Thursday February 27, 2020

Pay restoration an unfair demand

Unions are intent on taking for themselves what little resources we may have

13th November, 2016
John Moran: the demands of public sector unions for more pay are undemocratic

I realise with despair that I am now also an “angry white man”. We are not just found in Britain and the US. My anger is closer to home.

Our economy and public finances, which are not yet fixed, teeter on a new precipice.

Our recovery is losing momentum. External challenges risk taking away the little money we thought we had to invest in our future or alleviate the suffering of our most deprived.

Now, a more dangerous challenge is coming from within. A minority want to take for themselves what little resources we might have.

If we let them, other more deserving people who can’t ransom us with threatened industrial action will pay the price, or we will borrow to buy everyone off. This will wreck our finances again for future generations.

The Irish proverb says “Déanann sparán trom croí éadrom” (a heavy purse makes for a light heart).

It sits strangely in contrast to “Money does not buy happiness” but seems to condition our response.

Back in the 2000s, rents, transport costs, even the cost of coffee went up. Commute times increased as people struggled to put a roof over themselves and their children. Do it again and we will have no one else to blame but ourselves - not the banks, nor the bondholders.

What happened before was so dangerous. Why would we ever want to go back there?

The demands from public sector unions are undemocratic.

Our ‘new politics’ - while not yet perfect - established a consensus about spending choices for Budget 2017. There were winners and losers but that is democracy. Next year will bring a new opportunity for the losers to make their cases again.

So, what now gives any vested interest or loser the right to hijack that democratic process by demanding their own special deal before next year’s priorities are established?

We hear lots of demands for ‘restoration’.

Why?

Restoration should not be what we use to decide what is fair.

The gardaí put themselves on the line for our safety. We are all grateful for that, but let’s debate their demands, and the demands of others, against what we can afford

When the building boom merry go-round stopped, we discovered what we were really earning and how little we were paying in taxes. We realised that our expectations were too high and that we were living beyond our means.

We were forced to rein in our expectations and realign them with the real value of our national output.

What now gives anyone the right to demand for themselves ‘restoration’ to those unsustainable levels at the expense of others?

We hear that the fruits of economic recovery require and justify restoration. It is a non sequitur.

GDP recovery is not the right trigger.

Pay rises without productivity increases should come only when inflation shows that living costs have gone up.

Put simply, our economy could grow by say 5 per cent because our working population increases. This does not justify a 5 per cent pay rise from increased tax revenues for everyone doing the same job as last year.

Economic expansion might require more services, but not more expensive ones.

Hitherto, the unions were happy to sacrifice fairness, leaving most pain for new entrants. This strategy worked to provide the required savings and keep privileges for the incumbents.

Now, those very same unions demand “fairness”.

It is simple maths.

You can get “equal pay for equal work” by increasing the wages of new entrants to unreal levels, whereby everyone else pays. Or, you can pay for smaller rises by bringing down the incumbents’ pay rates to current market rates. The latter would be a self-funded solution.

Who is going to suggest that?

An RTE survey found that 50 per cent of Irish people want pay restoration claims to be accepted now that the gardaí are getting their award. It was lazy not to ask the real question: would you like to grant pay restoration and be willing to pay for it with a trebling of your rate of the local property tax? Or by deferring the building of schools or the National Children’s Hospital? What about paying for pay restoration by not hiring more nurses or teachers?

Would 50 per cent still have opted for pay restoration?

The gardaí put themselves on the line for our safety. We are all grateful for that, but let’s debate their demands, and the demands of others, against what we can afford and the sacrifices needed to provide them with more money.

Should we not hire any new recruits this year? Should carers get no relief? Should we cut back on special needs assistants? Should sick children be deprived of new medicines? Should others pay more taxes? Or should their better-paid incumbent colleagues perhaps put some more money on the table in the interest of fairness?

Tom Geraghty, chair of the ICTU’s public services committee, called the Garda deal a “game changer”.

Geraghty’s “game changer” should be the catalyst for a debate where everything is on the table.

We must be fair not just to those who shout the loudest but to all of our public servants and to those who will pay for any generosity.

The unions must put their hugely valuable defined benefit plans on the bargaining table - and not just for new entrants.

Compulsory redundancy should be an option for the future. That would make awards easier by enabling flexibility should demand for services or the cost of living to contract again.

Finally, but most importantly, we can pull two levers to facilitate affordable living costs: wage rises, or spending to have permanent reductions in living costs.

The latter should be our preferred option based on a long-term countywide plan because reductions in the cost of living benefit all our citizens, not just a vocal minority.

John Moran is a former secretary general of the Department of Finance

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