Impact predict job cuts in public sector?

Did anyone read this article about Peter McCloone. I thought this quote was particularly interesting:-

“In my judgment the alternative [to pay cuts] is likely to involve a significant reduction in public service numbers over the next three to four years, with the likelihood that some additional exceptional measures will also be needed in 2010 to deal with the budgetary crisis next year.”

I'm just wondering how other people read this. Is he suggesting PS workers may have to take pay cuts to save jobs or jobs will have to be lost to maintain pay? He doesn't mention if cuts in jobs would be compulsory.
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It was commented on this Morning on radio. Peter McLoone sent a 'confidential' memo to his executive.

I imagine this was meant to get out, as he owes the Government one big time after the mess he made of Fás.

There needs to be a bit of realism that has not been seen on the union side yet and this may well be the start of it.

I would suspect that this is possibly being discussed behind the scenes to avert strikes and industrial action. I would agree to this being a bit of realism. As a member of the CS, it has been crazy the uptake of staff in some (not all) quarters. I have heard of one area alone where there was a 30 fold increase in staff. However I would say that this is an exception and not always the case.

We cant put more people on the dole plus we cant afford to pay redundancies. Any savings in job cuts now will be erroded immediately. Long term yea ,but right now it cant be done, there is no money.
We should cut the ps pay bill today and reform the no.s when we are in a feasible postition to do so.

I don't know what the big deal is about reductions in job numbers. It's already happening!!

I know of one large government department where the staff numbers are likely to decrease by some 15% over an 18 month period as a result of the early retirement scheme and the incentivised career break scheme. I doubt if other departments are any different.

As the vacanacies left by these people are ultimately suppressed, I don't know how the required reduction in the public sector paybill isn't been adequately met to the point where reductions in core pay rates are also required.

I would agree that this might be happening in the CS. However the CS AFAIK only accounts for 15% of all state employees. I wonder what the trend is in the larger PS. Brian Cowen did say lately that there had been a better than expected takeup on these schemes.

You usually loose c.5% of a workforce per annum true natural wastage - retirements, resignations, career breaks, people moving on etc. etc., so this may be more achievable than people think.

You also have to remember that a lot of Government programmes are going to be cut or seriously reduced in the December budget. This means that their will be surplus staff in these areas.

As I've said many times on this forum, a % across the board cut in pay is a blunt instrument. Cuts the pay of those workers who are needed in order to keep those who arent in a job. No private company would ever take this approach - would simply e.g. close down any factory that is no longer needed - so why should the public service?

Realistically speaking, any proposed public service pay cut is going to be single digit percentages. Not replacing your 5% natural wastage will easily produce similar savings when taxation is taken into account.

Now, what if you went further with the job cuts? Aimed for 10% in one year instead of 5%. The additional 5% could be achieved by a number of means ranging from terminating contract staff to voluntary redundancies to compulsory redundancies in the case of unnecessary agencies and surplus HSE administrators. Do this two years in a row and all of a sudden you've a 20% saving on public sector payroll costs and whats more, you have this saving permanently.

Other measures such as introducing defined contribution pensions and more modern work practices e.g. employees in certain areas that require 24/7 staffing can be scheduled in shift to eliminate overtime and premiums for working outside 9-5 hours. Your plethora of expenses for everything in places like the Gardai could also be eliminated.

With all of these, you could end up with savings of 30% plus.

csirl said:

As I've said many times on this forum, a % across the board cut in pay is a blunt instrument. Cuts the pay of those workers who are needed in order to keep those who arent in a job. No private company would ever take this approach - would simply e.g. close down any factory that is no longer needed - so why should the public service?

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Xilinx did just that in 2001; after the dot-com bust they all took graduated pay cuts. The CEO took a 20% cut, reducing as wages reduced through the operation.

csirl said:

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With all of these, you could end up with savings of 30% plus.

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The only ones indicating that this won't be the case is the media. Now of course I could say the unions, as it is their press that is creating the media. But even the latest stuff is pay cut or lay offs.

I've not seen any indication that it will be such an across the board measure. Consider the only statement from the government 4bn savings and 1.8bn from "payroll costs".

Now as in the private sector there are many ways of reducing payroll costs without a huge direct cut in basic pay. So the government aren't actually saying there is to be a specific % cut. For example, capping and limiting expenses for TDs can be considered a cut in "payroll costs". No direct cut in basic pay though.

So all the assumptions generated have been from one side.

As to the job losses, again a lot of this is in hand with the incentives currently in place. Also, as you state no employer would make across the board redundancies without a review of where they can and can't afford to reduce levels. Given how common and standard this practice is, I'm probably being way too optimistic, but I feel this is the process the Government will undertake (although the bones of it have been completed in the McCarthy report). So again, we won't be losing staff in essential areas.

I think the HSE is losing around 300-400 per month (? seems very high) through the current incentives and other practices. However, there's no indication of how many this has taken off front line nurses etc rather than other functions.

And don't forget, we'll be going through the exact same thing next year as this is a plan for reducing costs over the next 4-5 years. However, I think they'll front load the cuts this year so this is the biggest hit and the gradually reduce the cuts for the next few years.

On that, I've seen different economists say different things. Most seem to agree that "controlled" cuts front loaded initially would yield better long term results. Those that oppose it and say delay the biggest cuts are largely the unions, though there are others. However, they're assuming a general across the boad cut and not a systematic one. In addition, their other argument is that we can still borrow money, however this money is only available to us because we promised to make these cuts.

Latrade said:

Now as in the private sector there are many ways of reducing payroll costs without a huge direct cut in basic pay. So the government aren't actually saying there is to be a specific % cut. For example, capping and limiting expenses for TDs can be considered a cut in "payroll costs". No direct cut in basic pay though.

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There are many allowances in the public sector that could be cut but this would affect some workers more than others. This approach may be favoured by unions representing employees that just get a set salary and no allowances or overtime, but others such as garda and teachers would be against it as allowances form part of their salary. You may see a split in the public sector unions themselves.

Shawady said:

There are many allowances in the public sector that could be cut but this would affect some workers more than others. This approach may be favoured by unions representing employees that just get a set salary and no allowances or overtime, but others such as garda and teachers would be against it as allowances form part of their salary. You may see a split in the public sector unions themselves.

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There already is a split, different factions are speaking for their own areas and looking after their own needs. The fact that there isn't a true unified voice on this will ultimately be hurtful to all their causes.

However, the point is that when you look at the statements from the government, there hasn't been this absolute statement of forced redundancy or direct pay cuts.

Latrade said:

There already is a split, different factions are speaking for their own areas and looking after their own needs. The fact that there isn't a true unified voice on this will ultimately be hurtful to all their causes.

However, the point is that when you look at the statements from the government, there hasn't been this absolute statement of forced redundancy or direct pay cuts.

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Yes, its probably not a coincidence the 24/7 group got together as overtime and shift allowances form part of their salary. When I say a split, I mean the government may come up with a proposal on budget day that is acceptable to some PS workers but not others and you won't have an all out PS strike like the one proposed for 24th November.