Public sector pay freeze for top 40,000 public servants announced

[S.L.F]

To say that teachers in their early 30s on €40k per year (plus the hols, the pension,etc etc) are "scraping by" is an insult. As for €60k at the top of the scale - sheesh !!

Are you saying all Public Servants are on 60k in their early 30's?

If so I suggest you take a walk outside and breath some fresh air because whatever you are smoking is distorting your sense or reality.

The cost of living in Ireland is caused, in no small way, by our inflated salaries.

Not the bosses...just the workers???

In the exposed private sector, we are making painful adjustments very quickly indeed. In my own company, we have had across the board pay cuts already this year, and more likely before Christmas. It's that or the jobs to Eastern Europe, where a highly skilled, low cost workforce can do our jobs just as well, while local tax rates are far lower.

My understanding is that 90% of the private sector haven't taken a pay cut as of yet but you are harping on as if every single person who works for the private sector has taken a pay cut.

100% of the Public service has taken a pay cut.

To see SIPTU and IMPACT on the news screaming for more pay rises for a cossetted public sector is a slap in the face to those of us scraping by, and praying that our jobs will be here tomorrow.

First I've heard of the unions screaming.

It is patently unfair to suggest that the entire pain for the readjustment / depression that Ireland is going through should be borne by private sector workers

Who suggested this???

I certainly did not and no PS employee on AAM has ever said this so can you back up the claim that someone suggested this.

With the exception of fuel, all others will come down if wages fall.

Will mortgages?

 

[S.L.F]

Fintan O'Toole also had a good analysis in the Irish Times during the week.

Any link to this statement???

In the meantime another good analysis

[broken link removed]

 

[Complainer]

The cost of living in Ireland is caused, in no small way, by our inflated salaries.

Don't forget our hugely inflated property prices (and don't forget that NAMA will ensure that they stay inflated).

 

[Purple]

Don't forget our hugely inflated property prices

Yes, the ones inflated by our inflated salaries...

 

[liaconn]

Sorry liaconn

It's been really hectic at work, so I haven't had the time or interest to get back to you to try to justify my entirely sensible starting point of a 20% pay cut.

If you really are struggling to find evidence that the public sector are massively overpaid compared to the private sector, have a look at the latest ESRI report:
http://www.rte.ie/news/2009/1009/economy.html

Fintan O'Toole also had a good analysis in the Irish Times during the week.

I don't think its necessarily accurate to benchmark against current wages in the private sector, as many private sector workers (including everyone at the manufacturing site where I work) are under pressure to take pay cuts for ever increasing hours. We are fighting for the survival of our jobs and homes.

I think a more accurate benchmark would be to compare public sector pay and conditions with those of our European neighbours. As one German diplomat pointed out recently, there is no reason why a civil servant in Ireland should be paid three times the level of his German counterpart. I also have a number of friends, who were hospital consultants in the UK, who came back to a more than doubling of their pay in Irish hospitals.

Nope - the truth is that 20% is probably a fair starting point in public sector wages, social welfare, and the minimum wage in order to take a dramatic step change in the cost base of our economy

You still haven't answered my question re your self proclaimed 'entirely sensible starting point'. If you go back to my post I broke my question down into a few simple stages for you.

 

[csirl]

I think a more accurate benchmark would be to compare public sector pay and conditions with those of our European neighbours. As one German diplomat pointed out recently, there is no reason why a civil servant in Ireland should be paid three times the level of his German counterpart. I also have a number of friends, who were hospital consultants in the UK, who came back to a more than doubling of their pay in Irish hospitals.

Are UK and German pay rates appropriate? Private sector wages in Ireland are at least one third higher than private sector wage in the UK. UK isnt even in the Euro.

If it wasnt for the low corporation tax here, the vast majority of private sector jobs would be uncompetitive. Essentially, companies chose to take a lower level of profit (due to higher wages), and use the benefit of the lower tax rates to offset this. The two go hand in hand - low corporation tax = high wages; high corporation tax = low wages.

Comparisons of wage rates in Ireland are meaningless when compared with high corporation tax wages. Public service wages follow on from this - they increase to keep up with private sector wages, though usually there is a time lag on increases/decreases in public sector wages.

 

[Purple]

Public service wages follow on from this - they increase to keep up with private sector wages, though usually there is a time lag on increases/decreases in public sector wages.

But they started higher than the private sector and over the last 10 years the gap has increased.

 

[csirl]

But they started higher than the private sector and over the last 10 years the gap has increased.

I'm not so sure the comparisons in these "studies" are like for like.

Best comparison is recruitment/retention.

There was a period of time between c.1999 and 2005 where the public service was leaking people more quickly than it could fill positions. In the high years of the celtic tiger - 2003 to 2005, the public service found recuitment very difficult and the calibre of candidates for many jobs was a lot lower than in previous eras. It wasnt until 2007 that this began to turn again. The fact that it was leaking people and couldnt recruit good employees is proof that the private sector was offering better terms and conditions.

I know quite a few people who left the public sector in around 2001-2003 because they were getting offers from the private sector they just couldnt refuse -wage levels well in excess of their public sector wages. Interestingly, a couple of these people have returned to the public sector over the past couple of years, but not in the same positions - they were only willing to move back to the public sector in return for a promotion - pay in the private sector was and is still higher for a job of the same level.

Averages dont tell the full story. My impression is that the public sector is most overpaid in lower level jobs. I know I'll get criticised for saying this, but it is true. Public sector workers in lower paid jobs have either incremental progression that takes them to a pay level way above what the job is worth or are just paid more than the private sector because the unions play the poor mouth card in pay negotiations and usually get better increases (or lower decreases as we've seen with the levys) that other public sector workers. At the other end of the scale, professional well qualified people are usually underpaid in comparison with the private sector. Not saying they are poor, but they dont get anything like the same level of renumeration of private sector equivalents.

 

[Purple]

Averages dont tell the full story. My impression is that the public sector is most overpaid in lower level jobs. I know I'll get criticised for saying this, but it is true. Public sector workers in lower paid jobs have either incremental progression that takes them to a pay level way above what the job is worth or are just paid more than the private sector because the unions play the poor mouth card in pay negotiations and usually get better increases (or lower decreases as we've seen with the levys) that other public sector workers. At the other end of the scale, professional well qualified people are usually underpaid in comparison with the private sector. Not saying they are poor, but they dont get anything like the same level of renumeration of private sector equivalents.

I agree with you on that bit.
I would point out that during the period from 2003-2005 the state was taking on about 20'000 people a year. Any organisation taking on such numbers will need time to fill them all.

 

[csirl]

I would point out that during the period from 2003-2005 the state was taking on about 20'000 people a year.

This is mainly in the health and education sectors - the core civil service was undergoing job cuts as well as keeping jobs vacant due to decentralisation during this time. I think we can all agree that a lot of those taken on obviously are not up to the job - the HSE being the perfect example. There was a bout of "just hire anyone" going on at this time as funding coming on stream in health and education which outstripped the number of quality candidates available for jobs.

 

[liaconn]

Any chance of an answer to my question, Beanpole? Or do you still not have the 'interest' to back up a call for 20% pay cuts across the board with an explanation of your rationale?

 

[DerKaiser]

I think the biggest stat in all of this is unemployment. We have about 400,000 unemployed, about 200,000 of whom had been in employment for a number of years.

Look at queues turning up for any available job. How can we justify inflated pay levels when we have such a supply of labour?

The reason we have this level of unemployment, far above the European average, has been our deterioration in competitiveness in the labour market here.

Professional fees, Public service pay, minimum wages and the dole (to maintain the gap with minimum wage and not encourage people into the poverty trap) all need to come down. Any union opposition to this amounts to throwing those already out of work to the wolves and reducing the employment prospects of young people.

In the same way, not addressing public spending now is simply maintaining unrealistic lifestyes in the short term and making the next generation pay for the debt run up.

Don't let any union rhetoric fool you. The 'hands off our pay' call simply translates into screw the young and the unemployed instead

 

[Latrade]

I wish the comparisson thing between private and public on both sides would cease and desist. It's a red herring that is taking us away from the simple fact that the outgoings do not match in the incomings. We have to address this balance.

In all the pages of debate on this thread and others, I think all we can say is that it is too difficult to compare the two directly. I suppose the point would be if it is wrong to compare the two in order to justify pay cuts in the PS/CS, then you have to accept it was wrong to compare the two in order to justify the pay increase in the PS/CS.

Just to clarify some points though. The CSO's figures do not show pay cuts in the private sector. And they're right, basic pay hasn't been cut in a lot of cases. But what they don't take account of is that there have been other cuts outside of basic pay level.

Redundancies, loss of bonuses, loss of overtime, reduced hours or days, etc. So it's unfair to say there haven't been cuts as there's only a few sectors of employment that haven't suffered with the current situation. Most others have either lost staff or reduced unit cost.

And that's it, we need to reduce the unit cost of providing the services we do. No one from the government has come out and said it means teachers, gardai, nurses, etc on the streets. That's been the unions and the media. People are getting wound up over something that hasn't even been decided yet.

In order to fix this we need to get that huge difference between tax revenue and public pay down and now. Cuts are obvious, but just like the Tax Report was to look at taxing in the long term, reform of the PS is for the long term. Getting the unit price down will unfortunately mean some loss of jobs, we don't know where from yet though. It will mean some look at pay. But it's going to be general views, like other employers, in terms of "other" costs that can be cut down.

 

[Caveat]

I suppose the point would be if it is wrong to compare the two in order to justify pay cuts in the PS/CS, then you have to accept it was wrong to compare the two in order to justify the pay increase in the PS/CS.

Very good point.

 

[Shawady]

I would aggree with a lot of Der Kaiser and Latarde's points but when you see that the ERSI are recommending the government does not cut social welfare rates, you have to wonder how they are going to cut the deficit.
The social welfare bill is the biggest cost to the state but anytime it is mentioned it may have to be cut, the phrase 'most vulnerable in society' is thrown out.

http://www.rte.ie/business/2009/1013/esri.html

 

[Complainer]

Look at queues turning up for any available job. How can we justify inflated pay levels when we have such a supply of labour?

This is the 'Let's not waste the recession' approach. The recession is seen as the opportunity to cut wages and salaries. Are you seriously suggesting that we should be replacing existing staff members with unemployed people to save money?

Professional fees, Public service pay, minimum wages and the dole (to maintain the gap with minimum wage and not encourage people into the poverty trap) all need to come down. Any union opposition to this amounts to throwing those already out of work to the wolves and reducing the employment prospects of young people.

In the same way, not addressing public spending now is simply maintaining unrealistic lifestyes in the short term and making the next generation pay for the debt run up.

Don't let any union rhetoric fool you. The 'hands off our pay' call simply translates into screw the young and the unemployed instead

This is dangerous and divisive nonsense, trying to distract attention from the real issues by pitting one group against another. It ignores many other parts of the equation - the money being paid over to the banks, the costs of tax breaks to property developers, the massive tax allowances available to pension contributions, the tax allowances available to developers of private health clinics etc etc.

Don't be fooled by this divisive rhetoric - look at the big picture.

 

[Purple]

Don't be fooled by this divisive rhetoric - look at the big picture.

How ironic; all of the above is nothing when compared to the massive overspend in public sector pay and social welfare.

By the way, nobody is "pitting two groups against each other". The private sector has finally woken up to the fact that they are being bled dry by greedy public sector unions and their whiskered fat-cat leaders.

Here’s a question; If all of the tax breaks that cause your blood pressure to rise are taken away (even the ones for private hospitals that save the state money) and the exchequer is still screwed would you stop this nonsensical defence of the indefensible and agree that public sector pay needs to be cut? (Or maybe you are like IMPACT and would rather see a cut in services than a cut in pay?).

I expect, as usual, there will be no reply from you.

 

[DerKaiser]

This is the 'Let's not waste the recession' approach. The recession is seen as the opportunity to cut wages and salaries. Are you seriously suggesting that we should be replacing existing staff members with unemployed people to save money?

In the last 10 years we've had close to full employment and have had to import labour from abroad to keep up with demand. Wages naturally increased.

We now have 200,000 people on the dole who were working last year and probably 60,000 people per annum looking to enter the workforce from school or college. That's a lot of labour supply. We can go down two roads:

1) Closed shop. Shut out the unemployed and graduates into a long term life on the dole in order to maintain the salaries of the current incumbants

or

2) Recognise that there are excellent quality people with no jobs drawing the dole whilst current occupants of jobs maintain wages that only arose due to labour shortages from a few years ago

Don't be fooled by this divisive rhetoric - look at the big picture.

The big picture is that we are in a recession and we are running up huge debts that will cripple future generations. I gladly have paid extra taxes and will pay more taxes but that is only one side of the equation. We need to stand up to all vested interests who refuse to take part in solving this crisis.

Tax breaks are being closed off and/or granted at a lower rate. The banking and building issue are being dealt with. The current public spending issue should also be addressed before we are incapacitated by debt

 

[Complainer]

2) Recognise that there are excellent quality people with no jobs drawing the dole whilst current occupants of jobs maintain wages that only arose due to labour shortages from a few years ago

Oh don't be so coy. Why not be a bit clearer about your recommendation. This is the IBEC wet dream - dump all employment protections, and let employers (public and private) continuously cut wages and conditions and fire any objectors, until we are all working in sweatshop conditions. This is your proposal - right?

The big picture is that we are in a recession and we are running up huge debts that will cripple future generations. I gladly have paid extra taxes and will pay more taxes but that is only one side of the equation. We need to stand up to all vested interests who refuse to take part in solving this crisis.

Tax breaks are being closed off and/or granted at a lower rate. The banking and building issue are being dealt with. The current public spending issue should also be addressed before we are incapacitated by debt

It is good to hear 'more taxes' on the agenda. It's not often this gets a mention here on AAM. Many AAM readers be forgiven for missing the fact that many, many private sector workers have not had pay cuts, and are continuing to do quite nicely, benefiting from price deflation and keeping their heads down to avoid attention. Income tax increases will mean that those who are earning (public and private) contribute to the solution.

Your claims about 'tax breaks being closed off and/or granted at a lower rate' is far from comprehensive. There is still no cap for mortgage interest relief for property investors (unlike the modest cap for residential mortgage holders). There are still tax breaks for developers of private medical clinics (i.e. the state subsidises a service that will only be available to the wealthy). Don't expect people to be patient about addressing these issues while expecting instant reductions in public sector salaries (which of course, have already experienced a significant cut).

 

[liaconn]

It is good to hear 'more taxes' on the agenda. It's not often this gets a mention here on AAM. Many AAM readers be forgiven for missing the fact that many, many private sector workers have not had pay cuts, and are continuing to do quite nicely, benefiting from price deflation and keeping their heads down to avoid attention. Income tax increases will mean that those who are earning (public and private) contribute to the solution.

Your claims about 'tax breaks being closed off and/or granted at a lower rate' is far from comprehensive. There is still no cap for mortgage interest relief for property investors (unlike the modest cap for residential mortgage holders). There are still tax breaks for developers of private medical clinics (i.e. the state subsidises a service that will only be available to the wealthy). Don't expect people to be patient about addressing these issues while expecting instant reductions in public sector salaries (which of course, have already experienced a significant cut).

Well Said.