The Cedar Lounge Revolution

Don’t cry (crocodile tears) for me… John McGuinness… November 18, 2011

Speaking after a speech in Dublin this morning, Fianna Fáil TD John McGuinness said the pay and pensions of staff in the public service were being protected under the deal.

He said that only 58 per cent of the workforce in the country had a pension while 42 per cent had not.

“But those 42 per cent who cannot afford a pension for themselves are contributing to the pension of the public sector. It is creating a two-tier workforce, it is creating a two–tier pension scheme and it has to be renegotiated.”

Does this make any sense? First up it’s the usual boilerplate we’re served on the topic. Much the same, no – almost precisely the same, was said by Michael Hennigan of Finfacts some weeks back.

But the problem is, as noted before, that this isn’t a two tier workforce, it’s a three or four tier workforce where those − like most of us I suspect, who are dependent upon the state pension are at the lowest rung while those who have public sector pensions and private sector pension provision are at different levels.

Indeed there’s another way of looking at this which is that – for all its clear flaws – at least the state has done what the majority of private sector employers will not do and that is take on its responsibility to its workers.

What I find most irritating about McGuinness’s line is that he doesn’t attempt to rectify that situation in any meaningful way by – perhaps arguing for true universal state pension provision to replace private and public sector schemes for all workers with individuals able to top up [albeit taxed at the appropriate rates], or alternatively by putting pressure on those private sector employers unwilling to provide pensions for workers.

Instead if we follow McGuinness’s approach of curtailing public sector pensions yet further – note how he conveniently ignores the previous increase in payments by public sector workers, which by the way I argued was legitimate – this will do nothing for me, and most likely you and indeed that 42 per cent of workers without pension coverage. So it’s entirely cosmetic his expression of concern because he intends to do nothing to ameliorate the situation. All it will do is to exacerbate the situation where the majority of private sector workers do not have a pension other than the state pension, and cause further attrition to public sector pensions, a situation that is a direct result of wages which are too low to sustain pension payments and private sector employers unwilling to shoulder any of the burden [my last private sector employment was typical of the general pattern. Company directors and certain selected members of higher management were given pensions. All others were not].

What’s telling is how heavily trailed this is in the media as if his statement is ‘news’ [it’s not], or as if he proposes something that will actually benefit workers [it won’t]. But that’s the orthodoxy for you.

A later statement quoted by him is of interest if only because of its simultaneous implicit assumption and intrinsic contradiction of that assumption that ‘technocracy’ is non-ideological.

“The only reason why that has not been done up to now is that governments were prepared to waste money rather than talk sense to trade unions, culminating in that great monument to sacred cows, the Croke Park agreement.”
“That monument is now being eyed by technocrats who have no respect for cloud cuckoo land and have a great desire to pull down any monument built to false gods. The Croke Park agreement certainly falls into that category.”

One could reflect on how the IMF and ECB have already ‘eyed’ the monument for longer than a year now and not sought to ‘pull it down’.

There are reasons for that, as articulated by Richard Curran in the Sunday Business Post some while back…

Unsurprising then see the new face of Fianna Fáil… same as the old face.

I’ll just add in CMK’s thoughts on this from a thread linked to above. I think it makes the case better than I could of what real pension reform might begin to look like…

here are a couple of positions that could be articulated by good faith commentators on pensions to demonstrate that they are, in fact, concerned about the welfare of current and future pensioners. These are:

- Retention of current retirement ages for all workers
- banning of defined contribution pension schemes and the universalisation of defined benefit schemes in the private sector
- severe mandatory prison sentences for company directors who dip into pension funds
- the prioritising of pensioners and pensions funds in dispersal of assets of liquidated companies including the personal wealth of company directors where there is a deficit
- making company directors personally liable for pension funds and for ensuring that no shortfalls arise on an ongoing basis

Anyone not making some or all of the above arguments couldn’t care less about private sector pensioners. Once Hennigan and the rest of his fellow travellers, much in evidence in the comment’s thread following O’Toole’s article, succeed in reducing public sector pensions to poverty levels, something they could well achieve in the medium term, they’ll forget about private sector pensioners and the latter’s travails.