A question… July 5, 2012
Posted by WorldbyStorm in Economy, Irish Politics.trackback
Reading the SBP at the weekend I found this…
The debate was reignited last week by Minister for Transport Leo Varadkar, who suggested freezing increments was a fairer option than cutting public services.
The protection of increments in the Croke Park deal goes straight to the heart of the budget debate, since up to 80 per cent of the spending for health, welfare and education consists of pay costs.
“It’s very hard to justify giving anyone any kind of pay increase in the year ahead while we are cutting services, and I think that is one that is particularly difficult,” Varadkar said last week.
This is a fascinating analysis by Varadkar. But… is he correct?
Karl Whelan on the Irish Economy wrote a useful piece last year. In it he checked the reports we send to Brussels and noted that overall:
Pay and pensions = 25.5% Social payments = 37.8% Intermediate consumption = 11.4% Interest payments = 8.4% Capital formation = 6.4% Other (including subsidies) = 10.5%
And he continued: “So not 70%. Closer to one-third of that figure. And, as I’ve dicussed before, when income taxes paid by public sector workers are factored in, the net cost is significantly less.”
Okay, that’s the overall level of expenditure across all departments. Let’s look at the individual areas.
The welfare system currently accounts for 40 percent of the government’s total spending, health care 27 percent, and education 17 percent.
Which means that 84 per cent of all government expenditure is in those three areas. If you prefer you can go and download the Comprehensive Expenditure Report 2012-14. it’s good reading and it has some interesting information.
Overall Current Expenditure by type is Pay 30%, Pensions 6%, Social Protection 38% and all other expenditures 26%. Now the Report notes ‘The two core components are social protection expenditure and pay. The majority of public servants are involved in the delivery of core public services. Together, the health, education, justice and defence sectors account for three quarters of the total number of public servants.”
I took my own look at wage expenditure in the context of Gross and Net Current Expenditure and my figures, very roughly (and they could be well out because it’s hard to entirely divine the overlap between say social protection and Jobs, Enterprise and Innovation, appear to show an expenditure of 40 % or thereabouts. Even if we threw in the 6 % pension bill on top of that and increased it to 10% we’d still be just on 50%.
If the overall pay/pension figures are 36% and the three largest areas by quite some way are Health/Education and Welfare then it seems impossible mathematically for the percentage to be so far adrift that it’s 80 per cent.
But my question is am I misreading this? Any thoughts?
Here’s some information exploding the myth that 80% of the Education budget goes on teachers pay. The Table in this link, provided in an answer to a Dáil question, contains a breakdown between Gross Pay and Pensions for the Education
https://www.evernote.com/shard/s37/sh/07967bb8-b9e3-4bed-8cd6-5f86455c3c60/5e8038c5d645101ce6dda67a246adc33
How is that figure of 52% arrived at?
Is it the pay (i.e. excl. pensions) for primary & post-primary sectors (i.e. excl. the other sectors)?
Useful breakdown.
Yes, one of the frames in the table is slightly askew, but excluding pensions the total on pay for actual teachers and not DES officials is just over half. These are govt figures, Leo Varadkar cloud do himself a favour and familiarise himself with the truth.
Thanks a million for that. More stuff for number crunching.
Varadakar claimed that 80% of the education budget goes on pay costs.
Not that 80% of the education budget goes on salary paid to teachers at first & second level.
And the numbers show that that the actual number is 78.3%, which seems to be the within the acceptable bounds of rounding up.
Are you worried about the missing 1.7%?
Do you think it would be easier to cut the pensions paid to retired teachers or the salaries paid to DES civil servants?
Varadakars point was that 80% of the education is protected by the CPA.
This is yet more coat trailing stuff by you Bartley. That’s not what Varadkar said. He said “80 per cent of the spending for health, welfare and education consists of pay costs.” Now that’s demonstrably untrue (not least because pay and pensions are not the same) but also because he didn’t focus on the one area but on three.
would it actually be a bad thing for 80% of the cost of an organisation to be on pay?
I have no problem with people being paid well, my point though was on the dishonesty of public commentary, at least in relation to the Education budget.
It also occurs to me that even if 80% is spent on salaries, teachers’ salaries only make up 52% of THAT and that’s closer to 40% of the total.
@WbS
That’s not what Varadkar said. He said “80 per cent of the spending for health, welfare and education consists of pay costs.” Now that’s demonstrably untrue (not least because pay and pensions are not the same) but also because he didn’t focus on the one area but on three.
Well it sounded a bit fishy that even a badly-briefed Minister would ever claim that 80% of welfare funding was comprised of pay costs, when clearly the vast majority of that departments spending goes on benefit payments.
Sigh … so I had to go and fork out €2.39 of my hard-earned to purchase a one-issue key to the sbpost.ie pay-wall and get to the truth of the matter.
It turns out that quote you attributed to Varadakar was in fact the words of one Niamh Connolly, the author of the piece.
The quote from Varadakar starts in the next paragraph, clearly signalled by the presence of quotation marks (and the absence of quotation marks around Connollys words).
And really, its splitting hairs to claim that both salaries and pensions arent pay costs. Both are paid from the same source, via the same payroll system, and most importantly both are protected by the CPA.
Some more information on the proportion of the education budget that goes on pay costs …
http://www.irishtimes.com/newspaper/ireland/2012/0711/1224319792595.html
More than 70 per cent of the Government’s €9 billion education budget is absorbed by pay and pension payments, compared to an OECD average of 63 per cent.
Actually, while the Times includes some interesting data on the prevalence of high salaries in the education sector, it misreads these OECD data:
http://www.oecd.org/dataoecd/61/2/48631582.pdf
Table B6.2a. expenditure by educational institutions, by resource category in primary and secondary education (2008)
Primary education
Ireland:
Compensation of teachers: 76.3%
Compensation of other staff: 13.2%
Compensation of all staff: 89.4%
Secondary education
Ireland:
Compensation of teachers: 67.0%
Compensation of other staff: 9.0%
Compensation of all staff: 76.1%
Table B6.2b. expenditure by educational institutions, by resource category and level of education (2008)
Primary, secondary and post-secondary non-tertiary education
Ireland:
Compensation of teachers: 71.5%
Compensation of other staff: 10.9%
Compensation of all staff: 82.4%
Tertiary education
Ireland:
Compensation of teachers: 45.0%
Compensation of other staff: 28.8%
Compensation of all staff: 73.8%
The quote from Varadakar starts in the next paragraph, clearly signalled by the presence of quotation marks (and the absence of quotation marks around Connollys words).
Yes, my misreading of it is a problem. I read it as being what Varadakar said because it came directly after a quote, outside of quotations marks, from him on “freezing increments” and before the actual quote. My mistake, but I think understandable given the context. And it’s one that you made too as well in your earlier comments on this thread (And note that I transcribed the relevant section in whole above in the post. So we both were suckered by it).
And really, its splitting hairs to claim that both salaries and pensions arent pay costs. Both are paid from the same source, via the same payroll system, and most importantly both are protected by the CPA.
Pay and Pensions are separate issues. I’m slightly puzzled as to why you seek to keep emphasising education alone when three areas were combined in the SBPs point. I don’t find it surprising that teaching at all levels is labour intensive and wage costs eat up a considerable share of the costs.
That chart you have as regards figures for compensation of teachers internationally doesn’t seem to support a contention that Ireland is radically out of line with other states. Although Ireland is above average in terms of compensation for teachers, it’s not markedly out of line with international norms (and of course figures are for 2008 predating wage cuts and pension costs increases). And intriguingly in tertiary education we’re three points above average as regards compensation (again 2008 figures).
Re getting the SBP online, if it’s feasible go the whole hog and get an annual sub. A lot cheaper than the paper edition.