The Cedar Lounge Revolution

Wage increments… December 16, 2009

Exciting times down the Irish Independent where they haven’t got the memo yet. So for them it is as if December 9th never happened. The latest in their front of the class war?

Fionnan Sheahan’s piece on €250m pay bonanza for 340,000 in civil service and subtitled…Employees will get ‘automatic’ salary increases of up to €2,400

Sheahan has determined that:

HUNDREDS of thousands of public sector workers will benefit from a €250m pay rise bonanza this year, the Irish Independent has learned.
Despite the dire state of the country’s finances, increments paid to civil servants and state agency employees moving up their pay scales are still being made to most of the 340,000 workers in the public service.

Well, we have to be careful here. We don’t actually have 340,000 in the Irish civil service. Indeed it’s a far snappier and leaner beast than that with approximately 38,000 employees. The broader public service is up around 250,000 employees and 57,000 work in the state sponsored sector. What he’s doing is eliding the overall public sector with the CS. Moreover he’s conveniently – or otherwise – ignoring the small fact that some of the public sector semi-states are actually turning a profit, as it is their job to do so. I note that the Government is less keen to impose pay cuts on those particular entities… for obvious reasons. Rhetoric apart the Government wants to maximise tax take and keeping profitable organisations employees well paid does precisely that.

The perception of a pay freeze and the pension levy hitting public sector workers stands in stark contrast to the reality of state employees in permanent, pensionable jobs.

I’ve read that sentence a couple of times, and each time come away with a different meaning. Is he saying that the pay freeze and pension levy don’t exist whereas the permanent pensionable jobs do? If so he might care to listen more assiduously to Brian Lenihan’s thoughts on public service reform and pensions as articulated during and after the Budget both of which would appear a la McCarthy to devalue security and pensions. By quite some measure.

They are still seeing their gross salaries increase because the Government is allowing them to receive increased pay purely on the basis of time served.

As one who isn’t hit by the pension levy, but is by the wage cuts – since I’m but a humble contract worker – I can assure him that my gross salary has decreased significantly (or will in a matter of weeks) despite rising minimally due to an increment. As have all salaries in the CS, many in the PS and we’ll have to wait and see in the semi-state sector.

So a pay ‘freeze’ in the public sector does not mean that workers stay on the existing salary — unlike the situation for thousands of private sector workers, many of whom have actually taken deep pay cuts.

This is the most irritating part of the article – for my money, which I’ll note again is not quite what it used to be, and given that it was never that great… I’ve no doubt many have taken deep pay cuts in the private sector. But now we know, because no lesser authority than the Sunday Business Post at the weekend noted, that:

It’s important to acknowledge something: public sector workers have now made a huge contribution to the stabilisation of the public finances. Many of our best public servants have seen their pay cut by 20 per cent in the last 12 months.

Sheahan is in no way stopped by such things… He continues:

A recent survey by Lansdowne Market Research found that three quarters of private sector workers had agreed to take an actual pay cut to protect their jobs. Fine Gael last night repeated its call for the pay scales to be actually frozen for the duration of the economic downturn.

I was puzzled when I read that bit about the LMR survey. But then I seemed to see a memory, as from a different time come to me. Something about May… yeah, that’s it… May 2009. And this piece here by…er… me…

There was indeed an LMR piece of research, a survey. But what it found was radically different to what Sheahan argues. Taken from a survey carried out in the aftermath of the Budget entitled “Public Sentiment After the Emergency Budget” it discovered that “Few households have escaped the impact the recession is having on companies and organisations” and it asked the question: Which, if any, of the following have happened to you or someone in your household recently?

Had a pay cut in work – 53%

Had a pay freeze in work – 37%

Employer has cut working hours – 34%

Made redundant – 26%

Any of the above 75%.

It did not, and this is crucial, differentiate between public and private sector workers (it couldn’t given that it used precisely the same polling base to offer opinions on broader aspects of the economy and politics). So that 53% must include both PS and private sector workers. That makes sense. Remember the Pension Levy?

But curiously when first reported in the Independent in April 2009 the report was neutral as regards whether it was discussing PS or private sector workers.

THE recession is hitting hard, with 53pc of Irish workers saying they have had to take a pay cut, according to a new poll.
And three quarters have had to accept a pay freeze, a cut in hours, or have been made redundant, the survey found.
Only one in 20 say they are better off now than a year ago, according to the field results of Lansdowne Market Research.
The 5pc who think they are better off represent a drop of more than half from the figure in January of this year (11pc) — and a massive collapse from the 27pc last September who felt their lives had improved.

Note that the three quarters figure is made up of combining the pay freeze, cut in hours, or redundancy figure. A long long way from three quarters ‘accepting a pay cut’.

Now, perhaps there’s another LMR survey out there, but I’ve been back to the site in the interim and I can’t find one. Odd that, surely Sheahan can’t be repeating figures incorrectly. Again and again. Figures that don’t even tally with their original outing in the same paper.

Some further small observations. Firstly increments are broadly neutral in their effect on the public pay roll. People exiting the public sector – and the pay scale – balance out with the people arriving in it. Given the moratorium extant in all but a vanishingly small number of areas payroll costs were already declining quite apart from the pay cuts and pension levies.

Secondly wage cuts in the private sector according to various estimates amount to figures somewhere around 20 to 30%. IBEC puts it around 21%, Chartered Institute of Personnel and Development puts it at 26%. Watson Wyatt put it at 26%. Whereas, by contrast, all public sector workers outside the semi-state sector have had wage cuts. The data on bonuses is interesting, given that according to the Watson Wyatt survey some 2/3rds of companies asked indicated they’d be paying them this year.

And news comes just this week, yesterday in fact, that the latest survey confirms the overall trend in terms of pay cuts.

SEVENTY PER cent of companies in Ireland reduced payroll by an average of 11 per cent in 2009, but the vast majority did not cut salaries, a new survey by Mercer has found.

More than 100 companies from the multinational and large corporate sector were interviewed for the study, which looked at cost-managing measures undertaken by companies in 2009.

The survey found that most companies used measures other than salary cuts to achieve a reduction in payroll.

These included: hiring freezes; compulsory or voluntary redundancies; reduction in overtime; and reductions in incentive payments.

Oh yeah, as regards pensions nice to see companies keeping faith with their employees…

The gradual phasing out of defined benefit retirement plans – particularly the closing off of the plan to future members – also helped to reduce costs.

And remember that nonsensical suggestion from the unions last month? That one about unpaid leave. The one IBEC poured scorn on…

The survey found that only 9 per cent of companies cut salary rates last year, while 12 per cent implemented unpaid leave as a cost-cutting measure. According to Patrick Robertson, senior consultant with Mercer, salary cuts were the exception rather than the rule during 2009.

Which is not to say that there aren’t pay cuts, or that newly advertised positions don’t have lower wage levels (which is not quite the same thing). A survey by recruitment company Hays notes that:

…salary levels for advertised new positions fell by up to 30 per cent in 2009.

30% eh? And where would they have been now?

Unsurprisingly, the construction sector saw the biggest drop in salary, with salaries for new positions down 30 per cent on the previous year.

Those applying for jobs in accountancy and finance also saw a significant drop in the level of pay offered. Salaries for new positions were down by 10 – 20 per cent in 2009, compared to an increase of approximately 4 – 5 per cent in 2008.

Still, why did Brian Lenihan offer a sterling defence of increments yesterday? Perhaps because he realises that to attempt to change the system ahead of any broad reaching ‘reform’ is a pointless exercise causing more hassle than it’s worth, that increments are as good a way as any at measuring movement in PS employments over a lifetime short of such ‘reform’ and that it would indeed be inequitable to those who have been in the PS for a shorter time period as against those who have been there a longer time to freeze them.

But that said, another year of this and what’s the betting PS salaries will come under further pressure. It’s not called a deflationary spiral for nothing.

So perhaps it’s no surprise that the Independent continues the class war, despite the white flag being raised.

It’s quiet out there… too quiet December 15, 2009

So, as anyone anywhere close to the political classes will tell you this last few days since the announcement of the Budget has seen not the long anticipated and – let’s be honest, feared – tsunami of discontent and anger at the Government parties but instead a strange silence. There were some indications of a public sector campaign of emails and calls, but low level in the main. So, all told the Government politicians are counting this as a job well done.

Are they right?

I’m not so sure. The next round of polls will tell their own story, but most intriguing to me is whether we see an upward tilt in the Fianna Fáil poll numbers. I wouldn’t be entirely surprised. And yet, this surely must mark the point at which Fianna Fáil voters in the public sector have finally lost faith with that party. And given that many, if not indeed most – statistics would be useful on this score, people have PS workers in their families as brothers, sisters, fathers, mothers, sons and daughters you’d think that the recent cuts would have finally nailed the trope about not sharing this nebulous ‘pain’ and that that might concentrate minds when pay packets come in in the New Year. So, to anticipate some gains for Labour and Fine Gael is hardly the stuff of divine prophecy and more like basic logic.

That said the media and business and econommentariat plaudits for the Budget are unlikely to have gone unnoticed and one wonders if that will support or even strengthen FF numbers. And there’s more than one FG tending voter who likes the lash of firm government, particularly if the crack descends elsewhere.

As regards the Green Party I’d wonder if further collateral damage has been incurred (and let’s leave Deputy Gogarty’s intervention aside… btw a good friend has met the man and found him pretty charming). Where we saw a bizarre, but for them pleasing, dynamic in the first year or so of the Coalition whereby their poll ratings drifted largely free of political events (our beloved former Taoiseach’s antics apparently having zero impact on their general popularity), only to begin to descend precipitously with the arrival of more straitened economic times. They’ve yet to recover, albeit their base is unlikely to be hugely upset by the measures taken against the public sector in the Budget. And yet, and yet. They too have – rhetorically – played it fairly fast and loose with the PS and this too will do them no good politically. An awful lot of second and even first preferences came from those employed in that sector who believed they saw kindred spirits of the very soft centre left. More than one has been disabused of that notion. To suggest that the Green Party may be out of power for a generation following the next election, may indeed slump largely back into the voluntary sector having lost most of its representation, sure ain’t the stuff of prophecy either. I think that’s a pity, I genuinely do – there are people of enormous capability and sincerity inside the GP who are indeed part of the centre left, but the trajectory of their journey over the past two and a half years has near enough cemented that outcome with a public just barely getting to grips with the outline of what the next three or so years are going to be like for them personally. And once it gets personal… well… that’s bad news for the Government parties, and perhaps particularly so for the smallest one.

Moreover, the point reiterated time and again that they have been supporting Fianna Fáil and it’s pomps and works is cruelly underlined by the Budget votes. No Green Party, no Government, no Budget – or at best a staggering on by FF for a short period with the support of a fractious crew of Independents of various stripes, and for progressives, however suspicious we are of FG and – perhaps in part Labour – it’s hard to believe that such a combination wouldn’t have exhibited at least a slightly greater level of social awareness in its machinations. Nothing too great, it must be noted, but perhaps eschewing social welfare cuts in favour of slightly increased on middle and higher income earners.

And talking about the Independents… well, they’re not necessarily doing themselves any great favors. We seem to have seen a remarkable divergence between types of Independents in the past number of years, those who solidly vote with the Government on foot of deals. And those who don’t at all. Telling to see Joe Behan, formerly of Fianna Fáil slot right into the latter category and hear him saying that he was ‘ashamed’ of his former party. But Behan got out at the right time, which is not to ascribe any cynicism to his move, but rather to point that to head to the exit any later and FF Deputies were blooded by Budget 2009. Hence the remarkably diverse rationales emanating from the good Dr. McDaid as regards his stance on the Budget. Eyebrows were certainly raised at other pronouncements during this period, which perhaps we’ll come back to at a later date.

But the point being that this crisis has exposed a problem in the nature of Independents. Too close to government and they must – inevitably – carry the can, as no doubt, many a gleeful Fine Gael, Labour and Sinn Féin candidate at the next election will be all too eager to point out. Too far from government and their function becomes unclear and the rationale for their existence potentially too diffuse to give traction. Hitherto I’ve suspected they’d do well as a group next time out. I’m beginning to revise that opinion. That said they still provide a reasonably comfortable home from home for Fianna Fáil voters not entirely sure what the hell is going on, but clear that they’ll never break for Labour, let alone – God forbid – Fine Gael.

And what of those parties? Hard to say. It simply wasn’t their Budget, good bad or indifferent. Their message too splintered – look at the spectrum occupied by Sinn Féin, Labour and Fine Gael… Their scope to shine was limited. There remains one government in this state and despite all the predictions that government has survived every trial and tribulation thrown at it thus far. I’d suspected that would be the case for some while back, the only question in my mind being how a defeated Lisbon II would play. Now that would have been a game changer. But so far, local elections notwithstanding, they’re still there. NAMA, Green Party convention, Budget… and so on.

And that is, what I’d hazard, is at the root of the current silence. There’s little point in shouting when it is absolutely clear that your voice isn’t going to be listened to. What’s in it for the Government, unloved and waiting out its days before its inevitable demise to cut and run? Nothing at all if the most recent polls are to be believed. Indeed the events of the previous two or three weeks where (dis)organised labour crashed and burned on the rocks of the Governments almost complete indifference may well have provided an object lesson to many who otherwise would be marching. It’s not merely that the Government won’t listen. It is now clear that alternative viewpoints will not, in the main, be given even a token sympathetic hearing. Indeed quite the opposite, as was made clear by the ‘statement to the Nation’ on one of our more high-profile media outlets during last week.

That’s the new consensus. Gogarty’s words might well have been right, albeit directed at the wrong target… we are indeed screwed.