That debate about the Croke Park Agreement. October 25, 2012Posted by WorldbyStorm in Uncategorized.
I’m still puzzled in the extreme reading the SBP as to what it precisely wants on the Croke Park Agreement. Each week we are offered yet another jeremiad on its iniquity. This week we get various features by Pat Leahy and a ‘why oh why?’ editorial.
Now in fairness to both they do at least make an effort to quantify the benefits. Industrial peace, facilitation of reform of work practices and exchequer savings are referenced. But each is hedged in caveats – for example, it speaks of two extra hours ‘bringing the week’s work to 34 hours’. But that would appear to be a significant generalisation, I’d love to know which part of the public service that is happening in. Surely not the one I’m on contract to. In any case the CPA, it can be argued (and from some admittedly anecdotal evidence I’m hearing this appears to be happening) is not inconvenient for employers to push changes in practices that may strictly speaking not be part of its remit. In other words there are pluses and minuses for both sides.
Indeed Leahy is quite open about the nature of the discourse:
Many Fine Gael TDs believe that Croke Park is unfairly protecting the public sector from the pain of the recession as it is being experienced in the private sector. This view is shared not just by vocal backbench TDs, but by a number of Fine Gaelers at cabinet level.
It isn’t entirely true – public servants have taken substantial pay cuts, averaging 14 per cent - but for those in the private sector who have lost their jobs, or who have seen their pensions wiped out, or who are trying to keep struggling businesses alive along with the jobs they provide, it certainly feels that way.
But what of those who require state provision in one form or another, for whom the idea of a private pension, or even a job, is now fantasy? Why no mention of them and how cut after cut in expenditure and the thinning of the ranks of the public sector workforce directly impinges upon them?
To be entirely blunt should public policy be directed to assuaging the ‘feelings’ of those who he himself admits have a not entirely correct view of the situation?
And interestingly when he attempts to get to grips with the savings he agrees that the figures are pretty robust. But then he argues:
But three observations must be added.
First, the quantifying of retirements as savings is based on the assumption that the saving is made by not hiring a replacement – ie, it is spending foregone.
Whether there is a reality to that assumption in the current economic circumstances – with the government running an €11 billion deficit for the first nine months of the year – is, to some people anyway, questionable. Would the government really be replacing every retiring public servant if it didn’t have the Croke Park agreement?
I could well be wrong, but surely the saving is in foregoing the cost of retaining the person who would otherwise decide not to leave – not a replacement. That’s a fairly substantial distinction.
Because many, perhaps most, of the early retirements are ‘early’. They’re people who otherwise would have stayed on another three or five or even more years.
The second observation is that, when public servants retire, they typically have to be paid a tax-free lump-sum of 150 per cent of final salary and a pension of 50 per cent of final salary. These costs don’t appear on the pay bill, but they do appear on the pay and pensions bill.
That’s a fair point, but that would presumably happen one way or another whether someone retired today, next year or ten years down the line. And it’s necessary to add that already the public sector pensions have been altered substantially (though no direct mention of that in the article).
The third point is that, even if retiring public servants were to be replaced, they would be replaced with people on much lower salaries. So, for instance, last year’s review of the agreement valued the savings of not hiring a new teacher as just under €54,000 – but teachers’ unions complain that new teachers now start on salaries of less than €30,000. Even making provision for any allowances and PRSI, that’s still a gap.
I’m not quite sure what his complaint – from his perspective – is here.
And when he continues there’s still a dog in a manger aspect to it:
Ultimately, what matters are the reductions in the monies paid out of the exchequer. It is certainly true that the pay and pensions bill has been reduced.
In 2008, the government paid out €17.2 billion in pay and €1.6 billion in pensions. This year, the pay bill is €14.4 billion, though the pensions bill has risen to €2.5 billion.
Much of that reduction, however, is due to former finance minister Brian Lenihan’s pay cut and pension levy.
By 2015, the pay bill is due to fall to €13.7 billion, while pensions will have risen marginally to €2.6 billion.
So there is no doubt that costs have been extracted.
However, look at it another way – the public sector is simply downsizing in accordance with the size of the economy. By 2015, the size of the public sector as a proportion of the rest of the economy won’t have changed that much since 2008.
I find the line ‘the public sector is simply downsizing in accordance with the size of the economy’ deeply puzzling. I’m one who would argue our public sector is actually smaller than it should be in European terms, but even on the terms he presents his case it’s hard to see his complaint here either. Why should the public sector reduce in size to a greater proportion than the rest of the economy? What particular logic is there to that? Again we’re back to ‘feelings’ territory.
Meanwhile back at the editorial the effort to tackle the downside of the CPA becomes uncharacteristically vague. And in a way when it asks the following plaintive question one has the feeling it could be turned straight back at it.
What is going on here? Has the Croke Park agreement become a secular creed, of which questioning is evidence of heretical inclination?
Isn’t it the opposite the case, that the malignity of the CPA has become an article of faith for much of the media, commentariat and political and chattering classes – perhaps in truth all of them. For what outlet seriously supports it unequivocally?
But most importantly both the editorial and Leahy’s article refuse as always to quantify what the measures are that it wants taken or what the outcomes of those measures might be.
For example in the editorial the only half-proscriptive lines are the following:
Croke Park needs to be interrogated. Some of the assumptions which underpin the savings are contestable, to say the least. The implementation body which oversees the agreement consists of current and former civil servants, sitting in judgment on a process agreed between unions and public servants which preserves the pay of public servants. It should have outside and private sector involvement. The continuing payment of increments and many allowances is clearly unjustifiable.
I think I mentioned before that I had a look myself through the list of allowances and it struck me that far from there being nothing but egregious wastes of tax payers money many seemed quite reasonable – particularly to me coming from a managerial position in my last fully private sector role.
Of course I’m not suggesting that my opinion on this is the last word. There’s no question that any system requires consideration again and again. But it’s this lack of quantification which is so irritating about the current debate.
What are the level of savings that might be expected from the removal of increments, and which allowances (of the ‘many’) should be done away with? How would jettisoning Croke Park ameliorate our economic situation to any significant degree? And what would be the negative effects of doing so once we were told what were – if any – the positive effects? But of this not a word.
And whatever one’s view of the CPA – and I’d be deeply critical from a left position – it does serve to underline the sense that it has become a most convenient whipping boy for a range of groups in the society – the media, sundry FG TDs, Fine Gael itself (sotto voce), Fianna Fáil when the mood takes it and tellingly few enough are calling them out about it.