ESRI Oct 9th: public/private sector pay difference of 26% based on job characteristic

Diarmuid

http://www.rte.ie/news/2009/1009/economy.html

The ESRI has published a study which finds the pay gap between workers in the public and private sector is 26%.
...
This time, it has based its analysis on job characteristics
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The so-called 'public sector premium' is lowest in the Civil Service and Local Authorities where workers earn an average 9%-12% more than counterparts in the private sector.
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The study did not take account of pensions or benefits-in-kind.

Long Onion

Cue Jimmmy ...

Ms Happy

Here we go again........ :rolleyes:

Diarmuid

I don't think we need to retred over the same ground again. It's just an answer to the union talking point that they didn't compare like with like. Well now they did.

gerry28

The so-called 'public sector premium' is lowest in the Civil Service and Local Authorities where workers earn an average 9-12% more than counterparts in the private sector.

I agree, this does not take the pension levy into consideration. So its pretty even then with the private sector.

Naz_st

gerry28 wrote: »

I agree, this does not take the pension levy into consideration. So its pretty even then with the private sector.

But it doesn't take into account the value of the guaranteed defined benefit public service pension either, so it's pretty reasonable that it doesn't take into account the levy.

Hydrosylator

It's an interesting publication

ESRI found that between March 2003 and October 2006 the overall public sector pay premium increased from 14 to 26 per cent, "with both the OLS and PSM estimation methods generating almost identical results".

Just like to point out when these figures are from. Not that it's relevant or anything.

The premium is greatest in the education sector where pay in the Institutes of Technology and the Universities give rise to a premium of 52.6%.

I think that's fair enough. Which colleges are better, public or private? In this situation, the public sector offers the best service, and has the best staff. It makes sense that they get paid more. In my experience at least.

In the private sector the pay penalty in 2006,
relative to the public sector, was most severe in Hotels & Restaurants and in Wholesale &
Retail, and least severe in Financial Intermediation and Construction.

Stuff like this does a great job of dragging these averages down. Remember working in hotels? I do. It was ****ing ****. The public sector has no job as ****ty, so it will always seem cushier when these are being used for comparison.

Another things from the report. Of the 73.2% of the work force which is in the private sector, 18.7% is in manafacturing, 11.8% is in wholesale and retail and 4.8% is in hotels and restaurants. This means that almost half the private sector are working in sectors dominated by unskilled labour.

Of the 26.6% of our population working in health and education both take up over 7%. These sectors are dominated by college graduates. Doctors, nurses, teachers. This is 7.3% and 7.5%, which makes 14.8%/26.6% . So over half of the public sector is dominated by college graduates, who do work which nobody can deny is essential to the state.

I would imagine that a nurse gets paid more than a hotel receptionist. I'm okay with it.

The real waste in the public sector is Bertie's election-time quangos, but nobody's going on about them in the media. I'd love to know why.

Diarmuid

gerry28 wrote: »

I agree, this does not take the pension levy into consideration. So its pretty even then with the private sector.

eh? Care to present your analysis?

Amhran Nua

Hydrosylator wrote: »

So over half of the public sector is dominated by college graduates, who do work which nobody can deny is essential to the state.

By the same metric just under half of the public service don't have third level qualifications at university level. In any case didn't this study compare like for like.

jimmmy

Diarmuid wrote: »

I don't think we need to retred over the same ground again. It's just an answer to the union talking point that they didn't compare like with like. Well now they did.

+1

Still hard to compare like for like when one has a still subsidised pension ( eg Eddie Hobbs confirmed a Garda would need to be paying 48% of his pension if he was to be paying the full economic cost : this was on RTE TV on Monday week last ), shorter working week on average, greater job security etc.

Methinks the pay difference should be the other way around if anything. In a western, free market economy its dangerous to have such a premium enticing people away from the wealth creating sector.

gerry28

eh? Care to present your analysis?

Well if the ESRI are to be believed then the net difference would be in the region of 5% after pension levy.

Hydrosylator

Amhran Nua wrote: »

By the same metric just under half of the public service don't have third level qualifications at university level. In any case didn't this study compare like for like.

Wrong. Any serious job in the public sector requires a qualification, usually a degree.

The security forces which makes up about an eighth of the public sector on top of that includes gardaí and soldiers, both of whom have years of training.

Amhran Nua wrote: »

In any case didn't this study compare like for like.

They certainly gave it their best shot.
However if you look at how the public and private jobs breakdown, there isn't a lot of common ground for comparison in any case:

Sector Employment Share (%)
Private Sector Organisations: 73.2
Manufacturing 18.7
Construction 12.8
Wholesale & Retail 11.7
Hotels & Restaurants 4.8
Private Electricity 0.1
Transport & Communication 4.0
Financial Intermediation 6.0
Business Services 8.9
Private Education 0.5
Private Health 2.0
Other Services 3.7

Public Service Organisations: 26.6
Civil Service 2.5
Education 7.3
Health 7.5
Security Services 3.0
Non-commercial Semi-states 0.5
Commercial Semi-states 4.3
Local Authority 1.4
Marine 0.1
Total 100.0

I do believe that there are over-paid people in the public sector, but that this is almost exclusively at the top. Think Fás. Would you rather start cutting at the bottom or the top?

Amhran Nua

Hydrosylator wrote: »

Wrong. Any serious job in the public sector requires a qualification, usually a degree.

So just under half of the jobs in the public sector aren't serious jobs?

Hydrosylator wrote: »

The security forces which makes up about an eighth of the public sector on top of that includes gardaí and soldiers, both of whom have years of training.

It takes years of training to do a lot of the jobs in the private sector as well. Also I'm not at all sure about that eighth there, is it not more like one fourteenth?

Hydrosylator wrote: »

They certainly gave it their best shot.
However if you look at how the public and private jobs breakdown, there isn't a lot of common ground for comparison in any case:

But eh, what was that whole benchmarking thing about so, if not comparing like for like.

Hydrosylator wrote: »

I do believe that there are over-paid people in the public sector, but that this is almost exclusively at the top. Think Fás. Would you rather start cutting at the bottom or the top?

I'd rather not cut at all, but we're sunk if we don't.

jimmmy

gerry28 wrote: »

Well if the ESRI are to be believed then the net difference would be in the region of 5% after pension levy.

I hope you do not work in any post in the p.s. where logic or economics are concerned. The public service pension - inc the levy - is a perk, not a cost. If the govt tomorrow said to you they are going to scrap the p.s. pension and the levy , would that be ok with you ? That 7% is the best value you ever paid. Anyone from the private sector would love to be paying it.;)

Diarmuid

gerry28 wrote: »

Well if the ESRI are to be believed then the net difference would be in the region of 5% after pension levy.

Did you factor in the benefit of the pension in your analysis?

If every worker in one sector got free accommodation and a free car, wouldn't you regard that as a benefit when comparing salaries?

joolsveer

Diarmuid wrote: »

Did you factor in the benefit of the pension in your analysis?

If every worker in one sector got free accommodation and a free car, wouldn't you regard that as a benefit when comparing salaries?

I heard a guy from the ESRI on the radio say that benefits in kind were not taken into account. He also said that guards were compared to security men. He was unable to give a comparator for soldiers. Seems like a dodgy exercise to me.

Diarmuid

joolsveer wrote: »

I heard a guy from the ESRI on the radio say that benefits in kind were not taken into account. He also said that guards were compared to security men. He was unable to give a comparator for soldiers. Seems like a dodgy exercise to me.

I quoted in the very first post that "pensions and BIK" were not included.

P. Breathnach

jimmmy wrote: »

... That 7% is the best value you ever paid...

What 7%? I have recently had sight of a public servant's payslip which shows three pension-related deductions (superannuation, spouses & children, and "pension related deduction") which add up to just shy of 15% of gross pay. There is also a deduction for PRSI, and when that is taken into account, deductions amount to over 19%.

The public service pension schemes are very attractive for their members, but let's be fair about what is involved.

gerry28

That 7% is the best value you ever paid.

I don't think true logic was applied here now jimmmy.

Before the pension levy I was paying money towards my pension so when i retire i would recieve a particular sum of money (sum x). Now, i have been asked to pay an extra percentage of my wage (pension levy) towards my pension.
However i will not recieve any more money when i retire than i would have got before the pension levy - I will still recieve sum x.

So it certainly was not the best value 7% i ever paid.

Diarmuid

gerry28 wrote: »

Before the pension levy I was paying money towards my pension so when i retire i would recieve a particular sum of money (sum x).

The issue is that: sum(your payments + 7%) < x (by a long shot)

Hydrosylator

Amhran Nua wrote: »

So just under half of the jobs in the public sector aren't serious jobs?

Very funny. I'm referring to the rest of the public sector from health and education, as I'm sure you could intuit.

Amhran Nua wrote: »

It takes years of training to do a lot of the jobs in the private sector as well. Also I'm not at all sure about that eighth there, is it not more like one fourteenth?

3% of workers are public sector security forces.
26.6% of workers are public.
(3/26.6)*(100/1) = 11.278%
Just over 1/9th.

Amhran Nua wrote: »

But eh, what was that whole benchmarking thing about so, if not comparing like for like.

I'm not defending the rationale behind benchmarking.

Amhran Nua wrote: »

I'd rather not cut at all, but we're sunk if we don't.

I know what you mena, but I'd rather cut out bull**** quango's than cut the wages of people we actually need to keep us healthy and safe, and educate our kids. All three of those are people doing jobs I wouldn't have the mettle for.

jimmmy

gerry28 wrote: »

So it certainly was not the best value 7% i ever paid.

ok, scrap the 7% so, and make provision for your own pension, like every private sector has to ( apart from the old age pension which most people inc the p.s. are entitled to ) .
I do not think you would like that either.

Anyone from the private sector would love to be paying it.
Not to mention having the other perks, like shorter working week, greater job security etc.

Pharaoh1

Had this pension levy discussion with a relative (HSE employee on circa 55k) at the weekend as she was trying to decide which way to vote on the IMPACT strike ballot.
I explained it like this:
- Prior to the pension levy when you paid superannuation towards your 50% pension and 150% gratuity this was a mega fantastic deal. (Pre '95 so no full PRSI)
- Now that you pay superannuation and the pension levy you now have a fantastic deal.
- If you paid the full cost of your pension maybe 25 to 30% this would be a very good deal if you had an absolute guarantee of receiving the pension (which she has in as much as anything can be guaranteed).
In any case she would only have to pay this for half of the contribution period from now until retirement.

She said she would give up the pension and the levy if given the choice so I advised her to communicate this to IMPACT.
Interesting to hear a lot of resentment from HSE and other govt employees towards the likes of ESB employees who have exactly the same pension entitlements but only pay superannuation. Admittedly they have their own pension fund which has a big deficit but what chance the govt underwriting it just like they did recently with FAS and Universities.

Amhran Nua

Hydrosylator wrote: »

I know what you mena, but I'd rather cut out bull**** quango's than cut the wages of people we actually need to keep us healthy and safe, and educate our kids. All three of those are people doing jobs I wouldn't have the mettle for.

€13 billion on quangos. Are they included in the general public sector pay bill on most reports is the question? The cost of public pay to the exchequer is considerably less than normally thought as well, since they are paid from the same pot as they pay taxes into. With that said we are still running a €24 billion deficit.

P. Breathnach

jimmmy wrote: »

ok, scrap the 7% so...

What 7%?

ardmacha

When looking at where expenditure went during the boom/benchmarking period, table 2 is interesting. Education had the lowest overall increase in the period and health was highest.

jimmmy

P. Breathnach wrote: »

What 7%?

Ah, the infamous p.s. pension levy introduced by the govt during the last year. Surprised you had not heard of it.
Its not coming out of retired p.s. peoples pensions, eg a Guard taking early retirement now still has his pension pot worth over a million, he is as comfortably off as before. Little did this fellow, far from the top of his school class in 1979, think he would now effectively be a retired millionaire.

dearg lady

What would public sector workers here think about a change to their pension scheme?
I think the best idea would be to increase state pension, and have everyone pay into that. It would be enough to live on, but for people who want to set further amounts aside for the future, they could pay into a private pension scheme available to public and private sector employees. Limited tax breaks on this, up to a certain amount per week/month NOT % of pay.

Maybe if this happened we could finally have a meaningful debate on public v private sector salaries :rolleyes:

Hydrosylator

Amhran Nua wrote: »

€13 billion on quangos. Are they included in the general public sector pay bill on most reports is the question? The cost of public pay to the exchequer is considerably less than normally thought as well, since they are paid from the same pot as they pay taxes into. With that said we are still running a €24 billion deficit.

I'd never say cut them all, that'd be bad. I can think of quite a few ones that add no value and help nobody in any meaningful way though. They should at the very least be shelved until things improve.

I get really pissed off because lately everyone seems to be complaining about public workers on one hand, and the same people then say we have to help the banks. It's like they've forgotten who ****ed everything up in the first place.

It's made me defensive of the public sector because I feel they're being scape-goated. I'm a freelancer, with no safety net of any description, who is happy on a week where I bring in more than I would if I just quit and went on the dole. Two out of three would-be clients can't afford to pay me, unless I work for sweatshop wages. Nobody has money for anything while the people who made all the money are still hanging on to it, and they're ****ing laughing at us.

Hydrosylator

ardmacha wrote: »

When looking at where expenditure went during the boom/benchmarking period, table 2 is interesting. Education had the lowest overall increase in the period and health was highest.

On the bright side, at least health has improved in results.
Education is criminally under-funded, and always has been. I went to a school that was 25% prefabs, finished in pre-tiger years. That school is now about 60% prefabs.

If we let education slip, we lose one of our greatest advantages in the international job market.

MG

The findings could be misinterpreted.
We need to wait for the results of a wider and more detailed report
It leaves important questions unanswered.
Much of the evidence is inconclusive.
The figures are open to other interpretations.
Certain findings are contradictory.
Some of the main conclusions have been questioned. (If they haven't, question them yourself; then they have)
Not really a basis for long term decisions
Not sufficient information on which to base a valid assessment
No reason for any fundamental rethink of existing policy
Broadly speaking, it endorses current practice
They is harbouring a grudge against the public service.

(With apologies to Sir H)