State workers are whiners - private sector workers in Ireland stomach the brunt of pay and pension cuts


In the state sector, the attitude is quite different.  Insulated from the reality that faces workers in the private sector, the need for adjustment has been accepted reluctantly and slowly.

This can be seen again in the agreement with state workers which the government concluded with unions last week after lengthy negotiations.   It's the second Croke Park Agreement (so-called because the talks were again held in meeting rooms in the famous sports stadium).  

The agreement includes minor adjustments in pay and working hours, but nothing that reflects the scale of the crisis in the state finances.  It's more of the same.

In 2010 in the first Croke Park Agreement covering the period 2010-2014, state workers gave a commitment to change the way they work so that both the cost and the number of people working in the public service could fall significantly, while continuing to meet the need for services (schools, hospitals, police, sanitation and so on).

In return for this no-strikes deal, the government gave commitments to the state workers that there would be no further reductions in their pay rates (they had lost around 14 percent over the previous two years) and there would be no compulsory job losses as long as state workers were flexible about redeployment.

In fact there has been only minor change across the public service over the past few years, in spite of the downturn.  The old ways of doing things prevail, and the snail's pace of reform still means there are too many workers in some areas and not enough in others.   An example would be the number of planning staff we have on the state payroll even though construction is at a virtual standstill.

Most people in the private sector believe that Croke Park I was a failure.  They point to the big gap that now exists between pay in the state and private sectors and the way that high pay, inefficiencies and poor flexibility in staff movement and job responsibilities are still common in the state services. It's all completely out of step with what has happened in the private sector.

The second Croke Park Agreement was necessary because to meet our reducing budget deficit target under the bailout program the state needed to shave a further €1 billion off the €13 billion public sector pay bill.  

Despite this small-scale adjustment (1/13th) many state workers are unhappy and it is still unclear whether Croke Park II will be accepted in all parts of the public service.  

It's not just state pay and the failure to match the reductions that have happened in the private sector that make the rest of us angry.  State workers also benefit  from job security and generous guaranteed pensions that people in the private sector now can only dream about. State workers still don't seem to appreciate how priceless these things are in today's world.

Let me give you the latest example.   Workers in Independent Newspapers, the biggest media group in Ireland formerly headed by Tony O'Reilly, have been through a program which has radically changed the way they work and what they get paid.  The staff has shrunk to a fraction of what it was in O'Reilly's heyday; everybody works longer and harder for much less.

A particularly sore point is the pension fund, into which Independent staff have been putting just under 10 percent of their pay.  It's stopped automatically from paychecks.  

Because of the market collapse, this pension fund now has a huge deficit.   Staff who have paid into it for years will be left with very little. There is some faint hope that "half pensions" can be paid, but even this is very uncertain.

A journalist or a printer who worked for the company for 40 years was supposed to get a pension of two-thirds of their final pay.  So if they were on final pay of €60,000 a year, the pension would be €40,000.   Under a half pension, it would be €20,000.  

Most are likely to end up with a fraction of that.  And since few people would have 40 years service, they would be getting much less anyway.  

Bear in mind that Independent Newspapers was one of the country's leading companies.   And this is not unusual.  Pensions schemes in many big private companies have been decimated by the downturn.

Now contrast this with the news last week that new judges will have to serve 20 years in future before they can draw a full pension (at present they only have to serve 15 years!)   And in future they will have to pay a 13 percent contribution towards their pension, instead of the current four percent.

The present arrangement was based on the idea that most lawyers work in the courts for years gaining valuable experience before they are appointed as judges, often in their fifties.  So they say it's not their fault they only get to work 15 years as a judge before they retire on a full pension!

This, of course, is completely bogus.  Most of them in their years as lawyers in the courts will have been paying into private pension funds.  So they have that to rely on.