Good article on why we should not be borrowing to pay increases to public servants
- Thread starter Brendan Burgess
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Pay increases are pay increases. A rose by any other name and all that.
The issue here is affordability.
There are pay increases in some parts of the private sector but I can guarantee that no business in that sector is borrowing to fund pay rises for their employees.
During the boom, when money was gushing from the state pay rise ATM, wage levels in the state sector rose at unprecedented rates to unsustainable levels.
As pay increased so did pensions and future pension liabilities. By 2050 every cent we raise in taxation will have to be spent on state pensions. In that context the pension levy is not just necessary it is crucial and, at current levels, totally inadequate.
Taking to above into account it is clear that the government is now playing politics at the expense of the greater good of the nation. They should be ashamed of themselves.
I work in the public sector , my experience was my wage was cut a lot with pension levy and other cuts and some small benefits we had taken away.
There are loads of people working in the public sector on very low wages, most of the Clerical officers would be struggling to get by on the money , but I find that there are just too many staff for each job and you can't get rid of non performing staff they are just transferred to another department and kept , the higher up are arguably paid too much.
Its not run like a private sector company I don't think its ever going to be either so its impossible to compare , problem is there are some really good workers who deserve a pay rise and loads of other non performing staff that should be and would be sacked in a private company that don't so meh its an argument that will go on forever .
There are loads of people working in the public sector on very low wages, most of the Clerical officers would be struggling to get by on the money , but I find that there are just too many staff for each job and you can't get rid of non performing staff they are just transferred to another department and kept , the higher up are arguably paid too much.
Its not run like a private sector company I don't think its ever going to be either so its impossible to compare , problem is there are some really good workers who deserve a pay rise and loads of other non performing staff that should be and would be sacked in a private company that don't so meh its an argument that will go on forever .
They did not reach an agreement last night but what seems to be definite is €1,000 increase for each worker introduced on an incremental scale over 2016. That represents an average 2% increase which I would condier moderate.
Where there seems to be disagreement is the unions want this repeated for 2017 targeting lower paid workers.
To go back to the original post by Brendan it is questionable whether the goverment should be incresing spending or reducing taxes while we are still borrowing money to run the country. It is not a shock that these things will kick in a few months before the next election.
From a Trade Unionist's point of view forward momentum is to be welcomed - moderate pay restoration incrementally over coming years & a restoration of the pay cuts introduced by the Haddington Road agreement by 2017 allied to universal tax cuts
The ultimate hope must be that the much heralded improvement in the country's finances continues apace thus rendering FEMPI absolete.
If the economy continues to improve surely a concerted Union drive to test the validity of FEMPI legislation in the Courts must be on the cards ?
It must be said that the convergence of a general election , the end of the Haddington Road agreement & the fact that the Government has played up the improvements to the economy has proved advantageous for the Unions.
The ultimate hope must be that the much heralded improvement in the country's finances continues apace thus rendering FEMPI absolete.
If the economy continues to improve surely a concerted Union drive to test the validity of FEMPI legislation in the Courts must be on the cards ?
It must be said that the convergence of a general election , the end of the Haddington Road agreement & the fact that the Government has played up the improvements to the economy has proved advantageous for the Unions.
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Duke of Marmalade
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It's not quite as simple as that, I think. The economists talk of "structural" deficits, which apparently can be justified. Thus at the moment Ireland has 10% unemployment. That is higher than an economic "norm" and is expected to fall. Therefore it is valid to recognise that we have an abnormally low tax base and an abnormally high social welfare expenditure. The economists tell us that this should be bridged by borrowing. Of course the debate is over what is "normal".
One of the injustices meted out over the crisis resolution was when new teachers and doctors were put on (10% I think) inferior payscales than incumbents - a horrible example of the unions pulling up the ladder.
A similar injustice was that since a certain date PS workers were put on an average salary pension scheme instead of the traditional final salary versions and yet had to pay the same levy (I think).
Surely these two injustices must be addressed first before rolling back any reduction to the pay of the earlier teachers, doctors and other PS workers
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Should all pay reductions be changed back? Is 2007 where we want to be?
I don't have a problem with modest or justifiable payrises, however we're in for another economic crash if our starting point is thinking that all the ludicrous payrises of the Bertie and Begg era can be brought back.
Maybe it's time to remind some people with short memories where we were in 2007.
http://www.rte.ie/news/2007/1025/95197-politics/
The Taoiseach is set to receive a pay rise of €38,000 a year, which will bring his annual salary to €310,000.
The pay increase is under the terms of a pay review for senior public servants.
The Review Body on Higher Remuneration in the Public Sector compares pay in the private sector with incomes of around 1600 senior staff including politicians, the judiciary, top gardaí and heads of Government departments and state agencies.
In general, the most senior staff have received the highest increases to take account of their heavier responsibilities.
The average award for these staff will be 7.3% and the total cost of the increases will be around €16m a year.
The pay increase is under the terms of a pay review for senior public servants.
The Review Body on Higher Remuneration in the Public Sector compares pay in the private sector with incomes of around 1600 senior staff including politicians, the judiciary, top gardaí and heads of Government departments and state agencies.
In general, the most senior staff have received the highest increases to take account of their heavier responsibilities.
The average award for these staff will be 7.3% and the total cost of the increases will be around €16m a year.
Of course it has to be bridged by borrowing but while we are bridging it we shouldn't give pay rises.
I agree it was the haves protecting themselves from the have-not's and yes, it was 10%, but if all future employees are hired on that bases it will act to bring public sector pay costs closer to a sustainable level.
The pensions time bomb is by far the biggest issue we are facing as a nation. If the T's and C's of existing employees cannot be touched then it is inevitable that new employees will have to be hit harder.
If a suitable number of appropriately skilled and qualified people can by found to do a job at current pay rates then there should be no pay increases. If enough suitable people cannot be hired then pay rates should be increased.
Duke of Marmalade
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Well that opens up a whole new can of worms. Junior doctors have gone through 6 years of training and are scarce fit for anything else, teachers also to a lesser extent. They are at the mercy of the monopolist employer. Unfortunately new recruits also found themselves at the mercy of the union collaborators only too willing to pull up the ladder.
One slight justification of leaving the incumbents as they were was that they possibly had entered commitments (such as mortgages). But what I see happening here is that, whether it makes economic sense or not, there is going to be an across the board pay rise. It is in that situation that I really find it hard to justify how those incumbents with their historic discriminatory advantage have any entitlement. But of course there are a lot more incumbents hence votes and union membership than new recruits.
I don't know about teachers, I guess they are sorta stuck here, but the approach to doctors has been outrageous and shortsighted and bodes very ill for the future of our health services. In the week that's in it with Ireland basking in its new found role as the beacon of enlightenment let us remind ourselves that we have been found guilty at the international courts of public sector slave labour for our young doctors and publicly endorsed brutality of our children. Rant over
If you assume that taxation as a % of GNP remains constant, and we do nothing to reduce our current unfunded State pension liabilities, it implies that the % of the total tax take that will need to be expended on State pensions (including the contributory old age pension) will increase from roughly 3.5% today to roughly 23.5% by 2060, based on the C&AG's most recent actuarial projections.
Put simply, on any reasonable projection, our accrued but unfunded State pension liabilities are completely unsustainable.
In this context, it is depressing to read today's reports that public sector PRDs are set to be reduced. Perhaps this is not particularly surprising but, in my view, history will not look kindly on the current Government's complete failure to make any progress whatsoever on the pension issue.
Put simply, on any reasonable projection, our accrued but unfunded State pension liabilities are completely unsustainable.
In this context, it is depressing to read today's reports that public sector PRDs are set to be reduced. Perhaps this is not particularly surprising but, in my view, history will not look kindly on the current Government's complete failure to make any progress whatsoever on the pension issue.
It is not unreasonable to accept that a set fund each year is put aside for PS workers. However, it is unreasonable and in the context of the pension time-bomb also negligent not to put aside a portion of this fund to cover future PS pension payments. The difficulties most of us have in understanding the potential consequences of unfunded future PS pay-outs is the absence of any comparison of the issue with other European countries. I.e. Are we all in the same boat or do other countries have significant reserves set aside to meet future PS pension payments. While this is not directly related to increases in PS pay it should be on the same page!
I agree something will have to be done with the pension time bomb.
We can’t carry on the way we are with the huge amount of private sector workers not paying into a pension fund. As far as I am aware the Government is to introduce a Universal Pension Scheme later in the year to address this.
Everyone should pay pension, not just the Public Sector
We can’t carry on the way we are with the huge amount of private sector workers not paying into a pension fund. As far as I am aware the Government is to introduce a Universal Pension Scheme later in the year to address this.
Everyone should pay pension, not just the Public Sector
The problem is that most public sector workers don't pay into a pension scheme - there is no pot of money - public sector pension entitlements (and the contributory OAP) are completely unfunded and are payable solely out of future tax revenue.
This is known as a "pay-as-you-go" system.
When Charlie McCreevy established the national pension reserve fund (NPRF) the object was to provide for future State pension liabilities by contributing funds equivalent to 1% of GNP per annum and investing these funds in a relatively aggressive fashion (80% equities). The funds in the NPRF have now been spent but the pension liabilities have continued to grow.
Ireland is not unique in facing this problem but Irish State pensions are particularly generous by international standards.
For the private sector, the Government is proposing mandatory enrolment (which they now have in the UK) but an employee can opt-out. This is really just window dressing.
Oh well, at least it's sunny outside
What on earth are you talking about?
Public sector employees come nowhere near to funding their pensions. We all get a state pension but other than that Private sector employees don't get a pension unless they pay for it themselves.
The semi-state sector is, for all intents and purposes, part of the public sector as none of those organisations are open to real competition.
The state pension, which is unfunded and paid for out of general taxation, is also unsustainable and will have to be changed and probably reduced significantly .
You just agreed with everything I said???
Incorrect! Pre 1995 Public Sector employees of which there are many do not get the state pension
The real issue here is that 1 in 2 private sector employees do not pay into any pension unlike the public sector who all pay in a pension.
This needs to be addressed.