www.irishtimes.com/business/economy/real-story-of-bailout-exit-is-how-good-crisis-was-wasted-1.1590267 The possible clean exit from the bailout is being described as jumping without a parachute. This is not strictly true. It would be more correct to say that a jump with the parachute of the present benign state of the markets is contemplated. The nature of the reserve parachute is what is really at issue should the main one fail; further draconian budget cuts and real radical reform measures to restore market confidence or a second bailout? P.S. For the record, I feel neither in a minority nor drowned out. Ernie , You are a public sector aristocrat. Not so. My superiority makes me peerless. @ brian lucey Your data above is in respect of non-tertiary levels (post secondary vocational is included for relevant countries) and the OECD says current expenditure devoted to purposes other than the compensation of staff is largest at the tertiary level, where it reaches 31% of all current expenditure, on average across member countries. At the secondary level in US ppp dollars, the cost per Irish student is $11,380 compared with the equivalent in Finland of $9,162 and in Sweden at $10,185. Ernie, I was going to call you a PS plutocrat but since you are neither a medical academic or a president, I thought that unfair. This percentage of staff compensation needs to be taken with a pinch of salt and requires more detail. If a university outsouces something, canteen, grounds etc then that proportion spend on staff salaries would fall, even though everyone is paid the same and the cost is still the same. On the OECD data, there is one odd thing. In most places, including Ireland, lower and upper secondary education costs are about the same, or sometimes upper secondary education costs are little bit higher. But Finland is a huge outlier as its upper secondary education costs there are only 70% of lower secondary education costs, which is why their overall costs are lower. They must be doing something very different. LOL, what did I do, when I look at Tull and Ernie. I was just asking about an Irish Band http://www.na-ciotogi.de/html/concerts.htm which seems to be pretty popular in Bavaria, you know, our deep black south : – ) But they dont seem to be that well known in Ireland, or …. ? They tour together with “Da Huawa da Meier und I”, doing some gaelic-bairisch fusion Francis, They are a bunch of lefties. No doubt one will leave soon to set up his own band. @ Tull Aithníonn ciotóg ciotóg eile. @ Michael Hennigan “From the start of the debate on this issue in 1999, the facts have not mattered for the beneficiaries and this period will be seen as marking the transformation of traditional trade unions to sectional representatives of privilege in common with counterparts in professional lobbying groups.” Looking at the endless leaps the trade unions have taken to justify maintaining rates of pay for their older better paid members at huge cost to newer younger members and excluding thousands more through hiring freezes its hard to disagree with that. Some of you are old enough to remember. When the last big jobs crises happened in the 80’s did the trade unions agree to abandon their core principle of solidarity and agree to allow new incumbents (generally younger people) be paid at much lower rates for like work? Did they agree to allow interns be employed as primary school teachers at €50 a week? Or is what has happened this time around new? I’m generally interested to know if the unions did this, and if so, how they managed to even out the differentials over time and get members back on board. I guess time helps since most of the people that are smart enough to know haw badly they have been treated emigrate soon after. @ Eamonn, No, they did not! This ‘intern’ baloney was unheard of at the time, for a start. There was, as I recall, considerable industrial unrest throughout the 1980s, including in the public sector. There was a major dispute involving the teachers’ unions and the binmen went on strike at one stage (that was in the days when we still had PS binmen). The army had to be called in to clean up Moore St. The relationship between TUs and the government was fractious on several levels, at least rhetorically, and occasionally confrontational. Then along came social partnership. (We have the Germans to thank for that suggestion.) Times were different in the ’80s, including political appreciation of the meaning, and values, relating to the public sector and its employees. Incidentally, I take it that story about the NS ‘intern’ teachers is apocryphal? Seafoid, Ta ceart agat, is ciotoig muse . @ veronica ‘Times were different in the ’80s, including political appreciation of the meaning, and values, relating to the public sector and its employees’ As the Russians say, the fish rots from the head. @eamonn “Looking at the endless leaps the trade unions have taken to justify maintaining rates of pay for their older better paid members” Oh, you mean like the Haddington Road pay cuts that only hit those earning over €65,000? Was that one of the leaps? How about a thread on Krugman’s latest column about the downgrade of France? By the numbers, then, it’s hard to see why France deserves any particular opprobrium. So again, what’s going on? Here’s a clue: Two months ago Olli Rehn, Europe’s commissioner for economic and monetary affairs — and one of the prime movers behind harsh austerity policies — dismissed France’s seemingly exemplary fiscal policy. Why? Because it was based on tax increases rather than spending cuts — and tax hikes, he declared, would “destroy growth and handicap the creation of jobs.” In other words, never mind what I said about fiscal discipline, you’re supposed to be dismantling the safety net. S.& P.’s explanation of its downgrade, though less clearly stated, amounted to the same thing: France was being downgraded because “the French government’s current approach to budgetary and structural reforms to taxation, as well as to product, services and labor markets, is unlikely to substantially raise France’s medium-term growth prospects.” Again, never mind the budget numbers, where are the tax cuts and deregulation? You might think that Mr. Rehn and S.& P. were basing their demands on solid evidence that spending cuts are in fact better for the economy than tax increases. But they weren’t. In fact, research at the I.M.F. suggests that when you’re trying to reduce deficits in a recession, the opposite is true: temporary tax hikes do much less damage than spending cuts. There goes Krugman, blaspheming against the religion of 95% of Irish economists… @ eamonn moran/ veronica In the UK in 1979, the so-called ‘winter of discontent’ of strikes helped bring Margaret Thatcher to power and in Ireland, in the same year, a total of 1,464,952 working days were lost (An Post was shuttered for months), which was the second-highest figure since 1922. Generally introducing European rules helped to improve the industrial relation system as it was common that a worker would not have even a letter of employment never mind detailed written terms and conditions. With the help of Europe, workers could no longer be arbitrarily fired and women got the right of equal pay for equal work – which no longer applies (wait until the insiders express shock about a European Court of Justice finding). Today, there are the sectional interests and the Hidden Ireland that is generally invisible most of the time. A planning tribunal sat for 16 years and still is there one party that would dare challenge the IFA and take away the stealth-taxing right that is known as rezoning? Size matters and when Dell shut its Limerick plant, there was money from an EU globalisation fund to advise on startups, production of business plans and other services, negotiated redundancy, and retention of pension rights. Contrast that with a closure somewhere this week that will be without fanfare. Basic redundancy will be paid and individuals will have a pension entitlement of about 29% of the current average earnings of €36K – among the worst levels in Europe for workers. Issues like this get no attention while those with collective power claim victimhood. Even the pension link to a current employee’s earnings has been maintained. Do these people give a damn about the private pension situation? Of course not. In 2011 Kenny who has 3 pensions promised to investigate the fees situation when the €1.8bn raid on funds was being discussed. Burton ordered up a report from PwC, the big accounting firm, which found that pension fund charges are taking as much as 17.4% of retirement savings in occupational schemes – and more in some cases. That was October 2012 and the pension levy is set for a rise in 2014 while the fees issue as well as the closure of guaranteed systems, is ignored. In 1997, the big unions were sitting at a big government table on Merrion Street while their leader had a perch at another big table on Dame Street when the corporate tax rate was on course to be cut to 12.5% from mid 30s for domestic firms. Did they push for extending pension coverage in the private sector? Of course not. Today’s young are not organised and it’s easy for the older men who call the shots to put them in the firing line. It’s interesting that the two men who are tasked with introducing reforms in Health and Justice are foundering. The status quo has been very good to both of them. Before expecting solidarity from Europe, it would be a good thing if there was some at home and less hypocrisy from those who are benefiting from a system arranged for insiders. Ernie “Oh, you mean like the Haddington Road pay cuts that only hit those earning over €65,000? Was that one of the leaps?” I doubt young teachers/ nurses starting out on their careers being paid 25-30% less than those that started 2 years ago would agree. Or the teachers working on Jobsbridge schemes. @ veronica No, you can check out the teaching jobsbridge jobs out on the jobsbridge website. I realise that the game is always divide and conquer, but surely it is the case that all in the public service, unlike those in the private sector, have been hit hard. If I understand your side, it’s a scandal that starting teachers make less. But you’d have no objection to everyone in the public service making what the starting teachers make. So it’s not the fact of people making less, it’s the injustice of singling them out. Needless to say I agree. Where I differ is that I make the same argument with regard to public sector vs. private sector. It is not right that only the public sector are singled out for sacrifice (usually accompanied by the justification that “we all have to take the pain”) while large swathes of the wealthy in the private sector have been untouched. And the way to make sure that none are singled out is to use the taxation system rather than insisting on endless public-sector cuts. According to Krugman and those he cites, not only is this fairer, it is smarter as tax increases have a smaller impact on GDP than spending cuts. And it is fairer since our progressive income tax system ensures that all will pay according to their ability to pay. But in Ireland, the politicians have figured out that 75% of the population would rather have 25% do all the sacrificing. @ Ernie Ball 1) It appears that you do not accept that there is or has been a public pay premium. There are some wealthy in both sectors: in recent years with the country in bailout status, one civil servant at 57 got an exit package of €713,000 with about half of it tax-free and an annual pension of €1420,000 annually – – this in a small country that cannot itself sustain a first world standard of living . Another got a €867,000 deal plus pension. Of course the pensions and past bonuses of bankers based on bubble profits should have been pursued but the elected public servants and their advisers did not wish to create a precedent that could rebound on themselves. 2) As for “large swathes of the wealthy in the private sector have been untouched,” not even Sinn Féin would propose a land tax. 3) The corporate tax rate is 12.5%. Companies should not be able to reduce effective rates to low single digits. 4) Capital gains tax has increased from 20% to 33%. The days of big pension pots are over but the civil servants as usual made some exceptions for their own. 5) Compared with countries that have a higher income tax take, the Irish top rate hits earners at a lower threshold. The difference between Ireland and countries such as Denmark and Sweden is that low income Irish workers do not generally pay income tax. 6) The sinking President Hollande has admitted that France’s problems cannot be solved by higher taxes. Your standard of living is not sustained by farmers but partly by foreign companies. So with a very high income tax rate, there would inevitably be an exception made for foreign expats. Another case of different laws for different people. 7) At the time of the crash, some of the salary levels in the public sector for a small country were at ridiculous levels. 8) There are about 480,000 on the Live Register or in public job activation schemes while the public sector retains an 1850s era guarantee of employment and guaranteed pensions. 9) In 1997-2005 the basic pay of Dail deputies that was linked to a civil service grade more than doubled. It was up 119% or twice as rapidly as the average industrial wage. The Exchequer’s annual wages and pensions bill increased sharply from €10.2bn in 2001 to €16.2bn in 2005. €2.2bn related to the cost of 38,000 additional workers. So the public payroll cost increased by 37% in 2001-2005 ex-new staff. CSO data showed that the increase in the average industrial wage for a male worker in the period 2001-2005, was 19%. The inflated pay was based on fantasy growth and the claimed ‘sacrifice’ suggests that there was a case to maintain the inflated pay and have even higher private sector employment. The cuts in pay and contribution to the cost of the guaranteed pension do not fully rollback bubble gains. Ernie , I certainly more on your side than mister hennigans . But would you not take the point that the upper grades of the public service are paid far too much . How does it work that teachers. Doctors and politicians are paid so much more here than elsewhere . Sure tax rates could go up but there is also the issue of value for money , I think the focus should be on providing a decent standard for all (given limited resources ) rather than adopting an attitude of “what we have we hold” There are some wealthy in both sectors: in recent years with the country in bailout status, one civil servant at 57 got an exit package of €713,000 with about half of it tax-free and an annual pension of €1420,000 annually – – this in a small country that cannot itself sustain a first world standard of living . Another got a €867,000 deal plus pension. Sounds like something that should be taxed… That way, those with obscene remuneration, whether in the public or private sector, would be called upon to make a sacrifice in our time of national crisis. As opposed to the current state of affairs where those sitting comfortably in their aeries in Kuala Lumpur can call on others to make sacrifices, no doubt as a way of settling some old scores. I agree with you on (3). (5) is trotted out almost as often as you claim that 75% of the costs of universities is spent on payroll. I realise that your self-appointed role is to afflict the afflicted and to comfort the comfortable, but it sounds as if your answer is to increase taxation on those making extremely modest incomes and leave the wealthy untouched. Is it? But I’m glad you mentioned Sweden and Denmark. Sweden has a top income tax rate of 57% and employer payroll taxes of 30%.. In Denmark, the top income tax rate is 52%. Tax revenues in Sweden as a percentage of GDP in 2012 were about 46%. In Denmark, they were at 50%. In Ireland, they were at 30% in 2005 and remained at that level (in a NATIONAL CRISIS we were told) in 2012. So please spare me your cherry-picked scandinavian stats. (6) Is a red herring. France’s “problems cannot be solved by higher taxes.” Nobody here is claiming any country’s “problems” can be “solved” by higher taxes. We (Krugman and myself, he said modestly) are suggesting that the best way to balance national budgets is through the taxation system. (7) “Some of the salary levels . . . were at ridiculous levels.” No doubt. That is true everywhere. However please note that all of the salary levels have now been cut. There was no attempt to actually see which ones were ridiculous and which were not. (8) “1850s era guarantee of employment.” Nice rhetorical touch. I suppose we should also abolish those old-fashioned 1850s-era child labour laws… (9) Public pay increased by 37% between 2001 and 2005. Is that real or nominal? What did GDP increase by over those years? What about population? And you did fail to mention what happened afterward, especially the years 2008-2013. Whatever you may think, there is little evidence to suggest that public sector pay is inflated now. If you have any, I’m sure I can count on you to present it in the most bombastic manner possible in between foot massages. Fascinating watching the amoral wriggling of the anonymous Ernie. Essentially its argument is that taxes should be higher so that public service workers can be paid enough to stimulate the economy. I confess it does seem slightly self serving. Just a little. Meantime the view is that the rest can go hang. And accumulate the debts without accumulating the pensions. I still remember hearing a PS union leader on a weekend radio show a couple of years ago explaining – without any irony – how the Irish car retail business depended on PS workers to buy new cars. Because, in his view, nobody else could. And then there’s the recent Sligo county manager’s deal. It’s just an individual example of an ongoing obscenity funded by a corrupt system. And worth defending, apparently. @ Ernie Ball “I realise that the game is always divide and conquer, but surely it is the case that all in the public service, unlike those in the private sector, have been hit hard.” More nonsense from the fountain head of it, those at the bottom of the public service have been used as tinder and kindling so that their ‘moral’ superiors and arch bluffers, can cling to their ill gotten gains. I look forward to the day your retirement cheque and others like you, bounces and your pension is only 40% of what you thought you were ‘entitled’ to according to the terms of your “contract”. Talk to the liquidator time is coming down the line and those in the public sector will not escape having to share in the pain of state bankruptcy. I swear 70% of you guys education and time is spent working out how to screw the country. I realise that your self-appointed role is to afflict the afflicted and to comfort the comfortable… Here we go again with the victims’ cross: When I highlight how the IFA managed to get almost a quarter of the national roadbuilding budget of over €18bn during the bubble for their members, I should be accused of hating farmers even though my parents came from small farms in West Cork; hating family members in the public sector or all lawyers and medics when I refer to ‘professional fee cartels.’ It’s a well-worn tactic to shut down debate as evident recently in the US. Hugh Sheehy above refers to your anonymity and you use it in the typical style of the Internet coward hurling abuse about and often raising where I live, evoking the ignorant suspicion of the outsider cf John B. Keane. In dealing with an Internet coward, the person using their real world identity is at a disadvantage. In your case, you have disclosed that you’re an academic, which suggests at least self-interest in the issue discussed here. In the real world, have you advocated in a public speech that Ireland adopt some form of communism with capitalist enclaves? (China’s Deng Xiaoping proposed such a system in 1978 but had second thoughts in 1992 and by 1997, Zhu Rhongi, China’s premier, had 30m jobs cut in state firms). This is a relevant issue as it would put your sole obsession with claimed victimhood in the public sector, in context. The Utopia gets a bit fuzzy when well paid ESB workers from the top down get free electricity while cutting off supplies to desperate people. Sarah Carey referred above to the current challenges of being in the media sector, why post crash would you presume that I am sitting ‘comfortably’ compared with yourself, bellyaching about having to give back some of your bubble gains. Robert Browne hits the nail on the head on pensions: the government of Ireland allows a foreign multinational to wind up my defined benefit (guaranteed) pension which also had an inflation escalation clause. We’re all coining it! 1. The net (after offsetting pension contributions) pay and pensions bill in 2012 was €17bn. 2. Using GDP with inflated multinational profits, understates the Irish tax burden, which is in line with the UK’s. 3. Irish employer social security costs are among the lowest in Europe as there is no obligation to provide a pension. About half of Sweden’s social security cost covers pensions and health insurance. The total rate in respect of under 26s is 15.5%. 4. The IMF has recommended that in respect of taxes, income taxes shouldn’t be targeted because of a number of factors. ESRI research shows that in 2010, 22% of households in Ireland were jobless compared with an average of 11% for the EU15 and in Spain and Greece, where the rates of unemployment are the highest in the developed world, the percentage of households without a working adult stood at 10% and 7.5% respectively. The Irish rate in 2007 was 15%. The ESRI has also said that a new rate of 48% on incomes of more than €100,000 would bring the top tax rate for employees to a total of 59% (48% tax, 7% USC and 4% PRSI). This would be higher than 13 of the other 14 members of the EU-15 group; The amount of revenue which could be raised, assuming no change in behaviour, was estimated by the Revenue authorities as €365m. The Irish top rate including charges is 52% compared with Denmark at 56.1% and Sweden at 56.6%. The Irish rate kicks in at the average wage compared with 1.5 times in Sweden, 4.2 times in UK, France (51.2%) at 5.1 times. In Ireland, even left-wing TDs buy private health insurance while the Nordics get superior health, education and childcare from their taxes. 5. Real growth from 2001 was dominated by property. 6. Industrial wage earners and PS workers were subject to the same inflation levels in data cited. “1850s era guarantee of employment.” Nice rhetorical touch. I suppose we should also abolish those old-fashioned 1850s-era child labour laws… I didn’t hear that Swiss and Swedish children have been forced to take up chimney sweeping. Of course, who would voluntarily surrender a caste system they benefit from?Including those folk who in theory want everyone to be equal. Michael H Genuine Q : there was a post advertised in TCD a bit back, August / September. If things are as cush as you (and others) seem to think in the groves of academe, then I am at a loss as to why you didn’t apply for it. It was Accounting/Finance with a side interest in innovation. To be honest, it was you to a tee. So, just wondering – why didnt you apply? And no, a PhD was a (very) desirable but not essential qualification. The crop interviewed included those with, without and in process of a PhD. So… genuine Q? Perhaps its no longer possible for family or business reasons to be based in Ireland, in which case thats ok. But given your ongoing interest in the place, and your tenor of it being so cozy, it would seem Same Q goes to the anonotrolls, but at least MH has the cojones to use his real name. @ Brian Lucey Wouldn’t that be the height of hypocrisy? To join the inner sanctum of the protected insiders system that he thinks is a corrupt and damaging to Irish society. I can see why people on the inside would want him to shut up and join the party as he is a constant pain their…. Join us Come to the dark side Luke! @ Mr Lucey Would the TCD post have offered similar conditions to someone who had been hired in the same job back during the boom? Or would the successful candidate have found that their new peers had already sacrificed the new guy’s package in order to shore up their own? On a broader point about pensions. How much is a decent pension worth? Using an internet pension calculator I would need a pension pot of at least £500k to ensure a gross pension payment of £30k (I am London based hence the sterling). To achieve this I would need to pay £12.5k per year into a pension pot from the age of 25 to 65*. That is almost half of the current UK average wage. So when Mr Hennigan bangs on about pensions he has a serious point. A decent pension (state guaranteed) is worth a material percentage of the recepient’s wage and arguably a lot more than they actually pay in. *I know I have not accounted for time value of money so these numbers are very sketchy. @ Brian Lucey I wasn’t singling out academe from the rest of the public sector (I guess that’s OK to say you’re in the PS as the NTMA handles the pensions etc) but thanks for the job suggestion. Eamonn suggests that if I was to drink the soup I could be setting myself up to be the fly (‘The Spider and the Fly’). With the big boss needing funding for the new business school and rebranding project, it wouldn’t be my cup of tea tugging the forelock to all those corporates. Thank you Google for your big cheque but how about paying your taxes? It should be said that working for a US or European multinational in most of the world is a positive experience as terms generally are better than at local firms and a crucial difference is that the local head is an employee like everyone else. As regards having a ‘cushy number’ once tenure status is reached I assume within reason, it would be up to an individual whether the job is cushy or otherwise. In the research area, you could even have a chance of becoming an entrepreneur without any initial investment risk if a student makes a breakthrough. It is handy though having a guaranteed job and pension for life and time to do the odd nixer, but I would have found it boring (there are of course boring aspects to every job). My experience is that teachers tend overdo the stress thing as few would know what stress exists elsewhere but that’s my humble opinion. Guaranteed jobs What happens where there are work lifetime guarantees for some is that temporary and part-time jobs rise. The Japanese government has estimated that there are 4.6m surplus employees in Japanese companies — about 13% of the permanent workforce. They cannot be forced to leave and a system of ‘banishment rooms’ has developed where they’re given no work in the hope that they will voluntarily go. Meanwhile the poorly paid temp workforce is about 38% of the total workforce. It’s inevitable also that some take advantage of the privilege and according to the C&AG, three quarters of all Clerical Officers in the Irish public service availed of sick leave in 2007. The average number of days taken by each Clerical Officer was 16 days. The average overall was over 11 days per person. In the US, The Atlantic says that since 1975, tenure and tenure-track professors have gone from roughly 45% of all teaching staff to less than a quarter. Meanwhile, part-time faculty are now more than 40% of college instructors. In contrast with the elite, there is 1m contingent and adjunct staff, some poorly paid and according to the Chronicle of Education, the percentage of graduate-degree holders who receive food stamps or some other aid more than doubled between 2007 and 2010. “During that three-year period, the number of people with master’s degrees who received food stamps and other aid climbed from 101,682 to 293,029, and the number of people with Ph.D.’s who received assistance rose from 9,776 to 33,655, according to tabulations of microdata done by Austin Nichols, a senior researcher with the Urban Institute. He drew on figures from the 2008 and 2011 Current Population Surveys done by the U.S. Census Bureau and the US Bureau of Labor.” Recent research at Northwestern raised hackles as it showed that non-tenured staff were better teachers. That’s not me saying that! http://chronicle.com/article/Ad-juncts-Are-Bet-ter/141523/ @ Hugh Sheehy +1 Ernie’s and BL’s reactions here show the traditional PS sensitivity to their “worth”……status is also an inherent preoccupation of the PS. My own parents were teachers. Never had enough remuneration to have it “cosy” with 7 kids to rear (no contraception in their day). However, when retired, they have had more than enough, and say so. It’s cosy compared to even well paid private sector pensions…..now being (again) pilfered to pay for PS largesse and Irish debt service. @MH Here in the US, our elementary, middle school and HS teachers can be fired at will, and are very rigorously evaluated and ‘bonused’ (modestly) for student performance. That drives a very high standard of education in the Public School system here (CT…..albeit a relatively wealthy state). Agree that Irish teachers overdo the “stress” of the job…..should try the reality of most private sector jobs….. That all said, the Irish PS sector has an inherent value…..but what’s fair? Economically speaking, the PS has been a valuable transmission mechanism for EU aid to the Irish economy. A stable distribution mechanism. In that context, why “dismantle” it, even if parts of the pS sector benefit disproportionally? All that is achieved by doing so is more debtor payment capacity…..ok, but no local economic enhancement /benefit. The sad reality is (as I have said before) that Ireland is in for a long period of EU dependent welfare. Ernie and BL et al are effectively employed in welfare jobs, dependent on the public purse in Ireland which is dependent on the EU welfare teat. The economic culture and efforts of the country are increasingly being focused on maximizing the begging bowl return. It’s not just the PS sector of course. Accountants, lawyers, etc in the private sector are also conforming to this economic model, as there is no growth /income engine elsewhere for most as MH have previously said. Only those employed in the international economy in Ireland can claim otherwise (a lucky minority). Ernie’s argument that they should be taxed more is also wrong, economically….just endangers the only source of independent, non welfare based income in the country. To add my German 2 cents to the discussion: We had those discussion about, whether the public sector is over paid in relation to the private sector here as well, after 2000, same stuff about outdated numbers, that raw pay scales do not reflect the real full pay, especially when looking at P.S. pension, which I feel on a personal level still somewhat high, and not sufficiently connected to the main system : – ) Then people harp into each other, just like here, and the medicine is to simplify and publish the pay scales (public VEr.di union vs metal worker union IG Metall) and rigorously reduce the adders. For those of you, who think, that posting with a personal identity is the only honest way to post, I would like to mention, that a whole, and for a time actually the most interesting, German economic blog, kantoos, was actually run by an anonymous owner. What really drives me to post now, is the description from Michael Hennigan of the US academic sector. We had this here as well, “Centers of Excellence” on university levels, we recently scaled back. Student Access is now completely free again, no fees. Having seen arguments for it, statistics of lower starting numbers from poorer parents, no matter the minor impact. That large parts of the post master academics are paid extremely low is creating a self replication of the established class. Not good in the long term. We didn’t do that much pay for performance on the school level, in Germany so far. So, if Paul W has some references to Connecticut at hand, I would be very interested. Does this really work, over something like at least 10 years? I have lived through about 10 different versions of “incentive schemes” in the private sector, and at some point many people said, just keep it simple, base salary, and a bonus paid based on profits, maybe with some differentiations across pay levels. People here do know, that with trotting out h-index and patent scores, I certainly do not have a problem with competitiveness in principle : – ) @francis “To add my German 2 cents to the discussion: Good man. That makes the German contribution to the crisis €750,000,000.02 [German Finance Ministry] A mere 3/4 of a billion! Irish have contributed ~95 Billion – excluding NAMA that is 40% of the EZ Total. D O D, it is actually a german billion, like an anglo trillion: 750 000 000 000.02 not to forget the 3 more zeros and my 2 cents, please : – ) galloperin_inflation! Glad that you do not dispute the facts – merely my enunciation of same. Half of you are having a great crisis …. the other half are low paid p1ss poor deutschelanders …. and migrants. @ Francis Plenty on the internet re CT school performance rates. Apologies that I don’t have the time to post here and bore you with detail. Truthfully also, many in these parts are Wall Street genetically (smart) or dependent on the cash flow from Wall Street…..so the kids here are “abnormally” smart, in general. Local HS (2,800 students) has among the highest Harvard and Ivy League intake. Public school system based off property prices….which also distorts……relatively rich people with high value homes drive the resourcing of the public schools…However, we are certainly getting bang for our buck. Each kid gets collected by yellow bus each morning and are delivered to school before 7AM. Get 1/2hr for lunch and finish around 3pm, rede liveried home by school bus….Benefits of large population, etc…plus have far shorter hols each year compared to Irish or UK kids. Culture does not include alcohol for kids (thank God) but the adults do as much as the Irish do, but behind closed doors. Main thing though is how positively driven the teachers here are, at all levels…reminds me or my parents in the old days…..extra-curricular (free) activity, etc. committed, professional…..unconditional, vocational, etc….impressive. Standard in math, Language arts (Spanish, etc), science (biology, physics, chemistry and a whole array of related….8 levels in math and most science programs). Way beyond what one generally has in Ireland (I attended a “privileged” private school in Cork (CBC)…… So the highly educated Irish workforce claim is fine , but overstated too…. Michael H Still not seeing why you didn’t apply. As usual, a long answer with something tangential in bold. Not clear what a discussion on clerical officers or google has to do with it. Why didn’t you apply? you almost creep up to but then resile from saying “maybe it aint that great when one starts..”. Is that why? @ paul w With the greatest of respect for your many excellent contributions, you are describing an educational and social millieu which is heavily subsidised, but not in the traditional state-subsidised manner. As you rightly acknowledge, the surplus which is being creamed off by the financial services ‘industry’ is being distributed to the key participants, and it requires an army of technical staff. It is, after all, an obscene, indefensible surplus, without economic or social merit. What you describe like a distributed, less racially-homogenous, less gendered version of Organisation Man, with elements of the cloistered, industry-free, Ivy League townships . Sadly, even the most meritocratic ‘gottos’ impose externalities on the rest of society, and US exceptionalism is in the end, a myth. Sorry. I meant ‘One Dimensional Man’ http://en.wikipedia.org/wiki/One-Dimensional_Man @Brian Lucey “Same Q goes to the anonotrolls, but at least MH has the cojones to use his real name.” As you know only too well many contributors here run the risk of losing their employment if their real names were exposed so for good reason they use anonymous names instead. You’re sensible enough to understand that this makes reasonable sense so in future play the ball not the man. Enough said. @ Brian Lucey It would be overdoing it to ascribe an adjective associated with Franz Kafta’s ‘The Trial’ to this vignette but still: You wonder why I didn’t respond to a vacancy that I was unaware of, in respect of a position that I was not in a position to take or even if available, would not be interested in taking up. I love this Kafka quote. @ Paul W I was actually looking for evidence that “pay for performance” does work on school level, in contrast to my expectations. Good information is always what goes against the grain. But your description of CT was actually even more valuable for me. The yellow school bus at 7 am is not my kind of dream here, but school, etc. in walking distance. So I had something to think about a little. @francis Actually, it seems that pay for performance is not as common here as I thought http://www.cga.ct.gov/2011/rpt/2011-R-0433.htm http://www.wtnh.com/news/new-haven-cty/teacher-contract-links-wages-performance Clearly an actively evolving issue. Paul W “Ernie and BL et al are effectively employed in welfare jobs, dependent on the public purse in Ireland which is dependent on the EU welfare teat.” err, not I . The school of business in TCD makes more, significantly more, via fees charged on taught postgrad and research programmes than the staff and overhead costs of the entire school. Competing in a global marketplace, we hold our own and make a nice profit. Do you? Oh, forgot you can say anything as your anonymous…. So, nope. Nice try tho. @BL Great Brian. Maybe then you could provide us occasionally with some economic analysis and insight. Paul W ” Maybe then you could provide us occasionally with some economic analysis and insight” Beside my irish examiner column and my blog and my regular media appearances and my copious research? Beside that? @BL Seamus Coffey is worthwhile observing……I don’t always agree with his donning the green jersey approach, but he stands for something. John McHale is too politically “ambitious” for me and loves his economic models…….still, he is identifiable and substantive in the debate here. Stephen Kinsella’s approach is also distinct, humanistic even. Colm McCarthy is simply relevant and tough, but is a little sensitive to criticism. Do I need to mention Morgan Kelly. You’re clearly another bright Corkman, and I do enjoy your Examiner article. However, could we see more of that TCD technical firepower here? I for one would like to see it. By the way, claiming credit for overall TCD economic profits doesn’t sway at all and is nowadays an unacceptable approach. What do you individually bring and what do you stand for? Your value added? Good luck. Basically, keep it less personal and more content oriented. Would love to learn something. Brian I should mention MH’s extraordinary “balls” in running his website and shamelessly plugging here at every opportunity….his content is additive and would be sadly missed if he didn’t post here. Individual blogs are fine….but I like this website’s bringing it together….don’t have time to follow the individual egos represented by individual blogs (KW being the biggest of the Irish egos). I should add that it’s a pity that your TCD colleague, CG, doesn’t participate here also. I’m sure there are others also…. Shouldn’t leave out Cormac Lucey….I went to post grad college with Cormack and he was always good company over a pint! Shouldn’t leave out Cormac Lucey….I went to post grad college with Cormac and he was always good company over a pint! Paul W wrote: Ernie and BL et al are effectively employed in welfare jobs, dependent on the public purse in Ireland which is dependent on the EU welfare teat. And then Brian Lucey wrote: err, not I . The school of business in TCD makes more, significantly more, via fees charged on taught postgrad and research programmes than the staff and overhead costs of the entire school. Competing in a global marketplace, we hold our own and make a nice profit. I honestly cannot tell you which is more depressing, the insistence that anyone doing anything that isn’t profitable is some sort of parasite who could and should be done away with (along with his or her entire discipline, of course) or the “defence” that buys into the premise but in order to reject only the claim of parasitism. What of those working in, say, philosophy or literature or art history, Brian and Paul? Are they nothing but parasites because they don’t make a “profit” in the funny-money ways in which such things are calculated? And what does that make you two? “Parasites” is not the word that comes to mind. I’m thinking of another word beginning with P. Paul W I’m from Kerry….. My value added? My students alone cover my salary. I created the masters suite of programs. I teach more than average and do more research. So, I can do this all day Paul. What’s your value added? Oh, again, I forgot, as your anonymous we don’t know. Constantin has his own blog, and has never been here. Only a few TCD (or other) persons are invited to publish here. Mostly CG, me for the most part, and others avoid here due to the proliferation of anonymous commentators with ill disguised agendae and a penchant for ad hom sneers. Ernie. Sorry I don’t fit nicely into a box for you. Iv an oped on Tuesday in the indo with Ronnie Munck that might help. I’d email you in more detail but then your anon also….. “Value add” is often the wrong way to look at how much someone should be paid. Yes, there should be added value. But a cleaner in a hospital adds huge value and the job is hard work. It’s beside the point. The point is that they’re easy to replace (many can do the job) hence don’t get to capture much of the value they add. Hospital cleaner is probably a low paid role even in comparison to an art history lecturer. “Value add” often isn’t the main point in pay. A huge complaint about PS pay is the process by which pay was reached. It was self serving for the PS unions and for the politicians. A corrupt process. It was. It still is. And the people paying the supra normal bills that result from this corrupt process don’t get anything like the benefits that either the politicians or the PS unions take out of their pockets. It’s a racket. Brian, You never explained your comment about (part) solving the crisis in Anglo by selling the Anglo deposit book. Did you make a mistake? (we all do sometimes). Can you please clarify it? Else it takes away from all of the other articles/research etc. This is what you wrote in the Irish Independent in April 2010: “…Anglo can be wound up cheaply — here’s how. Sell the €28bn deposit book. This is a regular event in banking, and even if it has to take a discount of 25pc that would yield €21bn. Sell the bonds and withdraw deposits in other banks. This gives a further €14bn, a total of €35bn, that is sufficient to cover the senior bondholders (€13bn) and the interbank deposits with NAMA (€16bn), with €6bn left over…” http://www.independent.ie/business/keeping-it-alive-will-cost-an-arm-and-a-leg-with-any-upside-hard-to-ascertain-26646082.html @Ernie Nobody is saying that all PS should be eliminated…..get real. However, there was a clear distortion of the system during the good times….primarily for the benefit of Irish politicians who are linked to the PS pays scale….totally corrupt as Hugh says. Brian…..let’s hear some economics from you. Get away from self defending and similar BS. Content? Don’t care whether you duplicate your blog here, but get on with it. Otherwise, you’re not adding much here. John G is far more intelligent in posting….I met him recently and he is an impressive, intelligent entrepreneur, as no doubt is MH. Finally, I have no need to defend myself. I know who I am and am judged by “the markets”.! Who are you? It’s unclear (economically). Love Kerry people. Half my extended family are from there. Cronins, Rices, Sweeneys, etc. Best Paul @ Brian Again, as a “senior manager”‘ I would assume that your profitability assertions can be verified. However, in a commercial bank /insurance company, the “front office” would be allocated “back and middle office” costs. Every time I went to add a FO person in Ireland (up to 2006), I added Euro 1.5-2 million cost per person cost pa. So anyone joining had to break through that cost base before being “justifiable”. What that meant in general was that we needed at least overall 15pc growth to grow the business and pay for the added costs……my net profitability per team member was approx. Euro 5.5m pa but I was by far the highest earner and contributor. I personally added a new Euro 6m approx in 2005. Work that out. Ireland has a hell of a challenge ahead is all I can say. Those figures above were during the boom times, I should caveat….emphasizes the size of hole that Ireland needs to climb out of. Ww Paul W You don’t see any contradiction between you claiming all sorts of monies and asking if I can back up my assertion? Your anonymous. You dont tell us the sector or the industry. And you want us to believe you with less information than the disbelief you aver to my information? Whether “brian lucey” is really Brian Lucey or whether Paul W is Paul Williams or Paul Walsh is also beside the point. Fees that TCD can charge students are largely because it’s TCD. The price at which a professor is charged out to students and the number of students depends on TCD far more than on the quality of their personal lecturing. The lecturer, unless they’re a Nobel Prize winning eminence, is far less important and more easily replaceable than TCD’s reputation…its IP, essentially. Whatever Paul W does probably has similar issues. However, the issue around PS pay remains the same…despite all the increasingly adhom goofiness here. The corruption and injustice of the process and its results remain intact. Indefensible, except that people who benefited will continue to defend it. Brian, Can you please reply? Did you make a mistake? If so then just admit it. If you don’t think you made a mistake then what was your logic? This is what you wrote in the Irish Independent in April 2010: “…Anglo can be wound up cheaply — here’s how. Sell the €28bn deposit book. This is a regular event in banking, and even if it has to take a discount of 25pc that would yield €21bn. Sell the bonds and withdraw deposits in other banks. This gives a further €14bn, a total of €35bn, that is sufficient to cover the senior bondholders (€13bn) and the interbank deposits with NAMA (€16bn), with €6bn left over…” http://www.independent.ie/business/keeping-it-alive-will-cost-an-arm-and-a-leg-with-any-upside-hard-to-ascertain-26646082.html Peadar @Paul W Do you think it behoves a university and those working in them to treat “the Markets” (as you do) as though they were the equivalent of the gods of Olympus and the ultimate arbiters of value? Or are you at least able to see that that viewpoint (homo œconomicus) is but one, very recent, view of the human predicament and that one function of a university education is to contextualise it (rather than simply bow down to it)? One might also wonder if you wouldn’t consider it wise to be a bit more restrained in your fealty to “the market” as arbiter of all things given that it was precisely this view of markets as infallible that got us into the mess we’re in… Comments are closed.