Cut/remove public sector pay premium as urged by ESRI

[orka]

From today's Irish Times:
"The pay premium enjoyed by public sector workers should - as a matter of urgency - be put on the agenda for discussion between the Government and the social partners in light of the recession, Economic and Social Research Institute (ESRI) researchers say in the organisation's new quarterly report.
Conservative estimates suggest that the pay of senior public servants was more than 10 per cent ahead of their private sector counterparts in 2006, while public servants on the lowest grades earned a premium in excess of 30 per cent.
According to researchers Elish Kelly, Séamus McGuinness and Philip O'Connell, the extent of the gap between public and private sector pay in Ireland is "far higher" than in many other countries. The average wage advantage increased to 20 per cent in 2006 from less than 10 per cent in 2003 thanks to several rounds of pay awards, while the pay gap in the rest of Europe rarely exceeds 10 per cent. "This differential would be difficult to justify in normal economic circumstances," they say.
The researchers cite additional awards recommended by the Review Body on Higher Remuneration in the Public Sector in 2007, noting that some of the awards were deferred. They cite the second benchmarking report, which recommended awards of up to 15 per cent mainly for senior grades while there was no increase for the majority of grades.
The research was published in a subsection of the ESRI's main quarterly economic commentary, in which the organisation argues that the possibility of public sector pay cuts should be considered given the deterioration in public finances. The main report says this may well be preferable to cuts in services and could well yield expenditure savings more rapidly than job cuts through natural wastage, early retirements and redundancy schemes.
The specific research on the pay gap says the differential is such that any wage reductions in the public sector would, in general, be highly unlikely to lead to any significant challenges in terms of retaining or recruiting staff.
The researchers say their work takes no account of the fact that the majority of public sector workers are entitled to pensions index-linked to wage growth in the public sector.
"Furthermore, occupational pension coverage is much lower in the private sector, and many such pension schemes are not linked to wage growth."

[Purple]

What have the public sector apologists on this site got to say about this?
After 10 years of the public sector unions conspiring with the government to bleed the economy for their own selfish ends this should finally show what “Partnership” has given the majority of Irish people; a disgruntled and overpaid public sector feeding off a bloated building sector with neither picking up the tab.

[pennypitstop]

Originally Posted by Purple

What have the public sector apologists on this site got to say about this?
After 10 years of the public sector unions conspiring with the government to bleed the economy for their own selfish ends this should finally show what “Partnership” has given the majority of Irish people; a disgruntled and overpaid public sector feeding off a bloated building sector with neither picking up the tab.

and telling us in the private sector about the bonuses that we were collecting and the perks we get every day of the week, well guys none of us are in Kansas anymore - the BS talking of a private sector land of milk and honey had better come to a stop about now.

[Dreamerb]

Originally Posted by Purple

What have the public sector apologists on this site got to say about this?

This here. http://www.askaboutmoney.com/showpos...9&postcount=48

Originally Posted by Purple

After 10 years of the public sector unions conspiring with the government to bleed the economy for their own selfish ends this should finally show what “Partnership” has given the majority of Irish people; a disgruntled and overpaid public sector feeding off a bloated building sector with neither picking up the tab.

See, that's just a rant. And that is making me disgruntled.

[Dreamerb]

Originally Posted by pennypitstop

and telling us in the private sector about the bonuses that we were collecting and the perks we get every day of the week

You mean you don't all get bonuses of half or more of your annual salaries, company cars, in-house creches, and rocket trips to the moon?

Yikes.

[YOBR]

Originally Posted by Purple

After 10 years of the public sector unions conspiring with the government to bleed the economy for their own selfish ends this should finally show what “Partnership” has given the majority of Irish people; a disgruntled and overpaid public sector feeding off a bloated building sector with neither picking up the tab.

This is all very simple, this country had two choices. One choice was partnership and the other choice was public service reform, we choose partnership. In addition, the people of Ireland voted, on two occasions, for the parties which brought it in..

It took a long while (for some) for the penny to drop....

[AlbacoreA]

I would say most public sector works would be ok with taking a pay cut in line, and adjusted with the private sector, taking in account the value of pensions etc.

However many people like to lay the blame of all our problems on the public sector pay bill. I would say the problems with the public sector are symptoms rather than a cause of our current woes. Excessive profiteering, by the private sector, especially the banks, building sector, but across the entire private sector, from buying a packet of biscuits, to getting your car serviced, and uncontrolled credit, provider in order to driver further profiteering, is what really drove up the cost of living, and the wage bills of all sectors, as people strove to meet the rising cost of living. The Govt its also completely to blame choosing to cream off the top, rather than clamping down and controlling the boom. The excesses and corruption in the private sector, especially in finance is staggering and banking is staggering.

Thats not to say the problems in the private sector should be ignored. They need to be addressed too and quickly as we can't afford the poor management of public funds that this Govt has allowed. But many in the private sector, feel aggrieved that, a lot of their hard work over the boom years have been nullified by the downturn. Especially those who've set up their own business, or work as a contractor etc. The public sector has been the whipping post for that.

[AlbacoreA]

Originally Posted by YOBR

This is all very simple, this country had two choices. One choice was partnership and the other choice was public service reform, we choose partnership. In addition, the people of Ireland voted, on two occasions, for the parties which brought it in..

It took a long while (for some) for the penny to drop....

Why are they mutually exclusive? I thought partnership was intended as the door to public service reform. No? Seems like it turned into self regulation which didn't work. Does it ever? Especially where theres vested interests and conflicts of interest.

[YOBR]

Originally Posted by AlbacoreA

I thought partnership was intended as the door to public service reform. No?

When the State is in collusion with the unions you are never going to get serious public sector reform.

[rabbit]

Originally Posted by AlbacoreA

I would say most public sector works would be ok with taking a pay cut in line, and adjusted with the private sector, taking in account the value of pensions etc.

The sooner a major cut in pay is taken by the public sector the better for us all.

[Sunny]

Originally Posted by AlbacoreA

I would say most public sector works would be ok with taking a pay cut in line, and adjusted with the private sector, taking in account the value of pensions etc.

However many people like to lay the blame of all our problems on the public sector pay bill. I would say the problems with the public sector are symptoms rather than a cause of our current woes. Excessive profiteering, by the private sector, especially the banks, building sector, but across the entire private sector, from buying a packet of biscuits, to getting your car serviced, and uncontrolled credit, provider in order to driver further profiteering, is what really drove up the cost of living, and the wage bills of all sectors, as people strove to meet the rising cost of living. The Govt its also completely to blame choosing to cream off the top, rather than clamping down and controlling the boom. The excesses and corruption in the private sector, especially in finance is staggering and banking is staggering.

Thats not to say the problems in the private sector should be ignored. They need to be addressed too and quickly as we can't afford the poor management of public funds that this Govt has allowed. But many in the private sector, feel aggrieved that, a lot of their hard work over the boom years have been nullified by the downturn. Especially those who've set up their own business, or work as a contractor etc. The public sector has been the whipping post for that.

The reason people are focusing on Public Sector pay is that it accounts for 50% of our current expenditure. It is unsustainable. You can't run a business or a Country during these times by trying to save a few quid here and there while ignoring the elephant in the room. This is not about bashing public sector workers or blaming them for the crisis. Any excesses of the private sector that you mention will be taken care of by the private sector. Look at the amount of job losses and businesses closing down. The private sector has the ability to cut its cloth to suit the circumstances and will go through a lot of pain. We need the public sector to be able to do the same.

[orka]

Originally Posted by Dreamerb

This here. http://www.askaboutmoney.com/showpos...9&postcount=48
"It has to be considered. I certainly don't relish the prospect of a pay cut, but given the overall economic picture there's a strong argument for it.

That said, I would not think it fair to extend cuts to the lowest paid - as well as their least being able to afford it, that (possibly) would raise the prospect of strikes, service withdrawal, etc. Any pay cuts would have to be (in my personal opinion) targetted on middle to high-ranking civil and public servants.

From discussions with colleagues I'd agree that not only is there a broad expectation that the pay deal terms will have to go, but there's a high level of belief that it's necessary. There's definitely no sabre-rattling from my colleagues, nor - unusually - from most of the public sector unions, just mutters about protecting the lowest paid."

The problem with protecting the lower paid is that that is probably where most of the wage bill is (I have no idea of the structure but another thread mentioned that most civil servants are CO/EO level on not very high salaries). You can be overpaid on 35K pa just as easily (possibly more so) as on 135K. If your job and skills warrant a 30K salary, you are overpaid by 20% if you earn 36K. The ESRI report says that the overpay at lower levels within the public sector is 30%. And unpalatable though it may be, those pay premiums should not be allowed to stand just because they are already there - why should someone be paid more than they are worth when our taxes are footing the bill?

I have to say I was shocked by the ESRI numbers. I was already seriously cheesed off at the public sector having 'same pay + job security + full parity index-linked pensions' (pension annoyed me most... and has for years - even before the recession) but to think its that PLUS 10%-30% is just sickening.

[YOBR]

[quote=Sunny;768287]You can't run a business or a Country during these times by trying to save a few quid here and there while ignoring the elephant in the room. quote]

I agree broadly that we have to have greater and more intensive public service reform leading to better services. For me the elephant in the room is that we ignored the fact that we could not build a sustainable economy on the construction industry solely and did nothing to plan for when people stopped buying houses. There was no national plan to diversify when we did have the funding available to do so. Cowen's plan in relation to high tech funding should have been undertaken 4/5 five years ago.

[Dreamerb]

@ orka: I fully take your point that overpayment can quite as easily apply at lower paid level. However, I think that is a particularly difficult area to tackle by means of pay cuts, because the lower paid are most likely to be financially stretched and most likely to be pushed into financial distress by a reduction in income. That will have knock-on negative effects on the wider economy which could well equal or surpass the positive effects in reducing the pay bill. That's why I'm inclined to believe that a pay freeze is both more appropriate and more palatable at lower-paid levels; those of us on higher incomes are obviously better positioned to cope with salary cuts.

[Sunny]

[quote=YOBR;768308]

Originally Posted by Sunny

You can't run a business or a Country during these times by trying to save a few quid here and there while ignoring the elephant in the room. quote]

I agree broadly that we have to have greater and more intensive public service reform leading to better services. For me the elephant in the room is that we ignored the fact that we could not build a sustainable economy on the construction industry solely and did nothing to plan for when people stopped buying houses. There was no national plan to diversify when we did have the funding available to do so. Cowen's plan in relation to high tech funding should have been undertaken 4/5 five years ago.

I totally agree but we can't change the past. We have to find a way to get out of this mess. I just wish the Government would have the balls to make the tough decisions and stand up for itself against various interest groups. I think most people would support them as we all accept we have to suffer somewhat. I for one didn't object them to tackling medical cards and class sizes. I did mind that they were the first things they targeted without trying achieve savings elsewhere first. It was pure laziness in looking for the simple answer. There is just no evidence that this Government have any idea on how to get out of this mess. Yesterdays PR excercise merely emphasised that.

[YOBR]

[quote=Sunny;768359] I just wish the Government would have the balls to make the tough decisions and stand up for itself against various interest groups. quote]

If the Government was doing this for the last 15 years we would not have the size of the mess that we have now. It will take a huge leap of faith for Govt to make decisions without one eye on the political outcome. Also a lot of our politicians are being exposed in this recession for the useless gombeens that they are...

[ubiquitous]

Originally Posted by YOBR

Also a lot of our politicians are being exposed in this recession for the useless gombeens that they are...

Too true. They haven't the cop-on to realise that people would react better to firm, decisive action rather than the flim-flam they're giving us at the moment. And they haven't even learned the lessons of comparatively recent history, ie how Charlie Haughey's popularity increased when he introduced cutbacks in the 1987-89 period.

[bamboozle]

its a pity we didnt remove Fianna Fail a long time ago, we cant put the blame at the public services door, they had a right to negotiate but our government failed to represent the best interests of the state by giving in to practically every demand made-the blame for this i rest solely on Ahern & co.

For all the consultants & experts the government has paid handsomely over the last 10 years did no-one stop and say 'hey guys i dont think this is gonna last forever' or 'hey guys lets not add fuel to the property boom by increasing mortgage relief & reducing stamp duty' or 'hey guys should we not listen to the reports of the ersi, the economist, reuters et al who have been saying since 2005 the Irish property market was going to fall' or 'at least lets put aside some money for a rainy day!'

but they just ploughed on ahead blinkered & ignoring the bare facts in front of us and what's worse Fianna Fail were re-elected!!!!!!

[Purple]

Originally Posted by ubiquitous

Too true. They haven't the cop-on to realise that people would react better to firm, decisive action rather than the flim-flam they're giving us at the moment. And they haven't even learned the lessons of comparatively recent history, ie how Charlie Haughey's popularity increased when he introduced cutbacks in the 1987-89 period.

Well said. The ols line about the only thing worse than bad leadership is no leadership springs to mind.

[Purple]

Originally Posted by bamboozle

but they just ploughed on ahead blinkered & ignoring the bare facts in front of us and what's worse Fianna Fail were re-elected!!!!!!

I agree with everything you said but ask yourself, what was the alternative to Fianne Fail? Enda Kenny and Pat Rabbitte won the last election for Fianna Fail.