What is the best way to reduce the PS wages?

Dannyboy83

I would like to move past some of the pointless bickering now please and concentrate on what is the best way to reduce the PS Wage bill.

There was an excellent post here by P.Breathnach:

Originally Posted by P. Breathnach
That's a social justice view, and has some merit.

But if we take a hard-nosed "what the job is worth" view, such as prevails in the private sector, then we should disregard the individual's personal circumstances and concentrate on striking the appropriate rate for the work, taking account of such factors as the skills, effort, and responsibility involved. One should also take account of the market, and how much you need to pay in order to attract suitably good candidates.

There are people working in the public sector earning -- and deserving -- over €100,000 pa; there are others who are paid €25,000 pa, and who are bad value for money.

I have no knowledge of how performance is rated in the public sector so I would be interested to hear how these cuts (or potential raises!) are going to be implemented.

Here was one suggestion by Chris

If a PS pay cut is to be implemented, how about this way? It wouldnt hit low earners hard but would savage the high earners.

If you earn €18,000 gross, you take a 1.8% pay cut.
If you earn €45,000 gross, you take a 4.5% pay cut.
If you earn €80,000 gross, you take an 8.0% pay cut.
If you earn €250,000 gross, you take a 25% pay cut.
etc etc.

Earn x%, pay cut of x/10000 %.

How would that sound to people?

The problem with the above is that its preserving the morally bankrupt methodology of the public sector, i.e. no form of meritocracy.

Riskymove

er...a number of us are posting on these ideas..its a bit much to just ignore that and start a new thread no?

Dannyboy83

Riskymove wrote: »

er...a number of us are posting on these ideas..its a bit much to just ignore that and start a new thread no?

Those threads are just a to and fro between private and public, with many public sector workers saying they won't accept cuts, an emotional tug of war.

I'd like to move past that and get some number crunching and actually tackle the idea of how we will implement the cuts (facts, numbers) and keep the bickering out of the thread.

helimachoptor

Dannyboy83 wrote: »

Those threads are just a to and fro between private and public, with many public sector workers saying they won't accept cuts, an emotional tug of war.

I'd like to move past that and get some number crunching and actually tackle the idea of how we will implement the cuts (facts, numbers)

That while a noble idea won't happen. This thread will just descent into the tug of war like the others.

Riskymove

helimachoptor wrote: »

That while a noble idea won't happen. This thread will just descent into the tug of war like the others.

Danny..fair enough but unfortunately I agree with this


anyway here is what i said about the proposal from chris

actually i dont really like the idea of "savaging" high earners, its too simplistic to just think that as they are highly paid that they deserved to be hit more than others

I'd also add that there seems to be plenty of evidence that pay differentials are actually much higher at lower incomes

a 10% cut on someone earning €250k returns €25,000, a hefty saving

in addition i think there would be an extremely small number of people on such wages anyway

I think the way inwhich the pension levy was phased was probably fair enough and I think the most obvious (and quickest ) way of implementing a further amount (if its chosen as an option) is to increase those rates

Dannyboy83

helimachoptor wrote: »

That while a noble idea won't happen. This thread will just descent into the tug of war like the others.

They can argue that in their other threads.
Lets get down to business here and crunch the numbers.

All ideas welcome, as I said, I don't know how performance appraisal operates in the public sector.

frman

How soon do we think the actual cuts will be made ?

Will they wait for the Budget in December to start cutting and culling, or will it be done now that Lisbon is out of the way ?

helimachoptor

Dannyboy83 wrote: »

They can argue that in their other threads.
Lets get down to business here and crunch the numbers.

All ideas welcome, as I said, I don't know how performance appraisal operates in the public sector.

Yes they will, but they will also argue it here my friend. I am sorry but you will not get a purely mechanical discussion on this. People have vested interests and don't want to take pay cuts/want the PS to take cuts.

Riskymove

Dannyboy83 wrote: »

as I said, I don't know how performance appraisal operates in the public sector.

very badly

Will they wait for the Budget in December to start cutting and culling, or will it be done now that Lisbon is out of the way ?

I imagine any cuts will come in from 2010

it gets difficult to bring in tax/pay changes so late in a fiscal year

ixoy

You would remove automatic increments for a start - everyone getting the same increase, regardless of aptitude, doesn't exactly promote the best work attitude: why bother if you can slack and still get the same?

This could be achieved by reforming PMDS. If I recall, PMDS is rated on a per-individual basis and that your rating will be decided on whether you achieve certain self-defined goals (with maybe a cursory input from your supervisor). In most private sector areas, you also apply your rating against your peers and use a bell curve model - so only 10% could get top (5), 20% above (4) and so on. Then only give increments based on those who achieve 4 or 5 - reward those working harder. Those who get a 1 or 2, in two consecutive periods, should be removed - let's get rid of the waste. Chances are if you're scoring a 1 or 2 you're not really contributing much. This would start to streamline the process.
Anyone who works in the PS/CS would surely support this - it must annoy them to see slackers beside them get rewarded as well as they themselves do. I can certainly see it every day and it annoys me on their behalf. Fixing this would reduce the bill and motivate for better performance.

When comparing the wages with the private sector counterparts, I'd like to see that the weighting given to job security and the shorter hours worked when taking pay into account. It may need to be re-adjusted.

In an ideal world there would be a ground level review of just how much people are needed and what departments - the McCarthy report is a good step here, but it can't tackle people as well within each group.

Dannyboy83

First we need numbers.

Borrowing is at 24billion per year.
Current Irish defecit is 71billion and climbing by 1 billion per 2 weeks.

There are 339,000 public sector workers.


Do we have any breakdown of y workers paid x amount?
A are paid 35,000 per annum
B are paid 50,000 per annum
C are paid 100,000 per annum
D are paid 250,000 per annum

etc.

meditraitor

There is great merit in what chris says

chris wrote:

If a PS pay cut is to be implemented, how about this way? It wouldnt hit low earners hard but would savage the high earners.

If you earn €18,000 gross, you take a 1.8% pay cut.
If you earn €45,000 gross, you take a 4.5% pay cut.
If you earn €80,000 gross, you take an 8.0% pay cut.
If you earn €250,000 gross, you take a 25% pay cut.
etc etc.

Earn x%, pay cut of x/10000 %.

How would that sound to people?

I think for the sake of the country Job cuts in the PS need to be dismissed apart from the small minority of wasters.
Pay cuts in the PS is the only way to reduce our national outgoings without hitting the poor and by this I mean that cuts in social welfare will have a more profound effect on our national psychy than reducing the pay of say a teacher on €60000 a year to €55000.

Riskymove

ixoy wrote: »

You would remove automatic increments for a start - everyone getting the same increase, regardless of aptitude, doesn't exactly promote the best work attitude: why bother if you can slack and still get the same?

Ioxy

your post sets out exactly how PMDS operates except you need to get less than a 4 to get an increment

to be fair while public sector reform is a must thats a far more medium to long term plan

in this thread the idea is discuss the actions needed around the planned savings and how best they may be implemented

Do we have any breakdown of y workers paid x amount?
A are paid 35,000 per annum
B are paid 50,000 per annum
C are paid 100,000 per annum
D are paid 250,000 per annum

sopme stats I recall from discussions on these threads are:

the majority are up to €60k

only 3% over €150k

joolsveer

ixoy wrote: »

You would remove automatic increments for a start - everyone getting the same increase, regardless of aptitude, doesn't exactly promote the best work attitude: why bother if you can slack and still get the same?

This could be achieved by reforming PMDS. If I recall, PMDS is rated on a per-individual basis and that your rating will be decided on whether you achieve certain self-defined goals (with maybe a cursory input from your supervisor).

The rules state that increments are not granted automatically and that performance and other criteria are taken into account in deciding if an increment is merited. Are there public service bodies where the existing rules are ignored?

Riskymove

Dannyboy83 wrote: »

Current Irish defecit is 71billion and climbing by 1 billion per week.

no thats national debt I think

the deficit is difference between this year's revenue and expenditure

i.e. 20 odd billion

Riskymove

joolsveer wrote: »

The rules state that increments are not granted automatically and that performance and other criteria are taken into account in deciding if an increment is merited. Are there public service bodies where the existing rules are ignored.

we are already moving away from the topic at hand


this has been discussed already on threads - basically the implementation of perfromance has been generally so weak that such technicalites are indeed moot

many people i am aware of who do very little or very poor work get increments

Dannyboy83

Riskymove wrote: »

Ioxy

sopme stats I recall from discussions on these threads are:

the majority are up to €60k

only 3% over €150k

Okay so 3% of 339,000 is 10,170 workers earning above €150k
So that total wage bill is €1,525,500,000 at the minimum

Reducing this by 20% would yield: €305,100,000

97% of 339,000 is 328,830 workers earning between €20k and €60k
So if we take €30k as the blind average, the wage bill is: €9,864,900,000
That figure sounds too high, nonetheless, a 10% reduction on that figure would yield: €986,490,000

Can we whittle this down a bit so?

Lets simplify it and stick to yearly figures, then we can narrow it down.

P. Breathnach

Dannyboy83 opened this discussion by quoting my view (well, one of my many views). Now I am going to be boring. If you agree with what I said, or hold a roughly similar opinion, the way to go is benchmarking -- fair-minded, honest, competent, and transparent benchmarking.

Dannyboy83

Alternatively, give me a link where I can get the figures and I will go away and do the number crunching myself and come back with the results.

God, I'd love a game of SimCity now

jimmmy

Dannyboy83 wrote: »

Okay so 3% of 339,000 is 10,170 workers earning above €150k
So that total wage bill is €1,525,500,000 at the minimum

Reducing this by 20% would yield: €305,100,000

I would argue those p.s. on more than 150,000 per year should get a pay cut higher than 20%. Its not as if there will be a huge exodus of them to the private sector, or to the public sector in other countries. Our deficit is huge and big savings need to be made. Another area where great savings can be made is p.s. pensions.....especially to those pensions greater than say 100,000 per year. What pensioner needs that obscene amount of money....most would have their mortgages paid off + kids reared etc ?

Dannyboy83

Well, I grossly underestimated the PS wage
Its €20billion:eek:, not €10billion, according to Page 14 here.
I'm going off to do some sums.
http://www.rte.ie/news/2009/0716/Volume%201.pdf

BTW, Just seen that we've hit €20billion in exchequer debt here:
http://www.rte.ie/business/2009/1002/exchequer.html

ardmacha

Inflation is negative. Simply "suspend" the last increases paid in 2008 in both pay and social welfare, right across the board. This will lead to immediate short term savings and is putting payments back where they were when prices were at this level previously. Perhaps this will have to end as inflation recovers,but as inflation recovers so will revenue to some extent.

Then launch a proper benchmarking.
- agree the criteria first
- then apply the criteria in detail to various sectors, having one benchmarking report cover everyone from manual workers and professionals doesn't cut it.

Sin1981

They keep going on about these recent reports on public v private not comparing "like with like". Can someone tell me where the 2002 benchmarking came up with figures to compare salaries?? did they compare public salaries with private? So why are these salaries not comparable?? mmm....

IMO, pay cuts depending on your level of salary,
seeing as the differential between public and private is greater at the lower entry level grades, there should be larger cuts there... but hey we're not that mean!! How about:

3% cut for anyone earning less than 35-40K
5% for anyone on 40-60K
10% for anyone on 60-80K
12% cut for anyone on 80-120K
and ~25% cut for anyone on over 120K.

And then.... get the benchmarking-to-western-European-averages show on the road, to make any further cuts over the next 2/3 years...

ardmacha

Can someone tell me where the 2002 benchmarking came up with figures to compare salaries?? did they compare public salaries with private? So why are these salaries not comparable?? mmm....

The 2002 benchmarking data is completely secret, they basically looked at what union you were in rather than any proper analysis.

Sin1981

ardmacha wrote: »

The 2002 benchmarking data is completely secret, they basically looked at what union you were in rather than any proper analysis.

Ahhh I see, all very fair and transparent.
Will Cowen have the balls to take on the unions proper? or will we see a cop-out token levy of some sort introduced like last year?

optocynic

P. Breathnach wrote: »

Dannyboy83 opened this discussion by quoting my view (well, one of my many views). Now I am going to be boring. If you agree with what I said, or hold a roughly similar opinion, the way to go is benchmarking -- fair-minded, honest, competent, and transparent benchmarking.

Oh if only wishing made it so.
Do you think such a fair, rational and realistic solution to the impending doom would get past the rabid union leaders?

I agree this is the best solution, but can we implement it... realistically?

P. Breathnach

optocynic wrote: »

Oh if only wishing made it so.
Do you think such a fair, rational and realistic solution to the impending doom would get past the rabid union leaders?

I agree this is the best solution, but can we implement it... realistically?

It's worth trying.

optocynic

P. Breathnach wrote: »

It's worth trying.

Without doubt... in fact... the least trying it would achieve is pointing out the pure hypocricy of the unions.

NewDubliner

ardmacha wrote: »

Inflation is negative.

Does that include the capital element in mortgage repayments?

optocynic

NewDubliner wrote: »

Does that include the capital element in mortgage repayments?

What is it you want?
Just spit it out... so we can all see how foolish it is!!!

ardmacha

Do you think such a fair, rational and realistic solution to the impending doom would get past the rabid union leaders?

Do you think it would get past the fact free contributors on this board?

Inflation is negative.
Does that include the capital element in mortgage repayments?

Inflation is an average, some people have mortgages, some do not. Are you suggesting a customised pay cut based on everyone's individual inflation rate? The only thing I would take out is any effect of government taxes on things like cigarettes.

NewDubliner

ardmacha wrote: »

Inflation is an average, some people have mortgages, some do not. Are you suggesting a customised pay cut based on everyone's individual inflation rate?

Just pointing out that the banks and their economists want everyone to have their wages cut to post-boom levels, but still demand repayment at boom levels. A selective rewinding of the economy with Joe public getting the worst from both directions.

As for paying PS incentives based on performance, this assumes you can measure performance. For example, with the Gardai would it be number of speeding tickets issued or number of lives saved?

Riskymove

Dannyboy83 wrote: »

Well, I grossly underestimated the PS wage
Its €20billion:eek:, not €10billion, according to Page 14 here.

the total Public Sector pay bill is around €20bn but it is made up of more than just gross pay of workers

it includes pensions for retired, overtime, allowance, expenses etc

so the actual gross wage of current workers is only a certain percentage of that €20bn

then tax is also included in it (which in this case is a notional amount which does not actually cost the state anything)

jimmmy

Riskymove wrote: »

so the actual gross wage of current workers is only a certain percentage of that €20bn

its quite a high percentage of the 20 billion....close to 85% I gather. That would be consistent also with the number of public servants x average wage.

ardmacha

its quite a high percentage of the 20 billion....close to 85% I gather

No doubt. So the cost of pensions isn't so high after all.

anonymous_joe

Why not be fair and just cut all wages in the Public Sector by 10%?

jimmmy

ardmacha wrote: »

No doubt. So the cost of pensions isn't so high after all.

As people live longer and public servants retire earlier ( eg many Gardai retire in their early fifties, with a pension pot costing over a million ) and as the population gets " greyer", yes the cost of p.s. pensions is high.
If you think its not high / they are micky mouse, why not scrap them altogether.

jimmmy

anonymous_joe wrote: »

Why not be fair and just cut all wages in the Public Sector by 10%?

That would only save about 2 billion a year....when we are borrowing 20 to 25 billion. P.S. Wages would need to be reduced by much more than 10% on average to bring them in to line with the European average.

NewDubliner

jimmmy wrote: »

P.S. Wages would need to be reduced by much more than 10% on average to bring them in to line with the European average.

And by how much should mortgages repayments be reduced to bring them into line with European average?

Clare_Guy

NewDubliner wrote: »

And by how much should mortgages repayments be reduced to bring them into line with European average?

To be honest this is a major point that needs to be addressed, I believe that public spending has to be cut, mainly through cutting pay or numbers in the public sector.

The fact is, the country has been cheated by this bank fuelled, government facilitated housing "boom". People are living in vastly overpriced houses with huge mortgages. These mortgages are the main expenditure for any household. This drain on incomes means that they can only be cut by so much. Is it not possible, now that we the people have so much influence over the banks, come up with some solution whereby the loans on peoples homes could be devalued so that the mortgage repayments come down to more affordable levels?

This would then allow more extreme cuts in pay levels, in both the public and private sectors. Returning competitivity to the labour market in Ireland too...

Firetrap

I think cutting wages is better than cutting numbers. You put more people on the dole and you're then taking money out of the economy and threatening the jobs of people in the private sector.

ardmacha

Is it not possible, now that we the people have so much influence over the banks, come up with some solution whereby the loans on peoples homes could be devalued so that the mortgage repayments come down to more affordable levels?

How can we do that? Also reduce deposits by an equal amount? Since the government now has a large stake in banks, any relaxation of loans is just as much a charge on the national debt as any salary in the public service.

You put more people on the dole and you're then taking money out of the economy

You are taking money out of the economy either way, that's the whole point.

Clare_Guy

ardmacha wrote: »

How can we do that? Also reduce deposits by an equal amount? Since the government now has a large stake in banks, any relaxation of loans is just as much a charge on the national debt as any salary in the public service.

I didn't say I have the answer, I'm asking the question. But if you're asking me if I think it would be possible to do something? I believe it would be, yes.

On the question of national debt, the government are happy to double it to help out their mates in the banks and the developers, I'd be much more comfortable if increasing the national debt was at the benefit of the ordinary tax payers rather than that shower. Especially if it tackles one of the core issues regarding getting the economy started again. The high cost of labour in Ireland relative to other countries.

And before you say it, I'm aware that the lack of credit is another problem at the moment, and I'm aware that NAMA is being sold to us as the solution to that problem, but seeing as the NAMA legislation has nothing in it to force the banks to release the new capital into the Irish market, I'm fairly confident that the banks will simply sell this cheap money out onto the international bond markets rather than risk it in an unstable economy here.

Helix

anonymous_joe wrote: »

Why not be fair and just cut all wages in the Public Sector by 10%?

coz the people at the bottom cant afford it and would likely be better off claiming benefits instead

the top can afford it, so they should pay far more

AMK

A genuine and transparent benchmarking exercise would certainly make clear 'what the job is worth'. However, if it is genuine and the benchmarks are 'like with like', it may not yield the drastic reductions people expect, particularly in the case of the middle ranks. This may be one of the reasons government hasn't jumped in to such an exercise - the results might not be what they want.

Regarding the lower ranks, I doubt very much if the Government/Dept. of Finance would mind if a pay reduction drove many of them out of the Public Service. Benefits claimed would be lower than pay so there would still be a saving to the Exchequer. Hard, I know, but that is the way it is going to be looked at.

Addressing performance related issues, desirable and all as that is, cannot be done quickly. A reduction in public expenditure i.e. pay, is an immediate necessity. The most efficient way is by an over the board reduction, effective immediately, of a certain % with a higher % for the most senior grades in order to help the medicine go down. This would no doubt result in inequities but the more glaring could be tweaked afterwards as was done with the Pension Levy.

I should make clear that I am a Civil Servant. Naturally, I do not like the prospect of further reductions in pay. I know I am not by any means overpaid for the responsibilities and workload I carry and I am confident that any benchmarking exercise would agree with me in this. However, I do not consider this to be the issue at this point in time. The appropriateness of my rate of pay must give way to the bigger issue of closing the gap between Exchequer income and expenditure. Right now one of the most obvious and easily implemented tools available to do this with is a reduction in Public Sector pay.

However, reductions cannot solve the problem of this years deficit on their own because even the most drastic of measures will not result in a high enough yield. The best they can do is form part of a series of further harsh but necessary measures many of which will hit public and private sectors alike.

Amhran Nua

Riskymove wrote: »

then tax is also included in it (which in this case is a notional amount which does not actually cost the state anything)

This is an important point, the public sector gets paid out of the same coffers that tax them, so someone on €250,000 is probably only costing the state €150,000 in real terms.

NewDubliner wrote: »

And by how much should mortgages repayments be reduced to bring them into line with European average?

Everybody gets to pay tax, mortgages are not and were not mandatory. And while we're on the subject, how much did public sector workers, much favoured by the banks when handing out mortgages because of job security, contribute to the rapid rise in house prices and mortgages? Not just PPRs but unwise "investment" purchases which accounted for 40% of demand at the peak of the boom. I'd be very interested to see some numbers on that.

Diarmuid

with regards to the op question. Why can't we just pay market prices? ie if you need 50 nurses to do a job you pay the minimum amount to get the 50 you need. Then you pay the mimimum raises to keep those 50. And raises/bonuses are not "across the board" but performance related.

Boskowski

Its really very amusing to witness with what ease and liberty people throw figures around when they're talking about other peoples wages.

I wonder are these the same people who are screaming 'murder' when those ridiculous child benefits or dole payments are being discussed?

Boskowski

anonymous_joe wrote: »

Why not be fair and just cut all wages in the Public Sector by 10%?

How would that be fair? You think a 2.5k wage cut affects someone on 25k equally as a 12k wage cut for someone on 120k?

Boskowski

AMK wrote: »

The best they can do is form part of a series of further harsh but necessary measures many of which will hit public and private sectors alike.

Which will of course only make the situation worse. If you take more money out of the economy how is the tax intake going to recover ever?

ardmacha

And while we're on the subject, how much did public sector workers, much favoured by the banks when handing out mortgages because of job security, contribute to the rapid rise in house prices and mortgages? Not just PPRs but unwise "investment" purchases which accounted for 40% of demand at the peak of the boom.

Whatever you might say, there is no evidence of the public sector particularly driving the boom in house prices. The job security of the borrower was a big issue in traditional banking, quite rightly. But when there was traditional banking there were reasonable mutiples for mortgages. But in the boom banks just gave out money, people in the private sector with bonuses and overtime could borrow against this largely transitory income.