Eddie Hobbs: Ireland has lopsided, unequal, and socially unjust remuneration model

By October 25, 2016Blog

The only unknown is how much the largesse will be, but the least well-off in the most insecure jobs have always funded the higher pay and job security of those least at risk, says Eddie Hobbs.

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The horse bolted, long time ago. Don’t kid yourself, the Government will capitulate to public wage demands, it’s just a question of the quantum. Throughout the course of modernising Ireland and making the private sector fit for purpose by deregulating its protected sectors under EU competition law, insiders in areas like, taxis, air routes, grocers, pharmacists, hospital consultants, lawyers, dentists etc., set their faces against change, pleading that their unique special case, their grievance, their agreements and their undertakings, served the common good and were in the national interest. Public sector wage demands for piecemeal reforms are no different except that EU laws do not apply to them.

None of the professions opted willingly for deregulation and modernisation because it effected their most powerful insiders hardest. The measure of any protected sector’s success is the premium it manages to extract from the public over and above what is a fair exchange for its value but think of Dublin taxis in the old days or flights from Dublin to London to understand the extremes to which such premiums can go.
Now take a close look at Ireland’s most powerful trade unions, not at what they say but what they do.  Distilled, these are organizations in the business of delivering benefits to subscription-paying members to which their own rates of remuneration are linked. They operate least within the most vulnerable parts of the private sector where traditionally unions fought against employer excesses and most behind closed doors in the public sector, where they are least needed.

By any measure these organizations have been fantastic, they steered their subscribers through an economic depression, managed to ensure that its worst impacts, joblessness and emigration were privatised and they emerged with a large premium over private sector wages after sanctifying over a thousand allowances as ‘core pay’ en route, all the while, maintaining the illusion that an unfunded pension debt of €100bn is sustainable on a Pay As You Go model for a fast aging population. That is not just success, it is raw power.
Listen closely to the news agenda set by the State broadcaster, where payroll costs equal license fee revenue and you don’t hear these facts. The workers that get name checked most are GTNs, (Garda Teachers and Nurses). Those funding them are rarely humanised to the same extent.

You are not told that the total income tax take from the public sector payroll just about matches the current yearly pension pay out, but do the maths. The ratio of earners to retirees is now about three to one. The deficit in the Social Insurance fund is over three times higher, both combine to exceed twice the national debt, neither is sustainable and each is treated like a Secret of Fatima.

The inconvenient truth is that Ireland has designed a lopsided, unequal and socially unjust remuneration model, one where the less well paid with the riskiest jobs fund the higher pay, security and lifelong income of those least at risk. Acclamation followed the Rip Off Republic TV series in 2005 for pointing where consumers forked out premium sums from after tax money to the protective professions but use the same analysis for consumer tax transfers to the protective Public Sector and suddenly you’re a villain to be demonised, denigrated and diminished, anything to distract from the substance of the problem –Irish people are living much longer, taxed too much at low wages and served badly by major public services.

Much is made about how Ireland’s progressive tax laws redistribute income to those most in need, principally through social protection benefits, placing Ireland among the most effective at income redistribution in the OECD. Still, even those ideologically in favour of increasing taxes further, dare not speak about security of tenure, that a job and premature pension for life is the single most valuable asset one can have in these times, especially if it’s paid for by your neighbour under sanction of the Courts and not some fickle Multi-National on a European tax jolly.  There’s never a word about benefit in kind tax on security of tenure for well-paid public sector contracts as a means of addressing inequality, yet coupled to capping pensions and introducing a properly funded universal pension scheme, it is the obvious way out of the trap.

At the root of Ireland’s inability to modernize its health system and deal with the chronic morale problems that exist across vital professions like Gardaí and Nurses, is our dysfunctional political system, one that punishes long term thinking in favour of short term benefits for whatever baby is screaming loudest. It is why we don’t have public services that lift staff morale, remunerate merit and are agile enough to deal with modern technology and the pace of change, it is why the legacy of the last Government was to blow the opportunity of real modernisation in favour of minimalist productivity gains, it is why the expectation of restoration was never challenged economically or socially and it is why we now face strikes. In these circumstances it is hard to blame public sector workers demanding a priority pass to scarce resources, even if more money won’t fix the underlying problem.

Don’t expect bravery. The truth is that politicians are scared shitless of public sector power. It’s why the Government will cave in, why opposition politicians won’t intervene and why blunt talkers or binary thinkers are unlikely to make the short list for the Public Sector Pay Commission.