Wage Flexibility in Ireland

This post was written by Aedín Doris

Donal O’Neill, Olive Sweetman and I have been working on the issue of wage flexibility in Ireland, and have put our initial results into a working paper. Here’s the abstract:

There is considerable debate about the role of wage rigidity in explaining unemployment. Despite a large body of empirical work, no consensus has emerged on the extent of wage rigidity. Previous attempts to empirically examine wage rigidity have been hampered by small samples and measurement error. In this paper we examine nominal wage flexibility in Ireland both in the build up to, and during the Great Recession. The Irish case is particularly interesting because it has been one of the countries most affected by the crisis. Our main analysis is based on earnings data for the entire population of workers in Ireland taken from tax returns, which are free of reporting error. We find a substantial degree of downward wage flexibility in the pre-crisis period. We also observe a significant change in wage dynamics since the crisis began; the proportion of workers receiving wage cuts more than doubled and the proportion receiving wage freezes increased substantially. However, there is considerable heterogeneity in wage changes, with a significant proportion of workers continuing to receive pay rises at the same time as other were receiving pay cuts.

The full paper is linked here.

Edit on December 17: link changed to working link

88 Responses to “Wage Flexibility in Ireland”

  1. Joseph Ryan Says:

    I am really surprised that over 40% of employed persons received wage rises during the crisis. The number seems very high. As you have managed to take account of the PS pension levy, which must to some degree offset increment increases, the PS can hardly account for the high % receiving increases.

    There must certainly be two economies in Ireland, but I had no idea that the better off half was so large or was, or is, doing so well.

    I have only scanned through the report but I must try to read it fully.

  2. Ernie Ball Says:

    And this study clearly shows that public sector workers have taken it on the chin throughout this crisis. Private-sector workers? Not so much.

    Doesn’t stop the media from prefacing each new round of public sector pay cuts with the justification that it’s necessary because “we all must share in the pain.”

  3. Ernie Ball Says:

    @Joseph Ryan

    And that better off half that has been doing so well has not been called upon to make more than token contributions to our “national crisis.”

  4. grumpy Says:

    Ernie the study relates to wage stickiness, of the waged. The private sector has a thing called “compulsory redundancy” through which wage costs are reduced during recessions. Imagine it as a far LH tail on the graphs.

  5. MickeyHickey Says:

    Private workers were in a competitive market before, during and after the downturn. Those who were competing successfully before the downturn who were serving external markets that did not crater continued to do well. Those serving the domestic market suffered layoffs and wage cuts/freezes which added to the downward spiral.

    In the public sector the Irish gov’t flush with tiger cash had been busily buying votes prior to the downturn. Remember the good times were a perpetual motion machine and Ireland never had a property downturn. In addition anyone who detected froth was advised to commit hari kari by none other than the head honcho of the whole country. Corrections have been made to PS wages because they were out of synch with the economy as a whole. Some people will say the cuts were not enough and others will say the cuts were too severe.

    We still have a whole raft of Quangos who are not adding value to the economy as a whole. They are untouched because the government of the day finds them useful.

    The ECB and IMF funding gave the government the luxury of not being forced to make unpalatable adjustments in the short term. Now that we are back in the bond market and particularly if the EZ economy stagnates the government has no place to hide.

    Are we moving heaven and earth to keep Mario Draghi in office.

  6. Dearg Doom Says:

    I work in a university, I have people from many countries in my class who may attend other classes in other countries. These people earn increasing salaries and have no problems finding employment. I’m both in a competitive industry and one which makes Ireland inc competitive. Why am I being “taxed” to pay for the crisis when other people are not?

  7. Michael Hennigan - Finfacts Says:

    The CSO reported this week that in the four years to Q3 2013 public sector average weekly earnings fell by €47.88 (-5.0%), and this compares with a decrease of €2.41 (-0.4%) in private sector average weekly earnings in the same period.

    The above normal retirement of older high cost civil servants would tend to reduce the average.

    In 1997-2007, the average weekly industrial wage (craft and manual workers) rose by 55% and for managerial staff in industry, the average rise was 59%.

    The comparable rise in the public sector ex health was 74% and in the civil service 78%.

    A TD’s basic pay in 1997 was €44,068 and it rose to €95,363 in 2007.

    Extra amounts included length of service (up to €6,000) and for holding positions on Oireachtas committees (up to €19,000) besides expenses in the range €30,000 to €60,000.

    Selfish self-styled victims may claim that a pension or job security has no value. However, in 2007 an official review engaged consultants who determined that the average employer cost of the Irish public pension was 27% of salary while the comparable level in the private sector was 12% based on the mix of scheme benefits and zero coverage.

    The 2009 public pension levy has reduced the margin of 15% but in the private sector defined benefit (guaranteed payout) schemes are being phased out while the link to current earnings has been retained in the public sector.

    1. There were no pre-crisis pay ‘cuts’ in the public sector and private sector (the odd struggling company would not have impacted the data).

    Hours worked would have varied as would performance payments.

    2. In the private sector, there are 3 economies: foreign MNCs, indigenous firms and agriculture where public funds support over 80% of average household farm income.

    Payroll costs for the big MNCs are in low single digits compared with revenues. They would have no reason to cut pay.

    The big professional firms are sustained by MNC and government business and nothing much changed after the bust.

    The insider legal folk are as busy with the fallout from the bust if not more than during the boom.

    The biggest employers in the country - Tesco and Dunnes Stores - had no reason to cut the low pay of their mainly part-time female staff while people need to eat through boom and bust.

    After dips in 2009, international dairy prices are up 67% and other food commodity prices have also risen

    So the big food companies were not under pressure to cut pay.

    3. Two-thirds of private sector workers are in indigenous non-exporting firms.

    There have been over 8,000 company insolvencies since end 2007.

    For those that survived, with reduced staff numbers, it’s usually stupid to cut staff pay as they are likely to be doing more work in a poor market. Developing new markets or maintaining old ones in a recession, only seems easy for armchair experts.

    4. So in 2009, bonuses fall as the market dips but in a realistic incentive system, targets are adjusted and then in 2010, it appears the workers have got a pay rise.

    5. Given the ease of reducing private sector pension benefits or abandoning existing schemes, there is obviously flexibility in the system.

  8. MickeyHickey Says:

    @Dearg Doom
    Unfortunately public perception is that the taxpayers are footing 70%+ of Irish University costs. In many countries taxpayers chip in 50% + or -. Competition is usually associated with internecine war between faculty members. In turn that leads to the saying “The stakes are so low so the wars are particularly vicious.”. I sympathise with you in relation to the latter.

  9. Michael Hennigan - Finfacts Says:

    Pay increases awarded to the taoiseach, tánaiste and ministers in 1997-2007 under national wage agreements, the Review Body on Higher Remuneration and benchmarking:

    July 1997: 2.5% (subject to maximum increase of IR£5 a week), Partnership 2000

    April 1998: 2.5% (also removal of IR£5 per week ceiling), Partnership 2000

    July 1998: 2.25%, Partnership 2000

    July 1999: 1.5%, Partnership 2000

    April 2000: 1%, Partnership 2000

    September 2000: 5% (of ministerial salary only), Review Body

    October 2000: 5.5%, Programme for Prosperity and Fairness (PPF)

    March 2001: 5% (of ministerial salary only), Review Body

    April 2001: 2%, adjustment to PPF

    July 2001:5% (of ministerial salary only), Review Body

    October 2001: 5.5%, PPF

    December 2001: (backdated from 2003) 2.75% (of TD’s portion of salary only), benchmarking

    April 2002: 1% lump sum, PPF

    April 2002: 5%, Review Body October 2002: 4%, PPF

    January 2004: 5.5% (of TDs’ salaries only), benchmarking

    January 2004: 3%, Sustaining Progress

    July 2004: 2%, Sustaining Progress

    December 2004: 2%, Sustaining Progress

    June 2005: 1.5%, Sustaining Progress II

    June 2005: 2.5% (of TDs’ salaries only), benchmarking

    July 2005: 7.5% (of ministerial salary only), Review Body

    December 2005:1.5%, Sustaining Progress II

    June 2006: 2.5%, Sustaining Progress II

    December 2006: 3%, Towards 2016

    June 2007: 2%, Towards 2016

    September 2007: 5%, Review Body

    Source: Department of Finance

  10. Tullmcadoo Says:

    MH,
    What happened after 2007. Did the world end.

  11. Michael Hennigan - Finfacts Says:

    @ Dearg Doom

    An entrepreneur can be rewarded or lose his or her shirt.

    In academia, in the science area, an individual can be lucky to be part of a discovery and make big bucks without risk.

    However, generally the options are limited as individual brilliance can be rewarded long-term but it’s a sector where individual annual incentive programs are difficult.

    Even at national level, there are few credible metrics of success for the investment in research.

    In countries such as the US, they’re are lots of low-paid PhDs and some making lots of money.

    You could also try your luck with your own business - usually the stories in the media are on the successful entrepreneurs but they’re would be more to learn from the failed entrepreneurs.

    @ Tullmcadoo

    Yes the world of ‘legitimate expectation’ did end.

  12. Tullmcadoo Says:

    MH,
    For the sake of completeness, I think you should post the downward adjustment since 2007. We both agree that PS pay was & still is too high. However it would be churlish to refuse to acknowledge that some part of the neccessary adjustment has taken place in some parts of the sheltered sectors.

  13. Michael Hennigan - Finfacts Says:

    @ Tullmcadoo

    Tabe 1 here in a report covering 2009-2013 has totals for both sectors

    http://www.cso.ie/en/releasesandpublications/er/elcq/earningsandlabourcostsq22013finalq32013preliminaryestimates/

    The CSO began a new earnings series in 2008 and it doesn’t now split the industrial data

  14. DOCM Says:

    @ MH

    The data simply confirm what is rather obvious; a necessary re-adjustment is taking place between the level of pay in the public and private sectors. What may not be so obvious is the impact of the ratchet mechanism which was a major driver in the inflation of pubic service pay in the first place i.e. the formal link established between the pay of public representatives and public servants in 2001.

    Ratchets usually work in both directions (UORRs excepted), a fact with which the higher echelons are having some difficulty in coming to terms with, notably in the health sector. It is, however, the best hope that the issue will be addressed. For the moment, however, the government is continuing to work a discredited management system, covering this failure with an unending sea of waffle about PS reform.

  15. Ernie Ball Says:

    @grumpy

    You never disappoint me. It seems nobody can bring up this topic without somebody yelling “redundancy is a 100% pay cut!”

    And once again I have to point out that those who are in jobs do not suffer by proxy because somebody else got laid off. They do not sacrifice by proxy.

    Indeed, unemployment is part of the national crisis itself. It therefore cannot be adduced as evidence that the private sector are doing their part to [b]solve[/b] the national crisis. The idea is absurd: “Yes, we all must do our part to solve the national crisis. You in the public sector do your part by working harder and taking repeated pay cuts. We in the private sector do our part by some of us going on the dole.”

    The fact is, almost the entirety of the “adjustment” has been borne by the public sector and those who depend on them. The private sector (with the exception of the small minority who have been made redundant) carry on as before. Who, exactly, did you think was pumping up the house prices in SCD? Oh, sure, it’s all those nurses…

  16. DOCM Says:

    @ Ernie Ball

    Surely the capacity of the employer to pay must also be a factor? The Irish taxpayer has reached his/her limit with regard to pay in the public sector. Rates of pay in the private sector are decided between employer and employee in varying circumstances but a market rate prevails. If these rates are rising, it is to be welcomed as it probably reflects a return to economic growth, however anaemic.

    The problem in the public sector is that there is no market mechanism; only linked un-targeted pay reductions (and increases) are possible. This what must change. Individuals would then have a pay which reflected the value of their contribution rather than the mediocre mean (which all see themselves surrounded by).

  17. Ernie Ball Says:

    “The sheltered sectors.” Please. My workload has doubled and my pay has been cut by at least 25% since 2008. There is virtually nobody working in the private sector of whom this is true.

    In the meantime, it’s so bloody cushy that I have colleagues “retiring” in their early 50s (on meagre pensions due to lack of service) because they’ve simply had enough: enough of the constant vilification not only in the media but by friends and neighbours, enough of constantly being told how “cosseted” we are as a pretext for another round of pay cuts and another increase in the workload. They know that, in fact, Irish lecturers are now not only poorly paid by international standards but have, basically, zero chance of advancement thanks to the effects of the ECF. Everyone who is mobile (not only because of their career profiles but also those who have personal family circumstances that allow it) either has left Irish universities or is planning their exit. Ah, but sure, couldn’t monkeys do their jobs! No, wait, we’ll have private sector robots do it!

    In addition, I’d like to applaud the Sage of Kuala Lumpur, who between foot massages by his manservant manages to constantly harp on the fact that public sector workers have pensions as if that were some kind of scandal (when the real scandal is the absence of pensions everywhere else) and as if being a creditor of the Irish state 10 or 20 years from now were some sort of great position to be in. The UCD pension system, of which I was a member until the government stole it from us, was in [b]surplus[/b], which is why it was taken over.

    All of this is meant of course to distract us from the good fortune of wealthy private sector individuals in Ireland like our friend tullmcadoo who haven’t been asked to contribute much of anything and are partying like it’s 1999. It is no accident that the Irish media, who make sure that views like mine never get an airing, are entirely controlled by private-sector billionaires and ex-pats, who most certainly do not want to be asked to contribute anything at all to the country. They’d rather that those who actually do contribute to the country–by educating its youth or nursing its sick or putting out its fires–contribute even more and they don’t mind vilifying them to make sure it happens that way.

    The relentless focus on TD salaries and the implication that public sector workers are somehow paid like TDs is only part of this.

  18. Ernie Ball Says:

    @DOCM

    Surely the capacity of the employer to pay must also be a factor? The Irish taxpayer has reached his/her limit with regard to pay in the public sector.

    The top income tax rate before the Celtic Tiger was 48%. By 2007, it had been lowered to 41% (buying a lot more votes than were ever bought with benchmarking: the PS, remember, is only 25% of the working population). Where is it now in our time of national crisis. Oh, yes, it’s still at 41% and the lower tax rate, similarly, has not budged.

    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 what evidence do you have that “the Irish taxpayer has reached his/her limit” when they were paying substantially more in the very recent past?

    Toqueville had a name for what this is: “tyranny of the majority.” 75% of the population would much rather that a minority do all of the sacrificing. It’s a vote winner (since people here like to talk about buying votes…). And if we have to portray the public sector as subhuman parasites in order to carry it out, well, you don’t make an omelette without breaking a few eggs (or universities).

  19. Ernie Ball Says:

    @DOCM

    And, no, I’m sorry, I don’t accept your divinisation of the market as the only possible arbiter of what is valuable and what is not. Your infallible market decided that Ireland should spend future decades of its wealth building estates that nobody will ever live in.

    Ask the pope if you don’t believe me…

  20. grumpy Says:

    Crikey, seem to be annoying both extremes of the political spectrum.

    Ernie for many people who are made redundant it is the financial equivalent of being taken outside and shot in the back of the head. Their colleagues who ducked the P45 usually have to scramble to fill in as the dismissed employee was never just sat there twiddling his ot her thumbs - added to which they are awarer they could be next.

    When you come on here proclaiming that the private sector has got off more or less scott free while really, the only people who have ‘paid’ for the prior economic mis-maagement of the country are the downtrodden public sector, you seem to be unaware of the privilledge that job security is.

    Then there’s the pensions - the private sector defined benefit system is in very broad terms, probably as bust as we are used to the banks being - but the government is still tapping the funds with additional levies.

    One part of the “adjustment” is of reducing state expenditure and increasing state taxes. I was under the impression there has been considerable increases in income and capital taxes, and a lot of stupid tax breaks have been closed off (the Section 23s though are still providing lots of defaulting BTL landlords with plenty of income).

    The other part of the “adjustment” is that of embedded costs within the economy - relevent to international competitiveness. This is where high costs in the Irish public sector, compared to the rest of the EU (see IMF etc) act to prop up these costs, as do the costs embedded in rent seeking sheltered private sectors. Guaranteeing no compulsory redundancies - just shifting people like doubled up administrators around, across the board spay cuts, increments etc are examples of a failure to manage the public sector effectively. People who value the public service, for the long term, don’t think that is a good idea.

    Nice to see the Nurses as human shields again.

  21. DOCM Says:

    @ Ernie Ball

    I am advocating changes that return the public service to some form of normality. These changes can be summed up in three basic propositions (i) public representatives assume their responsibility, through the Dáil, for raising taxes and control of public expenditure (ii) the organisation of public services is changed to allow managers to manage on the basis of market forces, whether for educational services or any other service and (iii) there are no preconceived divisions between public and private sector provision.

    There is an understandable degree of disenchantment with the present situation; to put it mildly! Other countries have confronted similar situations and have dealt with it by following the logic of these three propositions.

    P.S. I keep returning to the issue of the links between the pay of politicians and public servants because propositions (i) and (ii) cannot become a reality unless and until it is broken.

  22. eamonn moran Says:

    @ michael hennigan

    “For those that survived, with reduced staff numbers, it’s usually stupid to cut staff pay as they are likely to be doing more work in a poor market. Developing new markets or maintaining old ones in a recession, only seems easy for armchair experts.”

    I disagree with this bit.

    I think for indigenous businesses who rely on the domestic economy the best course of action would be to reduce wages rather than let people go. Every time young (and it generally was the young) less qualified workers were let go It had a massive negative effect on the domestic economy. If more employers had pursued these policies the recession would not have been as deep as younger people spend a larger percentage of their wages.
    Its also true that less debt would have been paid down over the last few years and there would be less money in the pension funds of those that kept their jobs but the economy would not have shrunk to the same extent, it would have recovered quicker we wouldn’t have had to have as much forced immigration and we would have embraced the concept of inter generational solidarity.

    This idea is counter intuitive and goes against the basic instincts of employers in financial difficulty but that doesn’t man it isn’t the best alternative. Its penny foolish but pound wise in the medium term. These policies were followed in some central northern European countries to some extent. We followed the more Machiavellian Latino model of Italy Spain and Portugal.
    convincing enough people to follow this policy in the next recession gives a chance to reduce our greatest national disgrace of forced emigration.

    Nobody argues this case. Not because it doesn’t make sense, it does. But it doesn’t pay to argue for it if you are inside the tent.

  23. Ernie Ball Says:

    @grumpy

    If others can use TDs as human bombs, I can use nurses as human shields. :-)

    Again: tax revenue was 30% of GDP in 2005. It was 30% of GDP in 2012. I don’t consider that a “considerable” increase since, as you can see, it is no increase at all.

    There is no evidence that the Irish public sector is particularly costly compared to the rest of the EU.

    The rent-seeking sheltered private sector (the grocery cartel about which nothing is done; the legal cartel about which nothing is done; the pharmacy cartel about which nothing is done; the real estate cartel [oh, yes] about which nothing is done) is a different matter entirely.

    I myself was opposed to the decision of PS unions to protect jobs at the expense of salary. Not because I buy into the refuted market fundamentalism that is as unshakeable as a rash in these parts but precisely because I don’t. Universities (to take only the example I’m most familiar with although the HSE is much the same I gather) spent the boom years imitating private sector management. This resulted in a completely unnecessary explosion of managerial parasites who add nothing to the actual service. If they all were teleported to a spaceship tomorrow, virtually everything of importance would go on as before. But these manager think they are working in the private sector and they’ve drunk the kool-aid. They think their job is to “audit” what people are doing (in the name of “accountability”) and they don’t mind collecting handsome bonuses for doing so.

    My view was that the crisis should’ve been used to sift out some of this chaff. There is no earthly reason why we need 3 administrators for every 2 people doing the actual work. And, in fact, DCU manages to get by on a significantly lower ratio than do TCD and UCD. But nobody ever points to that. Get rid of the parasites and let those who do the teaching and research get on with it instead of constantly imposing this or that bureaucratic box-ticking exercise just to make it look like you’re actually doing something for your 6-figure salary.

    So on that, I agree with you but for entirely different reasons.

  24. DOCM Says:

    @ EB

    On the role of markets, we will have to agree to disagree. What you get without them is uniformity and the victory of the mediocre.

  25. DOCM Says:

    @ EB

    “But these manager think they are working in the private sector and they’ve drunk the kool-aid.”

    You are making my argument for me.

  26. Michael Hennigan - Finfacts Says:

    @ Ernie Ball

    1) Try and come up with a tax comparison without multinational profits.

    2) At the end of 2008, the UCD pension deficit was €309m.

    3) KL is no longer part of the British Empire and your image of expats and manservants is as dated as the politics of the little party you lead.

    4) You’ve strong views based on prejudice rather than facts and I will grant you some sympathy for the adjustment you’re going through.

    5) You clearly don’t know much about the private sector and I guess for most of your adult life, you wanted the private sector wiped off the map; I guess you are among those who believe multinationals are run like the United Fruit Company? That wouldn’t stop you using their products or services?

    6) When the likes of the Castro brothers realised that the workers’ paradise wasn’t going to materialise, and the dwindling real world examples were among the world’s worst places to live, you said publicly you would tolerate capitalist enclaves.

    Modern slave colonies to keep the police state running the paradise tuned up?

    7) Despite the crash of your fantasy world, you persist in your self-righteousness.

  27. grumpy Says:

    Ernie,

    See page 50, item 37

    http://www.imf.org/external/pubs/ft/scr/2012/cr12264.pdf

    With regard to tax increases, tax take % of GDP stabilised because tax rates increased on lower activity / capital value.

    That more tax measures might have been appropriate is not something a reasonable observer would not dispute - as is the fact that the failure to reform the PS to protect its long term role and command proper public support, was a really bad idea.

  28. grumpy Says:

    too many nots there.

  29. Ernie Ball Says:

    Right, Michael, my views are those of Comrade Fidel. I have no idea what you’re referring to in point 6, in particular the claim that I said I would “tolerate capitalist enclaves.”

    Nor do I understand why you think I’m a party leader, although if elected I’ll be happy to serve.

    Do you think the UCD pension fund would be in surplus *now* if the so-called Pension Levy Contributions were made to it?

    As for basing views on prejudices rather than facts, well, at least I’m not calling myself Mr. Finfacts while doing it. And when it comes to self-righteousness and despite my considerable self-respect, I must take a backseat to you… Ditto for my rich fantasy life.

    @DOCM

    WRT manager drinking the kool-aid. You seem to have missed my point: the introduction of private-sector-style management techniques has made the public sector less efficient, not more. An army of bureaucrats whose purpose is to monitor the “outputs” of those who actually do the work does not a lean and mean university make. Similar claims can clearly be made about the HSE.

    As for your three positions, they bespeak an unbridled faith in the all-knowing wisdom of the markets that–you’d think–the experience of the last few years might have at least taught you to tone down in polite company. Again, the application of market forces to educational institutions like universities are a disaster for the education of the young, for research, as well as being a gigantic waste of money.

    @grumpy

    I didn’t understand a word of that. Can you rephrase?

  30. Ernie Ball Says:

    @ the Sage of KL

    Oh, and by the by, the claim about UCD’s pension fund being in deficit comes, as far as I can determine, from a single entirely unsourced Sunday Business Post article. But I can understand why you’d remember it 4 years later: it confirms your prejudices.

  31. DOCM Says:

    @ EB

    And you have missed my point! I agree that the introduction of private sector management techniques, especially on the basis of a standardised management system as set out in the still current Public Service Management Act, is a nonsense. But it is the con that was implemented by the previous government and which justified the fake comparisons between public and private sector and the conflation of salaries at a senior level.

    By “markets” I do not mean the term in the sense that you take it; rather as a means of pricing inputs correctly and, more importantly, outputs the measurement of which must logically vary in line with the heterogeneity of the public sector. If applied across the board, it would in likelihood throw up the result that entire layers of the “management” of which you complain had zero output and could be removed.

    Events are now conspiring to force the necessary changes. It would be a help if public servants actually delivering services could agree to push the process along.

  32. Ernie Ball Says:

    @DOCM

    What you get when you run universities without introducing market forces is precisely the opposite of the victory of the mediocre. Universities are run collegially and that means among other things that those who advance are those who satisfy academic criteria of value, regardless of what the market value of what they do might be.

    You get victory of the mediocre when you introduce an army of paper pushers who see the the educational and research missions of the university as mere means to the real end: making money. And therefore who also see themselves as the real “movers and shakers” and the academics and researchers as mere “employees.” At that point the university–no matter how much nattering about “excellence” goes on–devolves into nothing but a diploma mill (which is, of course, more efficient than actually educating anyone) and the academics who succeed in it are those most adept at gaming the “benchmarks” and giving the public what they want to hear. Kind of like the economists on The Irish Economy…

  33. Joseph Ryan Says:

    @Aedin Doris / Authors
    A few Points:

    The restriction of the samples to people who had worked a full year (52 weeks).
    Many who were laid off temporarily (furlough), or people who worked partial years, are omitted. On the assumption that such people are mostly in the damaged section of the economy would their omission have a significant affect on the results?

    re: The decision to use Gross earnings less pension deduction:
    While you do discuss this point, would it not be better to compare Gross earnings before pension deductions , if possible.

    Many who contributed to pensions particularly AVCs, both in the private and PS sectors, were forced by circumstances to reduce their contributions, consequent to tax effects on their income. They simply could not afford to continue contributions at prior levels. Such reductions in contributions would have mollified the true ‘pay reduction’ effect. In effect there has been a hidden reduction in savings, that is offsetting the real reduction in net pay. I know several people who have made the decision to contribute less and / or to cease contributions, because they cannot afford to keep them up.

    In addition, the tax changes to allowable pension contributions from stratospheric levels to a maximum gross wage of €115,000, means that certain better off people, would have been in receipt of even better off net pay. Could the numbers of people involved could be such as to influence the overall results?

  34. Ernie Ball Says:

    @DOCM

    Encrusted (now) bureaucratic managers are not going to “push along” any “process” that might result in them being made redundant. Let me put this another way: the least “productive” (if you insist on that misplaced factory-floor jargon) lecturer is infinitely more “productive” than the most “productive” administrator. But that won’t stop the finger being pointed by the latter at the former when it’s time to do the auditing.

  35. DOCM Says:

    @ EB

    Our posts crossed.

    “those who advance are those who satisfy academic criteria of value”

    “the academics who succeed in it are those most adept at gaming the “benchmarks” and giving the public what they want to hear”.

    Which is it?

    The market measures that I have in mind would ensure the first only. (The management disease to which you refer is far from being confined to academia. It has spread like form of sleeping sickness across the entire public sector and will not be halted until the current Public Service Management Act is scrapped; and the department implementing it with it.)

  36. skeptic01 Says:

    Getting back to the OP,
    The conclusions of this paper appear to be that

    1. Wages in Ireland have shown considerable flexibility over time.

    2. Flexible wages have not had much impact on unemployment.

    It’s always fun to find data contradicting the expectations of economists both left and right. The old joke about the two-handed economist will have to be revised. On the one hand they’re wrong; on the other hand, they’re also wrong.

  37. seafóid Says:

    @ DOCM

    “On the role of markets, we will have to agree to disagree. What you get without them is uniformity and the victory of the mediocre.”

    The TGV is mediocre , is it? How does it compare to the UK train system?
    And how does the market tend to deal with the externalities it generates ?

  38. Michael Hennigan - Finfacts Says:

    @ Ernie Ball

    Oh, and by the by, the claim about UCD’s pension fund being in deficit comes, as far as I can determine, from a single entirely unsourced Sunday Business Post article. But I can understand why you’d remember it 4 years later: it confirms your prejudices.

    Wrong again.

    Somebody must have told you that the Government stole the surplus. So what you knew was hearsay and then you go on Google to try and show that I was chancing my arm also.

    My information came from a breakdown provided by the late Brian Lenihan to parliamentary question on the issue of the value of funds which took about a year to transfer.

    http://debates.oireachtas.ie/dail/2009/12/01/00091.asp

    Anyway, there is no point in engaging with you or sidetracking the main subject of the thread.

    Again you behave as the typical Internet coward, seeking to hide your real world identity while coming up with a nickname for a person who uses his name! “Have you no sense of decency, sir? At long last, have you left no sense of decency?”

  39. MickeyHickey Says:

    Tax takes cannot be compared across countries without taking into account the public/private mix of services provided.
    For example a country that provides mandatory health services will be collecting 15% + or - either as general revenue or a mix of general revenue and health services deductions. Pensions are another area where governments provide 70% pensions to subsistence poverty levels of 10 to 15%. A bunch of sophisticates like yereselves know all this very well yet ye continue to make unqualified statements like Denmark levies 46% and Ireland levies 30%. The difference amounts to zero if Denmark has across the board single payer health care and Ireland has an inefficient mish mash of overpaid consultants and under resourced public hospitals. I am not trying to be hard on you, just pointing out the big picture is made up of immense complexities.

  40. rf Says:

    “When you come on here proclaiming that the private sector has got off more or less scott free while really..”

    Well parts of it have, and parts of the PS have as well..so Im not sure what good this endless dichotomoy of private vs public sector that we’re sold in this country is

    It’s only rhetoric

  41. Gavin Kostick Says:

    A bit of the old breaking news: secret ECB letter to Zapatero of Spain published.

    I think it is relevant here as the ECB’s justification for breaking up workers’ rights seems to be that it will reduce unemployment: which the paper above isn’t so sure about under the circumstances.

    ‘What’s the best place to publish an ECB letter setting out your country’s economic policies?’

    ‘”The government should also adopt exceptional measures to promote wage moderation in the private sector [...] We suggest revising other labour market regulations shortly, with a view at speeding up the re-integration of unemployed people in the labour market [...] “‘

    But plenty to boggle over.

    http://openeuropeblog.blogspot.ie/2013/11/whats-best-place-to-publish-ecb-letter.html

  42. DOCM Says:

    @ seafóid

    See my clarification above in reply to Ernie Ball. Why do you assume that letting markets decide must necessarily imply only private investors? Incidentally, while the TGV is profitable overall - a market decision - 30% of its lines are not and the TGV Est has come in for severe criticism from the Cour des Comptes. No further lines are planned.

  43. DOCM Says:

    @ GK

    fyi

    http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/139580.pdf

  44. Michael Hennigan - Finfacts Says:

    @ GK

    This letter is possibly similar to what the likes of the IMF would suggest to a government in private.

    Spain has had a dysfunctional labour market for decades with a peak 33% of the workforce on temporary status. This system developed because severance for permanent workers was very high.

    The temps took the brunt of the big job losses and there have been labour market reforms since.

    Yesterday in a report the OECD recommended to Greece that it should remove 555 restrictions/regulations (it also suggested it would need a new debt writeoff).

    Pressure from outside agencies can help and be necessary.

  45. seafóid Says:

    @ DOCM

    That line “What you get without them is uniformity and the victory of the mediocre” is no better than Tull’s assertion that Premiership style salaries for “high achievers” remove danger and dullness.
    The market can be very efficient but it doesn’t work for large chunks of the economy. Monopoly market power often leads to “the victory of the mediocre”.

  46. seafóid Says:

    @ DOCM

    Just to add to that

    Per Lex

    http://www.ft.com/intl/cms/s/517d3fa4-c3e1-11e2-8c30-00144feab7de

    “the freedom to be as avaricious as possible within the law keeps companies hard, fast and efficient, which is how we like them”

    There are 2 questions in particular :

    1. Define “efficient”
    2. Who writes the law ?

  47. Ernie Ball Says:

    @MH

    Tell you what: when I’m safely ensconced in my mountain aerie 11,000km from Dublin (and its vindictive public sector manager types), I’ll be sure to post here under my real name if I can find the time between back rubs by my manservant.

    But, to be honest, no, I have no sense of decency at long last. But then, implicitly comparing me to McCarthy and yourself to one of his victims is . . . how should I put this . . . indecent, especially since the person more likely to occupy the McCarthyite role among the two of us is you. What was that you were saying in this very thread comparing me to Fidel Castro? What’s the next step down that path?

  48. Ernie Ball Says:

    @MickeyHickey

    I love this game the right play in Ireland. It goes like this:

    “Yes, Denmark raises 50% of GDP in tax revenue. But look at the services they have! Therefore, Ireland, which only raises 30% of GDP in tax revenue, should cut its public sector further.”

  49. Gavin Kostick Says:

    @ Michael Hennigan

    Disinterested advice might be useful, but ‘advice’ backed by a big stick is a different matter.

    http://www.independent.ie/irish-news/michael-noonan-ecb-threat-letter-will-be-released-26890994.html

    Also:

    “The government should prove in a clear manner, by action, its unconditional commitment to the achievement of its fiscal policy targets, irrespective of the economic situation.”

    http://openeuropeblog.blogspot.ie/2013/11/whats-best-place-to-publish-ecb-letter.html

  50. grumpy Says:

    Only slightly off-topic. Thinking of Ernie - wind direction on the mainland.

    http://www.ftadviser.com/2013/11/27/investments/economic-indicators/lords-vote-in-favour-of-tough-licensing-regime-for-bankers-8EtdkS5lV5Fdjp1lo4956M/article.html

    “The Lords vote saw peers vote 222 to 217 in favour of an amendment to introduce licensing under the ‘professional standards’ section of the Bill. It followed demands from Tory peer Lord Lawson and Archbishop of Canterbury Justin Welby for changes to the reform package in the wake of the Co-op revelations and other recent scandals. ”

    “Following the Lords’ vote the Bill will now pass back to the House of Commons in order for the amendment to be debated, where it is expected to meet stiff government opposition.

    Under the current proposals a ‘senior persons regime’ for bankers would be introduced, which would introduce a set of ‘individual standards’ rules and new criminal sanctions for reckless misconduct by senior bank staff.

    The Financial Conduct Authority has said the new regime will “set expectations” for senior staff rather than simply acting as an “initial gateway”.”

  51. Shay Begorrah Says:

    @Gavin Kostick

    Disinterested advice might be useful, but ‘advice’ backed by a big stick is a different matter.

    This is the sound of fiscal chicken hawks coming home to roost. Glorious.

    It is gratifying that the ECB was foolish and arrogant enough to put its anti-democratic, pro-capital, anti-labour agenda into writing rather than just bullying and threatening member states in meetings and through back channels. It should make the next stage of the battle for the EU easier.

    Michael Hennigan, one of the quickest boys in the the reactionary class, is the first to adopt what I am sure will soon be the accepted position on the right.

    * We never said there were no threatening letters and if we did we were kidding. People send sharp letters all the time in the business world! Nothing could be more normal than technocrats setting fiscal (and labour) policy in one country for the benefit of another.

    * The contents of the threatening letters were just common sense (who could argue against measures to make the economy more competitive? Who?) Everyone here is a neoliberal right? Am I right. I am right wing!

    * The lazy southerners/feckless Irish were going to have to do it anyway, what with the way their overpaid public service caused the global financial crisis by angering the confidence fairies.

    * Did we mention how the public service are parasites? Let’s talk about that instead. How about some market reforms?

    * Its funny the left complains about anti-democratic institutions because Stalin something or other Cuba something something peasants.

  52. Paul W Says:

    I find Ernie’s logic to be “unbelievable”. The PS side of my own family have taken his 25pc cuts….but they still have a job. Exceptionally important, they still have their relatively unadjusted pensions. I have an old defined contrib pension scheme that has been “pilfered” in the last few years for tens of thousands of euros…..the result is that most /at least very many have stopped or reduced their DC pension contributions. By the way, I have now offshore that pension fund…….

    Ernie’s claim that the scandal is that everyone doesn’t benefit from a guaranteed pension like a PS pension is laughable as is his claim that one can ignore the paying capacity of the employer. Imagine someone in private employment who figured they could retire at 65…..most cannot now do so. The 65 yr old PS worker can still dream of the golf course or similar…..all heavily subsidized by the taxpayer. Granted the PS worker is also a taxpayer….but only 25pc of the workforce as Ernie says…..so his pension and job security is paid for largely by the private sector 75pc.

    To be honest, Ernie, you have no idea of the private sector’s plight. You are of course correct that there are those in the private sector that have unduly benefited…..AIB, BOi, etc bankers among them. Some of the pay levels at the bank management levels are obscene and are still above the (base) international norms despite these institutions being bankrupt. However, that completely misses the bigger picture…..and you are only a tiny part of that.

    Get real. If you were a PS worker here in the US, you would think twice about this BS……you could be unemployed tomorrow and have very limited pension rights. Not to mention that you would then face huge health insurance costs after the statutory 18 myths shelter (continuing employer) insurance period ends here…..you then are in your own. Swim or sink….on your own.

  53. Ernie Ball Says:

    @Paul W

    Maybe reading is not your “thing” but I never said one can “ignore the paying capacity of the employer.” What I said is that given that the income tax rates are exactly where they were in 2005 and given Ireland’s low level of tax revenue as a percentage of GDP there is little evidence that the capacity to pay has been reached. Does this mean I’m ignorant of Ireland’s debt position? Not at all. But is your side aware of it? We’ve been told for 5 years that this is a NATIONAL EMERGENCY and yet, for some reason, tax increases are off the table.

    Note also that my position, unlike most of yours, is disinterested. For if there are to be income tax increases, I’ll be paying them just like everyone else. PS pay cuts, however, are only paid by the public sector and since the vast majority of workers (and voters) don’t work in the PS, they’ve decided they like that situation just fine.

    What evidence is there now that PS pensions are “heavily subsidised” once the existing contributions + pensions levy are added up. Or are you saying that it’s somehow abnormal for an employer also to make a contribution to a pension?

    If I were in the US, here are some things that would be different: tenure would be ironclad rather than chipped away (as if it weren’t part of my contract at all) by national wage agreements imposed by blackmail. So it is false that, were I in the US in my position, I “could be unemployed tomorrow.” There’s be less chance of it than there is here. My pension rights, similarly, would not be “limited.” Although many of my US colleagues are in defined contributions schemes, the employer contributions are quite substantial.

    In short, on this last question (and no doubt much of the rest) you’re talking out of your hat. Or, to put it another way, you have no idea of the lecturer’s plight.

  54. Tullmcadoo Says:

    Lecturer’s plight? OMG

  55. Ernie Ball Says:

    It was a joke, Tull, in reference to Paul’s use of the word…

  56. Ernie Ball Says:

    But I do note your assumption that only those in the private sector could possibly have a “plight.”

  57. rf Says:

    Dudes, you all must chill

  58. Paul W Says:

    @Ernie
    I totally understand the lecturer’s plight. My family is large and we have /have had lecturers also. So no, you are the biased one.

    When you talk of tenure in the US 3rd level context, you again have no idea whatsoever….quit the BS please.

    As someone said above (MH I think), there’s no talking to you…..it’s boring at this point reading your constant bleating. When BL joins in, he says that he earns moe from private work…..well then, he and the like should be paid based off their commercial earnings…..this two-jobbing thing in parts of the PS needs to end. I have many close friends who are consultant Meds…..they should not be double -jobbing. In the past, they would have made similar fortunes in the US, but those days ended with Clinton. Ireland is way out of whack in these “protected” areas.

  59. Paul W Says:

    @Ernie
    If your job is not a net income contributor, who do you think pays your salary and for your benefits including pension? I accept though that some jobs cannot be directly linked to income stream…..in a FI, similar, we refer to that as a downstream middle-office or back-office job…..it’s often not so different for PS jobs. That así, the debate is not that PS employees shouldn’t be fairly compensated.

    The argument is that the PS benefitted in general from over-large compo rises during the good years. That should be adjusted. That doesn’t preclude adjustment /reduction of other sectors and Jobs (PS or private) that are unduly benefitting.

  60. Paul W Says:

    Re subsidization, pensions (including those of my PS parents), are paid out of current account……who pays for that generally? Approx 25pc PS / 75pc private (whether directly or indirectly).

    You would not do well it seems outside of Ireland’s protected insider PS sector (you come across as a lifer).

    Anyway, there is obviously no talking to you….

    By the way, I am “interested” only in the context of an outsider…..I have been out of Ireland for many years. Still, my family splits 60 /40 in terms of PS /Private….and many of the private sector family are indirectly or directly dependent on govt cash flow (those that aren’t so fortunate are really having a hard time).

  61. Paul W Says:

    Lastly for now, Ernie,

    Do you think that your employer (mainly) (Irish State), has the capacity to continue paying for your guaranteed pension? Contingent liability for Ireland is 160 billion (and growing),

  62. Bryan G Says:

    @Gavin K. et al

    A bit of the old breaking news: secret ECB letter to Zapatero of Spain published…

    An interesting letter. For a start, it’s not actually from the ECB, but is from Trichet and the governor of the Bank of Spain, who apparently believed they had the legal standing to micromanage fiscal policy. Trichet’s MO seems to have been to co-opt the relevant national CB governor to pressurize the government of the day. Honohan’s infamous Morning Ireland interview is another example of that. After the letter, and presumably after a suitable reply, Trichet then called an emergency meeting of the ECB at which SMP bond purchases for Spain (and Italy) were approved. However he made it clear that the ECB action was only to be temporary before the EFSF took over, which given the size of Italy and Spain, was an impossibility. He thus managed to prove himself both authoritarian and ineffective in one fell swoop.

    Draghi appears, at least on the surface, to recognize more boundaries, and is more effective. The policy conditionality associated with ECB money printing must go through the ESM program process, rather than be managed by presidential letter or radio interview. You could argue that this process is still opaque and will produce a similar outcome, but it’s better than the chaos that went on before.

  63. Tullmcadoo Says:

    Ernie,
    Wrong, it was an assumption that anybody on your salary with 12 class hours a week and 180 days off a year might have a plight. Although a tremor in your cuing arm can be debilitating.

  64. DOCM Says:

    @ Bryan G

    “Trichet’s MO seems to have been to co-opt the relevant national CB governor to pressurize the government of the day.”

    It is the European System of Central Banks (ESCB) - made up of the central banks of the euro area - that is the main authority in the context of the operation of the single currency. Its principal responsibility is to maintain the integrity of the single currency. Draghi may be more subtle in his approach but the proof of the pudding is ultimately in the eating. The objective has been achieved.

    http://uk.reuters.com/article/2013/11/25/uk-eurozone-zapatero-idUKBRE9AO04Z20131125

  65. Ernie Ball Says:

    @Tull

    I’ve just spent the last few weeks working 90+ hours a week (enrollments are up and we’re short staffed thanks to retirements with no replacement). You probably think actors in the theatre only work the time they’re on stage. “Great job! You only have to work 90 minutes a day!” My workload, in fact, goes up in the summer time.

    @Paul W
    You sure spend a lot of time and space talking to someone to whom there’s “no talking to.”

    1) Tenure in the US: My claim to expertise in this domain is the fact that I was educated in the United States and taught in universities there before coming here. What’s your claim to expertise about this? The fact that you’re dead wrong (and I’m right) suggests that you have none.

    2) On your view of the public sector as parasites: Although I can understand why you think it’s tempting to think of the public sector as being paid directly out of your income tax, that doesn’t really make much sense. Rather, you and I both pay income tax to the state. The state raises revenue from many different sources. The state also makes payments for services and other things to many different entities. In that context, it makes no more sense for you to claim that you (or the private sector in general) pay my salary than it would for a tourist paying VAT on a Marathon bar to claim to pay my salary. The fact is quite simply that The State does not equal private-sector income taxpayers. To claim that they are the same is not only to distort matters, it is also (and this is part of the campaign of vilification of the PS) to disenfranchise all public sector workers by implying that they have no stake in the State, that they are pure parasites feeding off the “productive” sectors. I remind you that the mess the state is in was one created by those “productive” sectors. Never mind how “productive” those “productive” sectors would be with an illiterate, unhealthy workforce and without police and judges to protect their contracts and property rights…

    Of course, my actual employer raises its own revenue. And were it to be privatised by the state, it would raise even more revenue (in the form of elevated fees that covered the actual cost of providing the service) and would have no difficulty paying my salary given the demand for places. Indeed, I’d probably get a raise. So the only reason that I’m a “parasite” rather than a lean, mean member of the “productive forces” that you so mindlessly worship is that my university happens to be owned by the state, which is what keeps the fees for your little ones at a price you can afford.

    3) My pension. You ask: “Do you think that your employer (mainly) (Irish State), has the capacity to continue paying for your guaranteed pension? Contingent liability for Ireland is 160 billion (and growing).” You’re talking out of both sides of your mouth here. On the one hand the Irish state has tremendous liabilities and may well turn out to be insolvent. On the other hand, you think my pension is fabulous because it’s “guaranteed” by the very state that you suggest may be insolvent. Nevertheless, that pension is an entitlement for which I have a contract with the state and which I’ve paid for under the terms of that contract. Although I realise that it would be (and indeed, has been) convenient for you to act as if those contractual terms don’t exist, you might want to think twice about invalidating them with a stroke of the pen. If it’s onerous for the state, well, maybe they should’ve thought twice about bailing out banks to the tune of €65 billion, especially when there was no legal or contractual reason for doing so. But that decision was made and now you want to renege on my contract because of it? Sorry, but if you incarnate The State (as you claim when you say you “pay my salary”) then you’re going to have to face up to your contractual obligations like a big boy. My advice: stop paying the bank debt…

  66. rf Says:

    Ernie Ball has blown ya’ll out of the water

  67. Bryan G Says:

    @DOCM

    I don’t know what point you are trying to make. Trichet thought there should be an EZ-wide financial minister, and thought there was no better man than himself to do the job, regardless of what the Treaties said. For the SMP for Spain/Italy the ECB signed off on policy conditionality written by Trichet and the relevant national sidekick.

    The current setup has the ECB signing off on policy conditionality written by the European Council/Heads of State of ESM countries. This has the benefit of not being illegal, unlike Trichet’s megalomanic “T’m-the-EZ-FinMin” approach.

    How long before the Irish government publishes Trichet’s letter and its reply?

    More broadly one might think that a country such as Ireland that has had one of the biggest bank collapses in world history, would be intensely interested in the new framework for failing banks being negotiated and discussed as part of the BRRD and SRM legislation. However that would be completely wrong - it appears that no politicians and no journalists are interested, not withstanding the fact that the financial strength of Irish banks ranges from very very weak to very very very weak.

  68. DOCM Says:

    @ Brian G

    The point that I was making is that Trichet had no need to co-opt anyone. The college of the heads of the EA central banks constitute the ESCB. They, in legal terms, are in charge. (Article 127 TFEU).

    If you seek to speak with such authority, you should back it up with some references. The most fundamental aspect of the ECB, and which differentiates it from all other central banks, is its uniquely independent status. Whether this is a good or a bad thing is another question but it must be recognised. Your view of what is legal and illegal is neither here nor there unless you can quote something to back it up.

  69. Bryan G Says:

    @DOCM

    You do understand that the letter demanding specific policy prescriptions sent to Zapatero was not originated by the ECB or ESCB? It was sent by Trichet and Ordonez in their personal capacities, not on behalf of either the ECB Executive Council or Governing Council. It was clearly designed to force governments to adopt specific fiscal measures, without which Trichet would not have put the SMP on the agenda and called an emergency meeting of the ECB. This “procedure” was not envisaged in any Treaties.

    Only the ECJ could rule on the legality of Trichet’s actions. The various ECB/PN-related court challenges mounted by the Left in Ireland would have been better targeted at the ECB exceeding its mandate by micromanaging fiscal policy and spending taxpayer money, and putting legal protections in place to prevent a repeat.

    The ECB themselves seem to be concerned with legal boundaries - see Economic and legal limits of central banking, e.g.

    The independence of monetary policy should however not be confused with a “carte blanche”. The Treaty clearly defines boundaries.

    The “independence” of the ECB relates to its conduct of monetary policy and does not mean it can take over fiscal policy (e.g. determining the size of the fiscal deficit, as it tried to do in Italy) and spend taxpayer money (e.g. loss allocation for failed banks, as it did in Ireland) if it feels like it. These are jobs for the Commission and the national authorities respectively.

  70. Shay Begorrah Says:

    @DOCM

    The most fundamental aspect of the ECB, and which differentiates it from all other central banks, is its uniquely independent status. Whether this is a good or a bad thing is another question but it must be recognised. Your view of what is legal and illegal is neither here nor there unless you can quote something to back it up.

    It is rather sad that there are still people in the world who look at obvious abuses of power and say in defence of them “Nothing illegal was done.”. Of course those with the most power both set the law and can, as we have seen several times in the last few years, change it at will. (The financial practices that brought Europe to the sad place it is now were all legal as well, though it took much lobbying from banks to make them so)

    All would be European Union political realists are such awful moral cowards.

    I suspect that if you asked them if there is anything that the ECB or the European Commission could do in pursuit of their agenda that would simultaneously be legal but wrong in some higher sense none would give a straight answer.

  71. DOCM Says:

    @ Bryan G

    “Only the ECJ could rule on the legality of Trichet’s actions.”

    You are dead right there! The question is finding a government, or some other person or body that would be accepted as having the necessary locus standi, to take a case. Good luck with that!

  72. Bryan G Says:

    @DOCM

    I’m just stating the formal situation. I think Pringle vs Ireland/ESM would have been better recast as Pringle vs Ireland/ECB.

  73. Michael Hennigan - Finfacts Says:

    @ eamonn moran

    I think for indigenous businesses who rely on the domestic economy the best course of action would be to reduce wages rather than let people go.

    I was thinking in terms of a firm that needs to restructure because of a big market change.

    In a service firm, wages are likely to be a big proportion of the input costs compared with manufacturing and where the recession didn’t have a big impact on revenues, then it can be wise to keep staff on reduced pay or hours worked until the situation improves.

    Where a company needs to restructure to survive (some of the SME owners got involved in property investment, reducing their capacity to get credit or support cash flow in their businesses), it usually does not have a choice but to cut staff levels.

    In that situation, it may not be wise to cut already low pay of the people you need to stabilise the business and prevent collapse.

    @ Bryan G

    The letter to the Spanish PM was not an official instruction as advice/ recommendations from the Bank of Spain governor wouldn’t have been.

    Germany for example would not have had individual authority to tell Spain what to do but Merkel could have said the same to Zapatero during a two-way chat at an EC summit.

    @ Ernie Ball

    You discuss your job a lot here and why with tenure, would you seek to have a separate identity?

    You didn’t deny who you were in 2010 when you were outed here and later promoted your own book:  Kieran Allen’s Ireland’s Economic Crisis.

  74. DOCM Says:

    @ Bryan G

    Now is your chance!

    http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fTEXT%2bIM-PRESS%2b20131104IPR23615%2b0%2bDOC%2bXML%2bV0%2f%2fEN&language=EN

    The amount of jumping up and down by politicians of every ill between now and the EP elections will be a sight to behold. The drafter of the press release certainly caught the way the wind is blowing. The replies to the questionnaire should provide more grist to the mill.

  75. Ernie Ball Says:

    @MH

    I was never outed here. I am not Kieran Allen, who is much less of a coward than I am and has never been shy about saying things in his own name (but doesn’t to my knowledge participate in much debate online).

    I do have to wonder why you seem uniquely obsessed with outing me as opposed to the dozens of others who post here anonymously. Why have I been singled out? Indeed, there’s something quite–dare I say it?–McCarthyite about this obsession of yours, not least in the way you, apparently (I have no memory of the episode in 2010 that you’re alluding to) are happy to take non-denials as confirmations.

    In any case, having denied that I am Kieran Allen, I’m letting you know now, I’m not going to engage any further in your little guessing game. So suggest all the names of UCD lecturers you like: I’ll have nothing to say. If it pleases you, you can take my future silence on all of your suggestions as proof that I am, in fact, all of those people at once.

    As for tenure, there are plenty of ways vindictive administrators can make life miserable even for someone with tenure. And under Croke Park, tenure became a lot less tenure-y (although I suspect that the rider they attempted to add to our contracts wouldn’t stand up to a court challenge, given that it was imposed unilaterally). Listen to the Irish Universities Association (a private organisation made up solely of the university presidents of Ireland and funded indirectly by the state to the tune of a few million a year) explain how they understand, for example, academic freedom:

    We are equally committed to our academics’ freedom to continuously vary what is taught as the universe of knowledge expands. We believe that the continual testing of what is held to be true is essential for all in the community of learners.

    There can and should be no doubt of this and we will defend this position.

    What we must do as a foundation for that defence, is to distinguish between freedom and licence.

    This is what we are seeking to do in the proposed contractual provision which states that it is to be acknowledged that the freedoms which are contained in Section 14 of the Universities Act are to be exercised in the context of the framework of rights and obligations contained in the contract.

    As articulated in this paper, the obligations element is simply a framework that contains accountability requirements which reflect the excellent practice of the vast majority of academic staff and which also safeguard against those cases of abuse which, though extremely rare, have the capacity to undermine public confidence in the universities.

    In other words: “nice academic freedom you’ve got there; it’d be a shame if anything were to happen to it.”

    Now, I’m not sure what the status of that document is and the rider to our contracts isn’t quite so clear about seeing statements that “undermine public confidence in the universities” as sanctionable abuses of academic freedom. But this gives you an idea of the mindset of those running the show.

    Given that much of what I say here and elsewhere could be construed as “undermining public confidence in the universities,” I feel it would be unwise for me to do this under my own name.

  76. rf Says:

    MH

    You shouldnt be starting rumours, regardless of how much you enjoy your anon cowards rhetoric

    Naughty naughty

  77. rf Says:

    Anyway, who EB is has nothing to do with anything. He posted a (non personalised) response dealing with specific points. If he’s Michael Noonan it doesnt matter.
    But you (MH) dont appear to be able to think past the first link in the chain, or to respond to any analysis that cant be copy and pasted from your site, so you have to resort to irrelevant personalised attacks
    (and yes, Ive given you my name before - ronan fitzgerald. even address -which i wont do again - so Im not really in the mood for your grandstanding)

  78. Michael Hennigan - Finfacts Says:

    @ rf

    Thanks.

    Your usual contributions here are Twitter-size snipings.

    You’ve said in the past that my posts are “stupid and boring.”

    That’s an inevitable reaction; some maybe genuine but there are lots who are ignorant and intolerant. I would wish then to be ignored by your type.

    Simply, move on and direct your ignorance elsewhere.

  79. Ernie Ball Says:

    Right. But speaking of ignorance: do you take back the false claim that I am Kieran Allen?

  80. rf Says:

    “Thanks.

    Your usual contributions here are Twitter-size snipings. . etc”

    Well that might well be true, but so what?
    It doesnt excuse the fact that you’ve spent this thread calling those who disagree with you (literally) communists, ’self righteous’, have speculated on their identity and (bizarrely) claim they’re still holding a grudge against the United Fruit Company !!!!
    I’ll reconsider my behaviour for sure, and I dont really post here that much..but why don’t you reconsider yours?
    Anyway I’m not going to divert the thread any more, continue as you please, I dont really care

  81. francis Says:

    Michael Hennigan,

    I really do like you, and I value your contributions here and on your page, a lot. Good quality, honesty, consistently.

    Please do not go down the slippery path of BL with identity phishing.

    In Germany even the owners of blogs (kantoos) have kept anonymous.

    And to just say it preemptively, I will not answer to any attempt on myself.

  82. Ernie Ball Says:

    I say you’re Angela Merkel!

    Not to deny is to confirm!

  83. paul quigley Says:

    A long way back up a diverse thread:

    ‘I am advocating changes that return the public service to some form of normality. These changes can be summed up in three basic propositions (i) public representatives assume their responsibility, through the Dáil, for raising taxes and control of public expenditure (ii) the organisation of public services is changed to allow managers to manage on the basis of market forces, whether for educational services or any other service and (iii) there are no preconceived divisions between public and private sector provision.’

    i) Concur. A politician is not a civil servant, but rather someone who engages in the competitive game of political representation. Snakes and ladders.
    ii) That is problematic in that we do not have free markets. We have powerful monopolist and monopsonist MNCs who subvert governance by funding and corrupting political parties. Woodrow Wilson would not have tolerated that sort of tyranny.

    http://www.amazon.com/Governing-World-The-History-Idea/dp/1594203490

    I can see why aircraft manufacture has only a couple of global players, but low tech stuff like sugary drinks FFS ? Why do our children have to be taught by TV, to prefer Coke to Pepsi ? The outcome in both cases is obesity and we pay the hospital costs. As the Dork says, we are being farmed.

    iii) Only provided that ii) is first addressed in a meaningful way. The German coalition is at least recognising that the ‘free market’ approach to employment is dead end. Karl Polanyi’s Great Transformation (1947) said it all. Hayek is great for those escaping the dead hand of communist tyranny, but, in western democracies, it is a cover for elites and insiders to loot the state. No point in jumping from the frying pan into the fire.

  84. francis Says:

    googling “röpke eucken pillow” for the other thread, I came to

    ‘post-war German social market economy ”economic policy was to be consistent with market principles and adhere to the principle of subsidiarity – what can be regulated by the market should be regulated by the market”.’

    Paul Quigley is quite right to point out, that if certain labor markets fail consistently to work as they should,

    The long standing industry unions argument of being able to slug it out alone does not longer reflect the reality any more. Their are people in East Germany, who do not join unions, and the hope that wages in all of Europe would converge, like we observed for a long time in the western parts, can not longer be reasonably held up. Somewhat bitter to have to accept this.

    People like me have to accept, somewhat grudgingly, that implementing a national minimum wage in Germany is the more reasonable thing to do.

  85. paul quigley Says:

    @ francis

    There are truths which are much more bitter, but I am glad to see that ordoliberalism is not the same as neoliberalism.

    Come and see Cliffs of Moher next summer. Good cure for a headache :)

  86. Vinny Says:

    Ernie- spot- on about parasitical bureaucracies ‘managed’ by mediocre timeservers - endemic in parts of the public sector and not unknown in the private sector…

    Re ‘academic tenure’ and the situation in the U.S.- have a look at a recent article in the Chronicle for Higher Education - huge numbers of academics now on semester/course provision type contracts, certainly little or no tenure on offer and very little job security….not agreeing with this just referring to the situation as reported…

  87. Vinny Says:

    Does ‘wage flexibility’ apply to ‘top-ups’ for senior execs in both public and private sectors?

  88. Ernie Ball Says:

    @Vinny

    My response about tenure was to Paul W’s suggestion that, were I in a similar position in the US, I could be fired at will. I am well aware of the rise and rise in the numbers of “adjunct faculty” with poor wages and little job security in the US. Similar things are going on here. However, “tenure” as a concept (and a reality, albeit for diminishing numbers) still exists in the US and it is as close to ironclad as you’re going to get anywhere.

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