Friday 28 October 2016

New pay deal shows ministers learned nothing from crash

Trade union bosses shuffling in and out of Government Buildings, carefully calibrated media leaks and late night talks. As the American baseball player Yogi Berra used to say: it feels like déjà vu all over again. About the only thing missing were Bertie Ahern's dulcet tones.

The Government and the unions spend yesterday dotting the "i"s and crossing the "t"s on a pay deal which will see the headline pay rates of public sector workers rise for the first time since 2008.

Public sector incomes under €28,750 will be exempted from the pension levy from next year while there will be a flat-rate pay increase for all public sector workers earning up to €65,000 in 2017. The proposed deal would be worth an extra €1,000 a year for public sector workers.

In return the trade unions will agree to extend the Haddington Road Agreement, which is supposed to make the public service more efficient, for another two years until 2018.

Oh, really. After Education Minister Jan O'Sullivan's Junior Certificate climbdown when faced with the opposition of the teachers' unions, one can only wonder how real the Haddington Road 'efficiencies' actually are. About as real as the post-2008 public sector pay cuts I suspect.

Ever since the Government moved to trim the public sector pay and pensions bill, which peaked at over €17bn a year, in the wake of the crash the trade unions have never missed an opportunity to tell us how much their members have suffered from these pay 'cuts'.

Nonsense. For a start, while headline pay rates have been cut and the pension levy, which averages 7.5pc for a post-retirement income that most private sector workers can only dream of, was introduced, the actual pay of most public sector workers continued to rise.


This is because the vast majority of public sector workers receive an annual pay increase or increment, regardless of whether or not there is a public sector pay deal.

These increments add up. The starting pay for an executive officer in the civil service is €30,516 per year. There are 13 increments on the executive officer pay scale meaning that, if he or she keeps his nose clean and just turns up for work every day, their annual pay will have risen to €49,837 after 13 years.

Wouldn't we all just love pay 'cuts' like those?

With most public sector workers receiving their annual increments come hail or shine it should hardly come as any surprise that average public sector pay is much, much higher than it is in the private sector, with the latest CSO figures putting average public sector pay at €904 per week, 42pc higher than average private sector pay of €634 per week.

So why, if public sector pay remains so much higher than in private sector pay and the hoped-for efficiencies have proved to be largely illusory, is the Government so determined to conclude a pay deal with public sector trade unions which will push public sector pay even higher?

Could it possibly have anything to do with the fact that there must be a general election by April 2016 at the latest?

Of course it does. The Government parties, Labour in particular, are terrified of the prospect of a rendezvous with the electorate and will do anything, no matter what the cost, to curry favour with the voters.

For all the good it will do them. If experience is any guide public sector workers will take the money and then astound the Coalition with their ingratitude by voting for other parties.

The great physicist Albert Einstein famously defined insanity as doing the same thing over and over again while expecting a different outcome. No-one seems to have told our ministers.

Instead, almost as soon as the financial crisis eases, they revert to their bad old habits once again and start throwing taxpayers' money at the interest group, such as the public sector trade unions, which make the most noise.

Don't expect a different outcome this time around. Once again it will be private sector workers - 300,000 of whom lost their jobs after the crash - who will pay the price.

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