John Fitzgerald on Public Sector pay "Restoration"

[Purple]

It was an ambiguous question, like your one. It is exemplified by throwing another factor into the equation "sold in Germany" after the question is answered. I could easily add that it costs twice as much in wages in Norway to do my job. So how much is my labour worth now? Am I paid too much? Or too little?

In the long run the value of labour will determine the return on capital. The more incomes fall, the narrower the consumer base for highly profitable goods and services to be sold. This is what we are seeing today. The dilution of the purchasing power of labour corresponding with increases in asset values and capital investments.
Cracks are setting in, in Europe and the US.

I agree that it's hard to determine and that ultimately the value of labour is determined by the return on capital. That's why I genuinely believe that the movement of capital to the Far East and the corresponding increase in wages and living standards is a good thing, even though it has happened to some extent at our expense (and indeed mine since I work in a a sector which is very exposed to Far Eastern manufacturing competition).
It is also why I don't understand where the notion comes from that pay levels should somehow be tied to the cost of living or what people need, or think they need, to live on.

 

[TheBigShort]

the Far East and the corresponding increase in wages and living standards is a good thing,

I agree.

even though it has happened to some extent at our expense (and indeed mine since I work in a a sector which is very exposed to Far Eastern manufacturing competition).

While the Far East can compete aggressively on wages, it should be noted that this should result in cheaper prices? This has emerged not in the form of retail prices falling, but interest rates falling. It has never been so cheap (at corporate levels anyway) to borrow so much for so long.
And that is the problem as I see, an abundance of supply with diminished demand. Either countries, banks, corporates need to default or go bankrupt and start again, or inflation needs to kick in. Increasing wages will induce an inflationary effect.

It is also why I don't understand where the notion comes from that pay levels should somehow be tied to the cost of living or what people need, or think they need, to live on.

What is the point in producing a good if you cant afford it? Why teach someone the qualifications to a good career if you cant afford the product or service that is generated from that education? Why investigate a crime if you cant afford the rent on your home?
An income that provides a standard of living, or perceived standard of living, is a motivator to good work and services.

 

[Purple]

While the Far East can compete aggressively on wages, it should be noted that this should result in cheaper prices? This has emerged not in the form of retail prices falling, but interest rates falling. It has never been so cheap (at corporate levels anyway) to borrow so much for so long.

And that is the problem as I see, an abundance of supply with diminished demand. Either countries, banks, corporates need to default or go bankrupt and start again, or inflation needs to kick in. Increasing wages will induce an inflationary effect.

The cost of white goods, computers and electronics, TV’s, clothes, kids toys etc are far lower in real terms than they ever were. The same goes for things like cars. Those decreases relate directly to lower labour costs (or greater returns on capital).

What is the point in producing a good if you cant afford it? Why teach someone the qualifications to a good career if you cant afford the product or service that is generated from that education? Why investigate a crime if you cant afford the rent on your home?

An income that provides a standard of living, or perceived standard of living, is a motivator to good work and services.

True, to an extent, but how do we quantify it? Many people make things they can’t afford. Most people making luxury cars can’t afford them. I very much doubt that anyone making ships ever buys one.

The average income for a Garda in Ireland in the first two quarters of this year was €66,000 (plus a fantastic pension) so they certainly don’t have a problem affording their rent (obviously newly qualified ones do struggle but that is the case with every job).

 

[TheBigShort]

The cost of white goods, computers and electronics, TV’s, clothes, kids toys etc are far lower in real terms than they ever were. The same goes for things like cars. Those decreases relate directly to lower labour costs (or greater returns on capital).

Point accepted. A combination of lower prices and low interest rates has led to an abundance or over supply of goods. Prices however did not fall to their true value as they were supported by a massive credit expansion. Now that that bubble has burst it is Central Banks propping up the void by a further credit expansion (QE) in the hope of creating a wealth effect that will "trickle down" to the population at large despite the evidence of a trickle up effect instead.

True, to an extent, but how do we quantify it? Many people make things they can’t afford. Most people making luxury cars can’t afford them. I very much doubt that anyone making ships ever buys one.

I was talking in general terms. People have made sacrifices in terms of job losses and pay cuts. But as the economy recovers, then those sacrifices should begin to reverse. Arguably they are, but at a slower pace than accepted or is expected.

The average income for a Garda in Ireland in the first two quarters of this year was €66,000 (plus a fantastic pension) so they certainly don’t have a problem affording their rent (obviously newly qualified ones do struggle but that is the case with every job).

The average mortgage and rent and cost of living should be compared also.
Also it is my understanding that the dispute reaches beyond pay rates. Lack of investment in technology, lack of resources to investigate, prosecute, unending resources allocated to minor petty crimes while more serious crimes are not investigated properly, has led to a general demise in moral and confidence in the Gardai and in particular, its senior management.

 

[Purple]

Point accepted. A combination of lower prices and low interest rates has led to an abundance or over supply of goods. Prices however did not fall to their true value as they were supported by a massive credit expansion. Now that that bubble has burst it is Central Banks propping up the void by a further credit expansion (QE) in the hope of creating a wealth effect that will "trickle down" to the population at large despite the evidence of a trickle up effect instead.

But they have trickled down, just not in the West. 4 billion people have been lifted out of absolute poverty in the last 20 years. We need to look at the bigger picture.

I was talking in general terms. People have made sacrifices in terms of job losses and pay cuts. But as the economy recovers, then those sacrifices should begin to reverse. Arguably they are, but at a slower pace than accepted or is expected.

Agreed, my comment above notwithstanding.

Also it is my understanding that the dispute reaches beyond pay rates. Lack of investment in technology, lack of resources to investigate, prosecute, unending resources allocated to minor petty crimes while more serious crimes are not investigated properly, has led to a general demise in moral and confidence in the Gardai and in particular, its senior management.

I agree. They would have strong public support if they concentrated on those issues instead of pay and stopped telling lies about what they get paid.

 

[jjm]

(1) anyone know for sure if the Rent is Taxed,
(2) anyone know Will putting rent in to main income Give an extra pension to retired members
(3)all agree or disagree With WRC they took out one allowance and put another allowance in its place, Should we not be getting rid of allowances which are paid to everyone they are now part of pay .
(4)Should we be doing away with lower end of the pay scale seeing very few starts on them anyway
(5) just asking

 

[jjm]

Purple Has a very good post over on GARDA PAY post NO 5
purple says allowances add another 25 to 30% to there salary and overtime can be worked

Year 1 25472 euro
year 2 28302 euro
year 3 29834 euro
year 4 32407 euro
year 5 35840 euro
year 6 38804 euro
year 7 40168 euro
year 8 42138 euro
year 9 42138 euro
year10 42138 euro
year11 42138 euro
year12 42138 euro year13 43857 euro
year14 43857 euro
year15 43857 euro
year16 43857 euro
year17 43857 euro
year18 43857 euro
year19 45793 euro

Purple says we should have another allowance for working in dublin ,The problem is we have so many allowances in the public service and more added by the day,
we are now going to have an allowance for shift change over this should be included in there pay in the chart above
I Think we need to up the entry salary and do away with many allowances if everyone gets them why have them

A few years ago all the buss as part of the reform allowances were to be done away to make payroll easier .Any suggestions on where pay scale should start

 

[Firefly]

As expected, they're lining up...

http://www.irishtimes.com/news/irel...new-pay-terms-after-garda-pay-offer-1.2854485

http://www.independent.ie/irish-new...review-following-garda-pay-deal-35188140.html

 

[Firefly]

Most of Europe and parts of the USA.

Only getting to this now. I quite like Holland actually. I know a few people from there and others who have worked there. Seems like an ideal place to live. Space is a bit tight in urban areas but they have a very high standard of living.

 

[Purple]

Only getting to this now. I quite like Holland actually. I know a few people from there and others who have worked there. Seems like an ideal place to live. Space is a bit tight in urban areas but they have a very high standard of living.

I like Holland too. They can be a bit cold though.

 

[ardmacha]

The present unrest over pay is obviously a function of the pay levels, but also because the government is pursuing an entirely political rather than industrial relations based approach. There is an obvious attempt by the government, and the media, to claim that people working in the PS should remain on recession level salaries in order to fund the public services, when of course all citizens should be required to fund public services.

The problem is that this biased commentary means that there is little intelligent discussion and this does not bode well for a commission. It has been mentioned here that the overpay bias being at the lower end is rarely discussed, rather the rhetoric suggests that high salaries for highly skilled people are robbing the pensioners. Of course, it is pensioners that suffer most when there is a waiting list because the medical specialists needed to treat them have gone to Australia. You have the likes of Eddie Hobbs spouting half truths about pensions, as much designed to cover up the poor performance of the private sector as anything else. There is a significant difference between different groups in the PS. You have the lower paid PS, who get a modest pension which is only notable when compared to those who have none. You have middle-level people who pay in for 40 years and get a very decent pension, but those who graduated with them are also doing decently in most cases. Then you have those who get enormous pensions after a few years in some top post, or as a politician, or Gardai who get pensions at a ridiculously young age. These different situations cannot usefully be aggregated together. Everyone in every job needs to be like the lower paid PS. Mid level people need a later retirement age, and the top level pension should be capped.

There is a problem with the PS. With pay at the low end, with performance at the middle and upper levels and with pensions at the higher levels.

 

[Purple]

There is an obvious attempt by the government, and the media, to claim that people working in the PS should remain on recession level salaries in order to fund the public services, when of course all citizens should be required to fund public services.

That's utter nonsense. The media are very sympathetic to the Public Sector as most of the media is heavily unionised and the State Broadcaster is effectively Public Sector as the employees are effectively unsackable and have defined benefit pensions. There is a desire by some people not to see Public sector pay return to boom time levels which were unsustainable even during a credit fuelled, capital tax funded windfall. The State simply can’t afford it. If you want pay increases then increase productivity and resuce numbers by a corresponding amount. If you want pay increases then divide the existing pay bill amongst fewer people who are working in more efficient organisations. It is the people working in the Public Sector who should be leading that change instead of waiting for “the gubberment” to tell you what to do.

You have the likes of Eddie Hobbs spouting half truths about pensions, as much designed to cover up the poor performance of the private sector as anything else.

What, specifically, are you referring to?

Your other points about the structure of pay and pensions are well made but there is no anti-Public Sector media conspiracy. The opposite is true if anything.