Why aren't the bankers' wages cut?

Tim Robbins

After debating with civil servants about their wages, I feel I have to be consistent. If civil servants have to have their wages cut on the basis that:
- the state can't afford their salaries
- thousands on the dole would love their jobs

Surely these argument can be applied to all the banks?

The state should be demanding:
- any bank getting a bail out has significant redundancies and salary cuts
- fulfill further cost cutting measures such as relocating away from the high rents of ballsbridge and stephens green

The costs saved by the banks would mean we the tax payers don't have to bail them out to the same degree.

Discusss...

ei.sdraob

Because they are doing gods work

ixoy

Well most of those in the banking industry didn't cause this - why should they pay?

There's already been significant job losses in the banking industry and I imagine more to come.
As the government becomes a bigger stakeholder in these banks though, they should have a larger voice on wage constraint - initiatives like relocation would be seen to be good.

Of course, the sad truth is that you could double or treble their wage bills and it would make hardly a dent in the amount they've screwed us all over by. Gotta love those banks!

bamboozle

have there not been lots of redundancies in the banks?

in fairness govt allowing Anglo to give pay rises last week was yet another example of a govt that has lost touch

RobbieTheRobber

they have cut or capped their wages

All bank executives at institutions covered by the State Guarantee Scheme will have their salaries capped in line with a recommendation from the Covered Institutions Remuneration Oversight Committee (CIROC) in its report published today

http://www.businessandleadership.com/news/article/12707/leadership/bank-executives-salaries-capped-at-500-000

As for making staff redundant as part of a government decision, how exactly woudl that be seen as a positive thing by anybody in this nation?

I mean are you seriously suggesting the government recommend that more people are placed on welfare and face financial hardship?

Edit: the average bank worker is no more responsible for the current state of our nations finances, than you or me!

gandalf

Can't disagree with anything you say there Tim.

I reckon there will be redundancies and quite a lot of them soon now that NAMA has become a reality. They wouldn't want to embarrass their Political Masters/Sponsors by announcing job cuts before the payouts now would they.

Count Dooku

Tim Robbins wrote: »

After debating with civil servants about their wages, I feel I have to be consistent. If civil servants have to have their wages cut on the basis that:
- the state can't afford their salaries
- thousands on the dole would love their jobs

Surely these argument can be applied to all the banks?

The state should be demanding:
- any bank getting a bail out has significant redundancies and salary cuts

Thousands of jobs are facing the axe

Tuesday March 30 2010

FEARS for thousands of banking jobs were raised last night as crisis-hit lenders prepare to slash their costs in a critical week for the financial sector.

The Irish Bank Officials' Association (IBOA) insisted cutting staff would be a "short-sighted, knee-jerk response" as it warned major jobs cuts were being considered by some institutions. It previously estimated as many as 10,000 banking jobs were at risk in 2010.

This comes in the wake of large scale lay-offs, including, most recently, 750 job losses at Bank of Scotland Ireland.

"Even though over 6,000 redundancies have either already taken place or have been agreed in the financial services sector in the 18 months since the banking crisis began, there is a serious concern that further major cuts in staff numbers are again being contemplated in some areas," IBOA general secretary Larry Broderick warned.

As the first tranche of impaired development loans are transferred to NAMA this week, Finance Minister Brian Lenihan will today outline further capitalisation of the banks and the possible consolidation of the sector.

This comes as the institutions receiving state support engage in negotiations with the EU Commission on a viability plan that will set the terms for the provision of that assistance.

The IBOA said 4,000 jobs had already been lost in the sector since late 2008.

I presume it is time for public services to reply by 25% redundancies as well

Permabear

This post has been deleted.

cson

donegalfella wrote: »

This post has been deleted.

I've not heard that before, 77%? That's insanity.

donegalfella wrote: »

This post has been deleted.

Further insanity.

Tim Robbins

donegalfella wrote: »

This post has been deleted.

Agree and disagree.

There needs to be an across the board of 15% cut in salary in the banks so it's clear to the public that all bank employees have taken a hit. It's inconsistent to have across the board salary cuts in the public service and not insist on them in the banking sector.

Yes there have been redundancies in the banking sector but how many of them got big pay offs? How many were leaving anyway? How many were temp staff? It's all unclear.

There is evidence of some bankers getting salary increases including Anglo. this is ridiculous. So nurses, teachers, firement etc just have to all take a 10% cut and some Anglo people get increases?

Inconsistent and ridiculous. It would be easier to argue for cuts in the public sector if it was clear and unambiguous that harsher ones were being applied to anyone working in a bank.

ixoy

Tim Robbins wrote: »

Inconsistent and ridiculous. It would be easier to argue for cuts in the public sector if it was clear and unambiguous that harsher ones were being applied to anyone working in a bank.

I can understand PS/CS workers anger at this, but would you at least accept the fact that the vast majority of those working in the bank are no more or less reponsible than the average PS/CS worker?

SkepticOne

donegalfella wrote: »

This post has been deleted.

I don't see why the monumental incompetence of the banking sector should deter in any way from the need to reduce salaries in that sector now that the State is increasingly taking a stake in those institutions. Who cares why they "primarily" are in trouble?

gandalf

SkepticOne wrote: »

I don't see why the monumental incompetence of the banking sector should deter in any way from the need to reduce salaries in that sector now that the State is increasingly taking a stake in those institutions. Who cares why they "primarily" are in trouble?

If anything the state should be demanding that the people who were in management and are being kept on do have a reduction in salaries that reflects the mismanagement of the organisations.

I also believe that a lot more of the so-called top executives who were operating on auto pilot during the "pre-emergancy" should be fired.

murphaph

I actually wholeheartedly agree that all bank staff working in the banks that are begging for taxpayer assistance should be looking at a 15% paycut across the board. True, most of them had nothing to do with the problems, but their employers, just like the state, are effectively bankrupt and can only survive because the taxpayers of the future will be paying for them to.

To me, someone working in a bank is in a very similar position to someone in the PS. As the government takes more control, paycuts across the board should be on the agenda for these banks. They are not like any other private sector firm, they are a special category.

Permabear

This post has been deleted.

Liam Byrne

donegalfella wrote: »

This post has been deleted.

I had nothing to do with them either, and I'm down by approximately 25%; AND I'm doing more work for that 25%.

As are others.

It's not "punishment"; it's called "the real world".

Ebonhoof

Government is not profitable therefore PS/CS have to take paycuts. (Even if the bank crisis didnt happen, government would still need to make cuts)

Banks are not profitable therefore bank workers need to take paycuts.

However, what isnt been shouted at the moment is that Bank pension schemes have been thrashed, any bank employee in a DC pension has seen their pension fund halved while the PS worker has the same benefits but is been asked to pay a bit more for them.

Also bank workers are being expected to do overtime for free. This isnt happening in the PS/CS.

Ordinary bank workers are feeling pain, just like the PS/CS, its just not as immediately obvious as they are so terrified of losing their jobs that they are not complaining.

Permabear

This post has been deleted.

Tim Robbins

donegalfella wrote: »

This post has been deleted.

But you can apply the same argument to the Civil Service?

What I am talking about is the lack of consistency.

Again, the multiplier effect comes in here. Just 70 staff at Anglo received increases—and none of them was connected to the antics that got the bank in trouble, as far as I am aware. Arguing that 350,000 public servants should not receive pay cuts because 70 Anglo-Irish staff got increases just isn't logical.

No I disagree. I got a promotion once which was quite a big thing in a company I worked for. But they withheld my pay increase until they returned to profit. I see no reason why anyone in Anglo should get an increase.

The lack of logic is on your part because you are being inconsistent. If the PS should get across the board salary cuts - based on their cost to the state, the banks should get larger ones.

It is ridiculous that many bankers can be shielded from market realities but the average tax payers is even more exposed to them to bail the bankers out.

IT's not just morally unfair it's bad economics. If a business is doing cr*p, the cloth has to be cut. Otherwise its false economics.

Liam Byrne

donegalfella wrote: »

This post has been deleted.

But none of the financial sector is living in the real world, because we're footing the bill for all of the main banks.

So there is no "commercial" benchmark.

Permabear

This post has been deleted.

Permabear

This post has been deleted.

ardmacha

Of our €9.3 billion education budget, for instance, 77 percent goes directly to teachers' wages and pensions..

This figure doesn't mean that teachers are overpaid, just that enough isn't spent on other things. Irish spending on education has always been low, despite hype to the contrary. And talking about teachers having security against being made redundant is largely a waste of time, unless people stop having children. Removing those that cannot do their job is very sensible, but a different issue.

Tim Robbins

donegalfella wrote: »

This post has been deleted.

Yes but it's the merit of the individual and merit of the organisation.

If a brilliant electronic engineer is working for company that is doing really bad or an industry that has very little work, they can't be expecting a huge salary.

But you're talking about carrying out what sounds like a vendetta against everybody who works in a bank, even those people who had absolutely nothing to do with the financial crisis. I just don't think that's reasonable.

But you can't dismiss the exact same arguments when the civil service make them. You are contradicting yourself.

I agree. I don't support the bank bailouts, personally. But I will note that "bankers" are a subset of "everybody who works in a bank," and you seem to want to punish the latter—including everybody from tellers to cleaners—for what went on in the boardroom circa 2006.

Yeah, based on the economic principle that their organisation and jobs would go bust if we didn't bail them out. Why should the tax payer feel the pain of bailing them out more than the employees whose jobs they are saving?

What about someone who started working in a bank last November, after all the bad decisions had been made. Should her salary now be cut by 15 percent, just because?

Yeah. It's 85% better than what would happen if the tax payer didn't bail them out. Ok be honest, do you work in a bank?

Permabear

This post has been deleted.

Tim Robbins

donegalfella wrote: »

This post has been deleted.

No I am saying all bank employees should receive pay cuts for the same reason as I give for all civil servant getting pay cuts. I am being consistent.

You use pretty logical reasons for cutting civil servants pay but then you defend bank employees the same way a civil servant defends their salary.

I am bit perplexed you can't see the contradiction.

The rationale for bailing out the banks, according to Mr Lenihan, is not to protect jobs, but to avoid the shockwaves that would run through the domestic and international economy if these institutions were to collapse under the weight of their toxic debt. Everybody with deposits, everybody with loans, every individual and business that uses banking or credit services would be affected, and the cost to the economy would be considerable.

What do you believe should have been done?

I don't know enough to understand the alternatives to the state not bailing out the bank. All I am saying is that if the state bails them out there should have been harsh cost cutting stipulations for the banks. This would include across the board salary cuts, that have been right across the private sector and the public service.

I can't understand why there is not. Not only bad economics but grossly unfair to the civil service and the rest of us tax payers.

yoshx

I would love to know who you are in the real world, u all seems to be well educated
There is no need for cuts , this country need more investors more jobs and more polish people :P

ei.sdraob

yoshx wrote: »

I would love to know who you are in the real world, u all seems to be well educated
There is no need for cuts , this country need more investors more jobs and more polish people :P

where would 20+ billion worth of investement a year materialize from?

deise blue

donegalfella wrote: »

This post has been deleted.

All AIB and Bank of Ireland employees on Union negotiated contracts ( i.e. the vast majority ) received the 3% increase being the first tranche due under the National Wage Agreement towards 2016 , BOI pensioners also received this 3%.
All AIB and BOI staff who retire over the next few decades will after 45 years service receive 2/3rds of their final salaries as a pension , indeed they can commute a percentage of their pension and take a lump sum in addition BOI pensioners will also get the Old Age Pension also the Banks fund club subs up to a certain limit
All for minimal employee contributions - approx. 1 quarter of PS pension contributions.
I appreciate the both Banks have black holes in their pension schemes but that issue is being addressed , AIB for example have practically halved their deficit.

Permabear

This post has been deleted.

deise blue

It is not true to say that 6,000 Bankers have been made compulsory redundant.
The vast majority of these jobs were lost by way of natural wastage or incentivised early retirement or voluntary redundancies.

waster81

From the banks that will transfer assets into Nama, ( barring Anglo 100% nationalised), how many jobs have been lost notincluding the natural wastage.

Bank employees were among a small section who received ( was it a 3%) pay increase all because at the time the banks were making a "profit".

Tim Robbins

donegalfella wrote: »

This post has been deleted.

That's true but it's not really my point.

My point is that the reason we give for across the board salary cuts can be applied to the bank employees.

I'm also happy to see banking salaries adjusted in a fair and equitable manner, by comparing salaries in the Irish banking sector with salaries elsewhere in the domestic private sector, as well as in banking sectors internationally. If we need to recalibrate salaries, then let's do so.

What should drive the salaray cuts is the needs and costs to the state. The should be cut as much as they can so that the amount of billions they require from us is minimised.

We should be only giving them the bare minimum to survive.

By contrast, the public sector now refuses to accept benchmarking, either against the domestic private sector, or against the public sectors in other countries. Well aware that they are overpaid, they know they would lose out in such a deal. Instead, they wish to cling to their Celtic Tiger salaries for the rest of their working lives.

The reactions of the public sector aren't my point. My point is (once again) the reasons we are using to cut public sector pay can be applied to the private sector.

The reactions of people is a political point not really a sound economic one.

My approach is a pragmatic one. If Irish banking is to recover, those banks must be staffed with honest and talented people—who in turn deserve a reasonable wage. If we decide now to treat the banking industry irrationally or punitively because we have an irate public that wishes to throttle every last teller, we will not be able to recruit or retain the talented people that we need to be the custodians of that sector in the decades to come.

Your approach is extremly inconsistent. What you have just said there reminds me of civil servant saying, if we are to have a good civil service we need "honest and talented people—who in turn deserve a reasonable wage".

Most companies pay people as little as possible until too many good people start leaving. This is normal supply / demand economics which the bank should not be shielded from.

Because of the finacial state of the country, it would be quite easy to slash public service and bankers salary because there aren't too many jobs there. This would mean the costs of the state are greatly reduced and we would be back to recovery much quicker.

I pulled 15% cut as a guess but a deeper analysis would give a more accurate figure.

Permabear

This post has been deleted.

Tim Robbins

donegalfella wrote: »

This post has been deleted.

Indeed.

MaceFace

OP: Reason is because the government, while they gave them the cash to bail out their companies are keeping well out of the running of the bank.

The last thing governments should be doing is getting involved in the day to day activities of the bank. The next thing that will be demanded of them is control the interest rates to suit mortgage holders.

Slippery slope and all that.

Liam Byrne

MaceFace wrote: »

OP: Reason is because the government, while they gave them the cash to bail out their companies are keeping well out of the running of the bank.

The last thing governments should be doing is getting involved in the day to day activities of the bank.

I'd disagree completely.

If shareholders had watched their money get flushed down the sewer, they'd be damn sure to keep an eye on everything.

And as the new shareholders, our Government should be demanding that we get some sort of value for money.

Of course, ideally the Government would have backed the Credit Unions and Postbank and allowed the staff from Anglo to get jobs in those for the going rate, and let Anglo rot; let the debtors travel over to Cape Cod if they want to confront the scum that lost their money - and even then it was up to them because they invested in it.

I didn't, and I'm still apparently down €22,000 because of this cessput; if even €1 of that is going to pay someone a pay rise then I'm entitled to object.

Diarmuid

Liam Byrne wrote: »

And as the new shareholders, our Government should be demanding that we get some sort of value for money.

Agree totally. And when they are done with the banks they own, they should look in the mirror and see what value for money they are getting for the €61,863 million they cost in 2009

Triangle

Surely instead of wages and cuts we should be looking at the overall cost?

i.e.
The over all cost of Public Services = X
The Over all costs of bank employees = Y

Then you can compare in real terms.

So PS costs of X took a cut of say W%
And now Bank Wages have a cut of Z%

This way you can compare overall cost reductions as opposed to wages?

Seems logical to me.

granite man

Well here's one for you's. We called the (bailed out) EBS a couple of weeks ago to request details of how much it would cost us to increase our mortgage by an extra 5 years. We were told we'd be e.mailed with the figures within a day or so. We waited a few days and no e.mail. We called, spoke to the woman in question who told us she was still working out the exact figures(although she had told my ex partner over the phone a, presumed at this stage, guesstimate). We politely waited another week as there was no way we were agreeing to another possible €50k in interest over a 6 year period without figures on paper. Today we called yet again to find out why this e.mail had not been sent only to be offered over the phone the extra term still without figures on paper to work out if it would be even remotely worth our while.
Is that ok with you the girl on the other end of the phone replied.
Would anyone in their right mind hand over an extra €50k in interest without reading the small print knowing the banks record on sending this country into a financial apocalypse?
No is the answer and to answer some of the points above. Yes, IT IS THE FAULT OF PEOPLE WORKING IN THE BANKS WITH THEIR BLASE ATTITUDES. I for one would not care for a minute if they were in my position, broke, stressed and on the f...in dole.

IslandFella

I'll tell you why the wages are still the same. Its because of us, the Irish. We moan about it but we take it, like a bunch of wives who don't fancy their husbands anymore (or vice versa). I've heard numerous people compare us to the French and how they would take to the streets and riot for a lot less.

What the hell is wrong with us? Would we have stood for this **** in the eighties? No way. We're a bunch of post tiger softies licking our wounds and shifting blame left, right and centre. I'm sick listening to the lot of ya. If you want to do something, organise a series of major rallies, bring the country further to its knees. Lets shout from the rooftops so the world can respect us again.
Instead, we debate and we blather. The real question is. Who has the balls we need for these times? Where is our Sean Lemass? We don't need modern politicians. We need visionaries and we need action men/women.

The bankers and their wages? Get used to it!

yoshx

Thats it ! thats the good mentality i strongly agree wiw u