Kyran Fitzgerald: Public sector flexing of muscle is poorly timed

Workers in the public service shouldn’t overestimate what the State can afford, or underestimate how much those in the private sector have suffered, writes Kyran Fitzgerald.

Kyran Fitzgerald: Public sector flexing of muscle is poorly timed

It has come time for a serious national debate on the role of the public service in Irish life.

At a time when the country is facing into a period of intense economic uncertainty, when the foreign investment economic model, that has served us well for decades, is under attack, the response of the leadership of the country’s largest trade union Siptu, with backing from some other unions, has been to press for a rapid acceleration in a process of public pay restoration already underway as part of the Lansdowne Road agreement.

Siptu general president, Jack O Connor, appears to suggest that as the economy is thriving, the Government can well afford to stump up now. As he put it, last week, “Why can’t we afford to go back to the pay levels of 2008? ... It wasn’t unsustainable then.”

In fact, the pay rates of that time could never have been sustained even if we had enjoyed the soft landing promised us by the political and business establishment.

Irish public servants are, with certain exceptions, pretty well paid by European standards.

Secondary teachers at the top of their pay scale, for example, are paid around €10,000 a year above the OECD average. Mr O’Connor should carefully review the situation that pertained at the time the economy went into freefall.

The dogs in the street could tell that the economy had become completely uncompetitive, driven by a mix of high wages and high prices. While pay agreements offered the appearance of restraint, there was a fair bit of window dressing in place.

Extensive promotions, allowances, performance pay for practically all among the higher ranks of the civil service. Mr O’Connor is right when he says that the trigger for the crisis was a banker-driven lending bubble, but that very same bubble meant that public spending could be maintained at unrealistic levels.

A much more realistic steer, with regard to our current situation, has been provided by the former secretary general at the Department of Finance, John Moran, a man with extensive experience of the private sector.

Mr Moran spent a number of years in the Merrion Street engine room at the height of the crisis. He knows how close we came to permanently losing our freedom of action as a country.

Along with the NUI Galway economist and ministerial adviser, Alan Ahearne, he was one of a small group of publicly spirited experts who came on board a badly listing ship of state. As he makes clear, what we have is a fragile economy where there is, in reality, little in the way of fiscal space.

Over the past three years, union bosses have been coming under growing pressure from members to secure rapid restoration of their pay and perks to pre-crash levels. The deal with the gardaí has served as a catalyst.

But the seeds of the current phase of industrial strife were sown a long time ago. Public servants have been encouraged to believe that they are somehow special and that moreover, they have been targeted by a cynical political class.

Many of the public, angry with their political leaders, have bought the line. But while we have many fine public servants, showing extraordinary levels of commitment, there are also the usual time servers and duffers, and the regular absentees. Public servants are human, after all.

Nurses, gardaí, fire service personnel, bus and train drivers, care workers, all help greatly to keep the show on the road, but let’s not forget all those in the private sector who do likewise — the lorry drivers who transport our goods, often through the night, not to mention the shop owners who stay open in sometimes dangerous localities, the executives rising early to take dawn flights, helping to keep our export success story going, the farmers and fishermen out in all weather, pursuing an exceptionally dangerous occupation.

Public servants have been forced to take cuts to their pay and pension under financial emergency legislation. Well over 200,000 people in the private sector lost their jobs, some lost their businesses and then found that they could not access the social welfare service. The €3bn public service pension bill was trimmed somewhat.

Yet by 2018, 65,000 lower paid public pensioners will be removed from the scope of the public service pension reduction scheme. Restoration for this group is well under way, a message you don’t tend to hear these days from union leaders.

Contrast this with the position in the private sector where defined benefit schemes face closure on a daily basis.

As we lumber in the direction of accelerated ‘restoration’, let’s not forget just how fragile our current situation is. Let’s just remember Ireland has the second largest level of debt, household, corporate and Government, of any advanced economy in the world.

In recent years, we have benefited from bargain basement borrowing rates, but every indication points to rising rates. Once this happens, the squeeze will be on borrowers.

It is indeed time for a deep discussion. It is time for consumers of public services to make their voices heard.

Are we getting value for money? Are our senior government departments providing real leadership? Is local government providing value for money? Is the correct split in resources between public pay and vital services being maintained?

If the Government does agree to demands for accelerated restoration, should there not be a quid pro quo? An acceleration in public service reform. Speedy implementation of findings of the Comptroller and Auditor General, along with greater resources for his office.

The Croke Park and successor agreements preserved job security and headed off outsourcing plans in what was a big win for the trade union pragmatists at a time of great vulnerability.

Is it not time to rationalise the number of managerial positions in the public service, particularly health? Is it not time to start discussing the looming iceberg that is the rising cost of public service pension provision.

Private pensions take account of rising life expectancy. Public service pensions do not. As a result, the public-private gap is growing.

Some still believe that there is a fat business goose out there to be plucked, that there is plenty of wealth to be tapped. For too long the debate on public pay has been dominated by people with loud voices and simplistic solutions.

A broader, more nuanced discussion is required and it is one in which all citizens should be permitted to participate.

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