That Croke Park Agreement 'confusion'...

Rejoice! Rejoice! The ‘confusion’ over the CPA is over. Though wait for the Budget and after. It’s interesting to reflect on why this should have appeared over the past week with a background (and foreground) chorus of comments from Ministers and parties various. Though it took the Taoiseach to knock it dead. Which is also interesting because his Ministers – yes, even the nominally social democratic ones, appeared to share this ‘confusion’.

Indeed this morning the IT itself admitted that:

TAOISEACH Enda Kenny and Tánaiste Eamon Gilmore moved yesterday to end confusion, largely, it must be said, created by members of the Cabinet itself, over the Government’s stance on the Croke Park agreement.

But of course it wasn’t just Ministers. Not at all. The Irish Times had helpfully been running an intermittent series on this very issue in the past week or so (and the SBP was no slouch in terms of pieces at the weekend – btw, this mornings piece provides something of a rebuttal). And Eddie Molloy’s contribution – perhaps a particularly notable one – was raised in comments over the weekend here, primarily by Jonathan who wrote that:

I note that Eddie Molloy was writing the same stuff in the IT on Friday, right down to the reference to Larkin, although there it’s even more absurdly phrased, if that were possible: “Next year will be the 100th anniversary of the 1913 lockout and the trade union movement will take the opportunity to remind us of the heroic struggle of their founding members against injustice. Big Jim Larkin will rightly be remembered for his inspirational leadership in that epic struggle. But before current trade union leaders presume to don the mantle of Larkin and all he stood for, they might stop to ponder this question: if Larkin were around today which causes would he champion? Where would he see the greatest injustices?” What, indeed?
But who is Eddie Molloy? I assume it’s this guy: “Over the last thirty years, Eddie has gained an unrivalled reputation for helping both indigenous and multi-national companies develop and execute their change and growth strategies. His is widely recognised as a thought leader with a record of success in the areas of strategy, structure, change and innovation.” See here for more: http://www.advancedorganisation.com/our_services.htm (a sample of what they do: “Achieving Distinctive Customer Focus: Creating a truly customer focussed organisation one that stands out from the pack. This means creating a ‘sense and respond’ capability based on a competitive product set, supported by coherent easy-to-use- systems, finger-tip information, employees with the right combination of skills and commitment to customer care. The secret is to empower front line employees to focus ruthlessly on attracting and strengthening the customer relationship while at the same time complying with clear boundary conditions.”

It’s well worth going back to that IT article with Jonathan’s comments in mind.

Certainly Molloy argues against the CPA and it’s a familiar cry, though to be honest there are points that he makes that many of us critical of the CPA from the left would possibly agree with – perhaps first and foremost the distinction between current staff in the PS and their wages and terms and those who are new entrants. I’m still unable to quite believe that that was agreed. And he is correct that it is indeed difficult to see service cuts biting deeper and deeper.
Yet, in the litany of failings – from his perspective – there are a number of curious omissions. Firstly he appears indifferent to, and certainly makes no mention of, previous cuts in pay and changes in the pension structure in the PS since the crisis broke.

That’s no small thing and it ill-serves his argument not to engage with it.

Secondly there’s not an hint of what sort of claw back he would envisage. What would he cut in terms of wages and how. He mentions only one figure throughout and that’s the following:

It represents a fundamental failure to govern when €1 billion is being borrowed every month not just to keep public services ticking over, but to pay annual increments, the most absurd allowances and index-linked pensions to deliver on the Croke Park deal as interpreted by trade unions.

Well actually that’s not the only figure, he mentions this:

In addition to “protecting the most vulnerable”, “facilitating flexibility” and “delivering industrial peace”, another much-used construct has been “legitimate entitlements”. When exit packages for secretaries general and others, one of which carried a value of €5 or €6 million, were questioned, we were asked to accept that these people have “legitimate entitlements”.

There’s no end of discussion one can have about those exit packages, and I doubt there’d be many here who would defend them, but then again they were relatively atypical. Interestingly according to Finfacts Ireland’s top civil servant, secretary general retired last Summer with a €713,000 package, which was composed of the following:

In addition to an annual pension of €142,670, McCarthy received a once-off lump sum of €428,011. He also got a full year’s pension as a special severance payment of €142,670. The overall package was worth €713,000. Details of the package were released to RTÉ under the Freedom of Information Act.

I think that was excessive, but while I’m not casting doubts on Molloy’s figures, if that was the top civil servant one presumes that no other civil servants, Secretary-General’s anyhow or lower, would have retired on an higher pay off and certainly not €5 or €6m (or if it occurred at all there was more to it than that). Or perhaps I am casting doubt on his figures, because one way or another – even if accurate – he appears to be talking about a wildly atypical example. The average lump sum of the 1,424 civil servants who retired this year was, according to the Independent, a rather less spectacular – though by no means derisory, €87,000. And given that those were most likely civil servants well into their years in the job that figure is probably tilted to the higher end. Actually, as interesting was the information that 63 per cent of civil servants receive pensions of €10k or less.

Thirdly he doesn’t even bother to quantify what benefits would flow from scrapping the CPA. This in a way is the most egregious omission of all because one would think that if such an approach were worthy of consideration it would equally be worth spelling out why. As I say I’m broadly critical of the CPA, but I can see the utility as an economic stabiliser of maintaining PS wages etc at a certain level, at least until the end of the agreement which – of course – is now a year or so away (though I’ve heard there’s some ambiguity as to the specific end date). Moreover – and in direct relation to that thought – consider the following:

Since Christmas 2009, when the agreement was finalised, and June 2010, when it was ratified by a majority of trade unions, there has been unforeseen budgetary deterioration on several fronts. For example, growth projections for the economy have not materialised and the scale of mortgage defaults, personal indebtedness and bank debt – all of which require massive amounts of public money to resolve – has risen to a level not envisaged in 2009.

What he seems to ignore is the fact that public sector workers live in precisely that economy with precisely those sort of problems. Knock ten per cent, or twenty per cent or as one will find suggested in comments under the article, thirty three per cent off PS wages and see how that impacts on ‘mortgage defaults’ and ‘personal indebtedness’. Indeed Richard Curran in the Sunday Busines Post made precisely that point some months ago suggesting that it was precisely because of the dangers of exacerbating the situation yet further that the government had not moved in that direction. And that’s before we consider falling tax returns and so on.

But by not stating explicitly what the outcomes are this article serves its purpose. Does Molloy believe that monies ‘saved’ from the removal of the CPA would flow to those areas where services were cut? He doesn’t say, but that doesn’t entirely make sense given that the argument made in general terms is that we cannot afford to pay wages at level x because ‘we’re spending x more than we take in in taxes’ in terms of government expenditure. Merely shunting the monies to cover services cut would make no impact upon the latter whatsoever.

But what then is the argument? That we will service the deficit more efficiently?

Michael Taft looked at some interesting research on this issue a while back (and by the way it is great to see Michael posting again after a well deserved break last month). But what of the argument about covering cuts in services – which is implicitly at the heart of so much of this (a sort of crocodile tears about how if only the CPA was removed there would be more monies for services – even though the bona fides of many of those making such claims are highly suspect due to their aversion to state intervention in the first place). Well there I tend to the view that everyone, public and private sector, has to face facts that tax rates must increase – and this would be true bailout or not. But wait – that’s the very policy approach that the larger partner in this government has set its face against.

That’s what’s so lop sided about this concentration on the CPA. It is as if the CPA is the fundamental problem and block against economic recovery, and if it is removed all will be sunny uplands, when in truth other economic policy decisions appear to be much more problematic. But asking the government to tilt the balance between expenditure cuts/tax increases from the current balance which places greater emphasis on the former is near pointless…

I’m far from an unquestioning champion of the public sector – and likewise the private sector – but
And that’s the problem with the article and the broader discussion of which it is a good example. Lots of complaints, some of them entirely misjudged, and no explanations as to what the alternative might be, let alone whether it provides a solution.

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