CSO wage report - Pay gains for public sector perplexing

There is both good news and some that can only be described as downright perplexing in the latest report on wage trends from the Central Statistics Office.

The good news is that it reflects an upward trend in the average weekly earnings of those fortunate enough to have a job. Measured by any yardstick, the fact that people are earning more, however small or insignificant the rise may be, has to be welcomed at a time when the Irish economy is still on its knees.

Perhaps the most surprising aspect of the CSO report, and one which no doubt will cause considerable confusion if not dismay among the vast bulk of struggling taxpayers, is that workers in the public sector are the beneficiaries of faster rising wages than their counterparts in the private sector.

What people will find most upsetting about this trend is that as things stand it flies in the face of Government ambitions to save hundreds of millions of euro through wage cuts and efficiencies right across the public service. At least, that is the avowed aim of the Croke Park II and Haddington Road deals with the unions. Something seems to have gone wrong.

In a revealing comment on this seemingly contradictory situation, Davy Stockbrokers found the composition of the wage increase as charted by the CSO “surprising” because despite the cuts being sought by Government, wages in the public sector were still up 1.3% year-on-year.

The commentary goes on to express the hope that after the delays leading up to the recent pay deal hammered out between Government and unions, the cuts “should come through in the second half of the year”. It is a hope most people will share.

However, in a worrying contrast with the rate of the wage rise in the public sector, workers in the private sector saw an average rise of only 1% over the sameperiod, bringing the average weekly wages to €928.76 in the public service compared to €623.17 in the private sector respectively. On a more optimistic note, Davy anticipate that with growth in some sub-sectors of industry surging to 4%, there should be a healthier glow to the employment figures due out today.

That wages are gradually rising is borne out by preliminary estimates showing average weekly earnings of €695.78 in the second quarter of 2013. While that is barely 0.4% higher than in the three months of April, May and June last year, it is refreshing to see wages going up rather than down.

The minuscule nature of this change is reflected in average hourly earnings of €22.02 between April and June, a mere 5c higher than in the same period of 2012. Yet, though people are working longer hours, the rising trend is a move in the right direction.

There is now an onus on the Fine Gael/Labour coalition to inject much greater urgency into the rationalisation of state agencies. Forcing these unwieldy bodies to share services will cut out costly duplication and achieve significant savings, especially in the major spending areas of health, education, and local government.

The axe should also fall on costly state quangos, organisations stuffed with party hacks over the years. They are the end result of a political strategy driven by self-interest based on the creation of ‘jobs for the boys’, an award system which successive governments have indulged in, with scant regard for the cost burden on hapless taxpayers.