Public Sector Wages; what should they be benchmarked against?

[Purple]

Context (with apologies for being long winded; I don’t have the time to write a short post):

There are a few posters here who used to work in large multinational and now work in the public sector. I am sure that the skills they brought from their former employers are very useful in their new roles and, from the quality of their posts here, I am sure that they are intelligent and capable people. The question I have concerns the tendency that have to compare their current pay and more specifically their terms and conditions to what they enjoyed while employed by large multinationals.

Given that this is a high cost economy large MNC’s base high value add operations here, basically we are near the top of the value chain. Therefore is it reasonable to deduce that a considerable amount of value has been added to whatever product or service (or most likely a combination of both) that the Irish operation is involved in by an operation or operations in a lower cost economy.

So wages in the Irish operation are sustained not only by the value added/created here but also by what has been added elsewhere. That position in the value chain allows high wages to be paid. The same is not the case with the public sector where wages are paid using the taxes generated in the domestic economic.

So the question; Should public sector wages and terms and conditions be closer aligned to what is enjoyed in the SME and general domestic economy since that is where the majority of the taxes that fund them are derived from?

 

[colm5]

Like most of our European partners, it should be less, due to the pension and job security. I canot see any reason why it should be aglined or greater.

If they do not have these benefits, it should be closely aglined to private sector.

 

[csirl]

Just thinking off the top of my head.

Comparisons with other countries public services dont work. Private sector workers here earn higher wages to people doing identical jobs, sometimes in the same company, overseas.

You could try comparing them with other large administrative organisations such as banks and insurance companies. The organisation size and type of work done is comparable.

You would also need some element of supply and demand in a comparison. When I worked in a Government Dept 10 years ago, they couldnt hold onto staff. People were walking every day. Some people didnt even bother to give notice - just didnt show up one day because someone offered them a higher paid job elsewhere. I'm aware of one very important area in the civil service which got absolutely plundered over a 3-4 year period between c.1999 and 2003. I've noticed that in the 2-3 years afterwards, this area made a lot of monumental mistakes which cost the taxpayer billions - and even today they have still not recovered. All down to being unable to retain good experienced staff.

In the same way that people complain now that public sector pay rates are not responding quick enough to the downturn, they also do not respond quick enough to upturns. Public sector organisations are straight jacketed by their payscales. Even benchmarking didnt make any difference in the example I mentioned in the previous paragraph.

In the end of the day it comes down to what rate of pay will attract the correct caliber of employee with the correct education and skills and keep them in the organisation for an appreciable length of time.

One area that could be looked at is the monopoly professionals. The example often quoted is hospital consultants. They are the highest paid in the world by a good margin. Even if you cut their wages significantly, none will leave as they would still be paid more than most and so would not move abroad. There are other cartel like monopolies like this in the public sector (and in the private sector) that need to be smashed.

Clerical workers - I dont see why the Government needs to keep 10,000s of these on the payrole doing simple administrative tasks such as form processing. These jobs could be tendered privately ensuring that you get value for money.

 

[haminka1]

i'd take the ratio between private and public sectors in the EU and apply it on wages over here ...
especially the teachers providing "world-class education" /if i hear this statement again i'll start screaming/ would be surprised, especially if they found out how much teachers in other EU countries have to work for their salaries ...

 

[Purple]

i'd take the ratio between private and public sectors in the EU and apply it on wages over here ...
especially the teachers providing "world-class education" /if i hear this statement again i'll start screaming/ would be surprised, especially if they found out how much teachers in other EU countries have to work for their salaries ...

We have the best paid teachers in the OECD. Is that necessary to retain, over a 10-15 year period, the right people for the job?

 

[Mpsox]

Firstly, salary is only one part of why people stay working for an organisation. Other factors such as the challenge of the role, fair/unfair treatment, training, opportunities of advancement are also a factor. I know people who left the Public Sector out of sheer and utter boredom, not because of salary issues

Secondly, (and I accept that this may not be suitable for all areas) there should be proper performance related pay systems in place. Reward the best performers, benchmarking over recent years did not differentiate between the best and those who turned up, most days, and did the minimum to survice.

thirdly, call increments what they really are, pay rises

 

[Caveat]

thirdly, call increments what they really are, pay rises

Exactly. Not often said. Payrises that depend on nothing except showing up for work, at that.

 

[haminka1]

We have the best paid teachers in the OECD. Is that necessary to retain, over a 10-15 year period, the right people for the job?

best paid doesn't mean the best, am i right? ireland surely doesn't top the lists of best educated young people or most young people at the universities in OECD. also, their workload is by far one of the lowest in EU.

 

[corkgal]

What does it do for industrial relations in the country as a whole if the government is a poor employer who cuts wages, pensions and staff??

I think they should be allied to the market rates for those stills. I don't want monkeys running the country (pay peanuts etc)

 

[Calico]

I think we should aim to spend whatever the European or OECD average percentage of GDP on our public sector and abolish both permanent contracts and public sector pensions.

 

[Latrade]

Why do they have to be benchmarked against anything? Look at the confusion and rows with benchmarking to the private sector and in a similar way I don't think we can compare with OECD averages either.

Why can't we set a service level expectation for what we expect and want and then set a fair wage and pay and conditions for that?

 

[Purple]

What does it do for industrial relations in the country as a whole if the government is a poor employer who cuts wages, pensions and staff??

A poor employer is one that does not run their business in an efficient way thus damaging the medium to long term prospects of their employees. If wages and pensions are being paid that are not economically sustainable then the business is being badly run and so they are bad employers. If staff are not being used efficiently then the business is being badly run and so they are bad employers. If staffing levels are higher than necessary because of structural inefficiencies then the business is being badly run and so they are bad employers.

I think they should be allied to the market rates for those skills. I don't want monkeys running the country (pay peanuts etc)

That’s my question; are the market rates set at what is being paid by large multinationals that conduct most of their business out of the country or should they be set at what is being paid in the SME sector?

 

[Firefly]

Where possible, why not enforce contract-only (say 3 months) employment. That way market forces would come into play and the government would know based on its tax intake how much it could afford to pay. No pensions bill to worry about either. Uncertified sick leave would not be paid and with everyone on a contract there would be a lot less striking and stories of people dossing as there would be a chance every 3 months to cancel the contracts of such staff.

 

[shnaek]

Public sector wages should be benchmarked against performance. So if your job is to regulate the banks, for example, then you get a huge salary, golden handshake and massive pension if you manage to do the job as badly as possible. That applies to the department of Health also. And to Fas.

 

[S.L.F]

i'd take the ratio between private and public sectors in the EU and apply it on wages over here ...
especially the teachers providing "world-class education" /if i hear this statement again i'll start screaming/ would be surprised, especially if they found out how much teachers in other EU countries have to work for their salaries ...

When applying the new scales will the costs of everything else come down or just the wages of public servants.

"World Class education"

(I can hear you screaming right now)

Ireland comes 19th in the world when it comes to education not bad at all for a little country like ours.

We are a credit to our teachers...

best paid doesn't mean the best, am i right? ireland surely doesn't top the lists of best educated young people or most young people at the universities in OECD. also, their workload is by far one of the lowest in EU.

Is this a question?

I think we should aim to spend whatever the European or OECD average percentage of GDP on our public sector and abolish both permanent contracts and public sector pensions.

LOL

Are you suggesting that our govt doesn't homour it's agreements.

Where possible, why not enforce contract-only (say 3 months) employment. That way market forces would come into play and the government would know based on its tax intake how much it could afford to pay. No pensions bill to worry about either. Uncertified sick leave would not be paid and with everyone on a contract there would be a lot less striking and stories of people dossing as there would be a chance every 3 months to cancel the contracts of such staff.

Please give an example of where you think this would work.

 

[Pique318]

"World Class education"

(I can hear you screaming right now)

Ireland comes 19th in the world when it comes to education not bad at all for a little country like ours.

We are a credit to our teachers....

But are our teachers a credit to US? Which is more important.

OK so we come 19th. Who comes above us and what do they spend as a percentage of GNP/GDP compared to us?

 

[Firefly]

Please give an example of where you think this would work.

Clerical officers, HSE admin staff

 

[Purple]

What we spend in a particular sector as a proportion of GNP or GDP is not the only issue. What proportion of our expenditure goes on wages is just as important. If we need X amount of teachers and we have Y amount of money to spend on salaries then we have to have an average teaching salary of Y divided by X. If we pay more than that then we won’t have enough teachers or we will have to spend out capital budget for education on salaries. That’s what’s happening at the moment; we have large classes and decrepit buildings because we are using too much of our money to pay salaries.

Two questions should be asked before pay increases are given (in any sector);
1) Is it necessary to retain and/or attract the right sort of people for the job and
2) Can we afford to pay it.

In the context of the last 7 years the answer to the both questions is no.

 

[webbs]

Where possible, why not enforce contract-only (say 3 months) employment. That way market forces would come into play and the government would know based on its tax intake how much it could afford to pay. No pensions bill to worry about either. Uncertified sick leave would not be paid and with everyone on a contract there would be a lot less striking and stories of people dossing as there would be a chance every 3 months to cancel the contracts of such staff.

Why not spread this across all sectors of the economy that way we will have a workforce who would be unable to even think about having a disposable income as they would be unsure one month to the next regarding their jobs.
They would be unwilling to contribute to the economy as they would save any money they could to help in the likely outcome of being laid off, they would also be unable to secure mortgages, loans etc and so would further retreat from contributing to the economy.

 

[Latrade]

What we spend in a particular sector as a proportion of GNP or GDP is not the only issue. What proportion of our expenditure goes on wages is just as important. If we need X amount of teachers and we have Y amount of money to spend on salaries then we have to have an average teaching salary of Y divided by X. If we pay more than that then we won’t have enough teachers or we will have to spend out capital budget for education on salaries. That’s what’s happening at the moment; we have large classes and decrepit buildings because we are using too much of our money to pay salaries.

Two questions should be asked before pay increases are given (in any sector);
1) Is it necessary to retain and/or attract the right sort of people for the job and
2) Can we afford to pay it.

In the context of the last 7 years the answer to the both questions is no.

+ 1.

However, we need a proper analysis to show the proportion of budget spent on wages. All though the OECD report shows an overall higher proportion, it's a big job to go through all departments and see the wages and the breakdown of jobs too.

The education areas is interesting, but it has to be remembered that this would also include colleges, etc and a skewing of wages. However, "on paper" there are enough teachers to meet the demands of the number of pupils in a reasonable ratio. It's just there isn't an appropriate geographical spread of these teachers, there has been a Harneyesque attitude to education running as a buisness (i.e. where there is less demand in rural areas, there is less service) and there are too many teachers not teaching for whatever reason (managerial duties).

However, we have to stop the benchmarking in my opinion. I'm pretty sure both sides can argue it isn't possible and it doesn't work, then or now. To me the PS/CS is different to the private sector. I'm talking traditionally, but the model should be that there wages in the PS/CS are lower than in the private (hmmm to contradict myself doesn't that imply benchmarking of some sort?), but this is countered by better and more secure T&Cs. So better pension, leave arrangements, flexibility, security etc.

That to me is the benchmark: the swings and roundabout and expectations. You can still attract good teachers etc, but based on good benefits over pay. As mentioned a lot, you don't train to be a teacher or a nurse on the expectation of being a millionaire.