Eddie Hobbs: Ireland has lopsided, unequal, and socially unjust remuneration model

The only unknown is how much the largesse will be, but the least well-off in the most insecure jobs have always funded the higher pay and job security of those least at risk, says Eddie Hobbs

THE horse bolted a long time ago. Don’t kid yourself: the Government will capitulate to public wage demands. It’s just a question of the quantum.

In modernising Ireland and in making the private sector fit for purpose, by deregulating its protected elements under EU competition law, insiders such as taxis, air routes, grocers, pharmacists, hospital consultants, lawyers, dentists etc, set their faces against change, pleading that their special case — their grievance, their agreements and their undertakings — served the common good and was in the national interest.

Public sector wage demands for piecemeal reforms are no different, except that EU laws do not apply to them.

None of the professions opted willingly for deregulation and modernisation, because it affected their most powerful insiders hardest.

The measure of any protected sector’s success is the premium it extracts from the public over and above what is a fair exchange for its value — think of Dublin taxis in the old days, or flights from Dublin to London, to understand the extremes to which such premiums can go.

Now look at Ireland’s most powerful trade unions — not at what they say, but what they do. Distilled, they are in the business of delivering benefits to subscription-paying members, benefits to which their own rates of remuneration are linked.

They operate least within the most vulnerable parts of the private sector — where, traditionally, unions fought against employer excesses — and most behind closed doors in the public sector, where they are least needed.

These organisations have been fantastic: They steered their subscribers through an economic depression, ensured that its worst impacts (joblessness and emigration) were privatised, and that they emerged with a large premium over private sector wages, after sanctifying a thousand allowances as ‘core pay’ en route, all the while maintaining the illusion that an unfunded pension debt of €100bn is sustainable on a pay-as-you-go model for a fast-aging population. That is not just success; it is raw power.

Listen closely to the news agenda set by the State broadcaster, RTÉ — where payroll costs equal licence-fee revenue — and you don’t hear these facts.

The workers that get namechecked most are GTNs, (garda, teachers ,and nurses).

Those funding them are rarely humanised to the same extent.

You are not told that the total income tax take from the public sector payroll just about matches the current yearly pension pay out, but do the maths.

The ratio of earners to retirees is now about three to one.

The deficit in the social insurance fund is over three times higher.

Both combine to exceed twice the national debt. Neither is sustainable and each is treated like a secret of Fatima.

The inconvenient truth is that Ireland has designed a lopsided, unequal, and socially unjust remuneration model.

The less well-paid, who have the riskiest jobs, fund the higher pay, security, and lifelong income of those least at risk.

Point this out and suggest remedies to deal with the economic realities of longer lives and you can expect to be branded as some class of an anti-public sector, neo-liberal, fighting monk to be demonised, denigrated, and diminished.

Anything to distract from the substance of the problem, which is that Irish people are living much longer, taxed too much at low wages, and served badly by major public services.

Much is made about how Ireland’s progressive tax laws, principally through social protection benefits, place it among the most effective at income redistribution in the OECD.

Still, even those ideologically in favour of increasing taxes further dare not speak about security of tenure, that a job and premature pension for life are the single most valuable assets one can have, especially if it’s paid for by your neighbour under sanction of the courts and not some fickle multi-national on a European tax jolly.

There’s never a word about benefit-in-kind tax on security of tenure for well-paid public sector contracts as a means of addressing inequality.

Yet, coupled to capping pensions and introducing a properly funded universal pension scheme, it is the obvious way out of the trap.

At the root of Ireland’s inability to modernise its health system and deal with the chronic morale problems across vital professions such as gardaí and nurses is our dysfunctional political system, which punishes long-term thinking in favour of short-term benefits for whatever baby is screaming loudest.

This is the reason why we don’t have public services that lift staff morale, remunerate merit, and have the agility to deal with modern technology and the pace of change.

It is why the legacy of the last government was blowing the opportunity of real modernisation in favour of minimalist productivity gains.

It is why the expectation of restoration was never challenged economically or socially, and it is why we now face strikes.

It is hard to blame public sector workers demanding a priority pass to scarce resources, even if more money won’t fix the underlying problem.

Don’t expect bravery. The truth is that politicians are scared of public sector power.

It’s why the Government will cave in, why opposition politicians won’t intervene, and why blunt talkers or binary thinkers are unlikely to make the shortlist for the Public Sector Pay Commission.