Public service will have to share the pain already felt in private sector

FEARS of racial and xenophobic tensions in the event of an economic downturn have not been realised, thankfully. This is another sign of the maturity shown by the Irish people when faced with a speedy influx of foreign workers unprecedented in any European country.

However, divisions and tensions are developing in Irish society between two local castes, private sector and public sector workers.

The brunt of the economic crisis is being faced in the private sector and is leading to soaring unemployment and pay cuts for many of those keeping their jobs. More than 100,000 job losses have been incurred in the private sector over the past year and that number could be repeated again given the way things are going.

Many private sector workers have been told their pay is to be reduced by anything between 3% and 25% if they want to keep their jobs. There are few bonuses, even if people depended on them to meet bills, and overtime is hard, if not impossible, to come by.

The idea that the national pay deal would deliver a 6% increase over 21 months after a mere three-month pay freeze — that effectively is over now — is a poor joke to most private sector workers. The Construction Industry Federation’s ruthless decision not merely to impose a pay freeze but to seek 10% pay cuts across the board was merely a public confirmation of what is going on.

The public sector has not been immune to the problems. Posts once they become vacant have been left unfilled, increasing the workload of those left behind. Temporary workers on contracts — who sometimes have been left in that position for years — now face being laid off.

The Government’s summer decision to reduce public sector payroll costs by 3% is being achieved apparently. Although the national pay deal provides for a pay freeze in the public sector until September next year, that commitment may be tested by an effort to extend it. Paying it and increments due to public sector employees will add €600 million to next year’s pay bill, bringing it to about €20 billion.

Therein lies the rub. At least public sector employees have the consolation of knowing their pay will not be cut and that it is supposed to go up again next year. Most, with the exception of between 400 and 1,100 teachers, depending on whose estimates you believe, will not lose their jobs unless they opt for voluntary redundancy. To many in the private sector it does not seem the pain is being distributed fairly.

The cost of the public sector is enormous and has mushroomed in recent years. More than 75,000 new people have been added to the public payroll in the past eight years, bringing the number to near 320,000. Average pay in the public sector is €49,000 compared with €41,500 in the private sector. While many public sector workers get paid nothing like as well as that, there are more private sector workers earning the minimum wage or little more.

Now the argument is being made that comparing the public and private sectors is not comparing like with like, but that was what benchmarking was all about. It was the process designed to bring public sector workers up to a level achieved in the private sector, which apparently was better off. Although based on a methodology that, suspiciously, was withheld from the public, it did not result in a mere once-off compensation to public sector workers for perceived underpayment. It provided a permanent boost to the salary levels on top of which annual increases and increments for length of service or promotions was then applied. Worse, the pensions of former public servants are tied not to the rate of pay when they retire, but the existing rates that apply to their old jobs.

When the most recent benchmarking process, which took into account job security and the value of pensions, failed to deliver increases for all but a small number of public servants, there was public sector trade union uproar. But a true and fair benchmarking process might have demanded cuts in public service pay, although there was never a chance of that.

In fact, I believe we should do everything possible to safeguard vital public servants — such as teachers, nurses, gardaí, public doctors and the like — from job losses because most of the services they deliver are essential.

However, given the soaring numbers employed in recent years, I find it hard to believe everybody is necessary or working to their utmost capability and that the public sector should somehow be immune from detailed scrutiny. The many honest and hard-working people in those professions will tell you quietly they are carrying slackers and nothing is ever done about it.

Why then should all taxpayers — who include public sector taxpayers — have to bear this burden? The main problem seems to be with administration, as it seems we may be paying for an enormous amount of pen-pushers. Again the stories are legion and from within the state apparatus, from people furious at carrying the can for others.

For example, every frontline worker in the health system will tell you of the frustration of dealing with layers of bureaucracy. Meanwhile, the Department of Health has more than 540 civil servants on its books, despite the effective outsourcing of the responsibility for running the system to the HSE. Apparently they are working on policy. That many? Add in the issue of sick days: government departments such as Social and Family Affairs see workers claiming an average of 17 days sick leave on top of their holidays. My radio programme, The Last Word, has been contacted by many people in the past few days who claim some civil and public servants aim to achieve a quota of sick days each year and are encouraged by local, low-level union officials to do so. If they don’t, it’ll ruin things for everyone else. Such behaviour in the private sector is much more likely to lead to dismissal.

The standard response of union officials has been to quote a recent OECD report that said Ireland has the lowest level of public sector employment in the developed world. This is true if it the measure is called gross domestic product.

BUT if you do the sums against a measure called gross national product — which takes all income into account and is more suitable because it measures the true impact of multinationals operating out of Ireland — then the answer changes dramatically.

We also have one of the smallest defence forces in the OECD, which reduces the need for public investment dramatically, and a younger population who should need much less healthcare than in older states.

So where does the Government go from here? Well it has announced a new expenditure review group under the chairmanship of the excellent Colm McCarthy, which has been given the job of assessing the value of all public expenditure. There is talk of changing work practices and structures and while that is welcome, it’s unlikely to do enough. The deteriorating exchequer position and the hopelessly optimistic budget projections suggest it will have to demand serious public spending cuts — either by way of redundancies or pay reductions, mirroring what is happening in the private sector. Services will suffer, but with the Government already borrowing about a tenth of the public service pay and pensions bill, something has to give. And it should give nobody in the private sector any pleasure if the public sector is required to share in the pain. But it’s hard to see how it can be avoided.

The Last Word with Matt Cooper is broadcast on 100-102 Today FM, Monday to Friday, 4.30pm to 7pm.