Eamonn Gilmore cites the Troika to avoid paycuts .

CDfm

Listening to Newstalk yesterday Eamonn Gilmore was quoted referencing the Troika .

In my world Troika is a dubious Canadian Vodka.

http://minivodkaguy.com/TroikaGold3New.jpg

But ,of course, thats not what he meant .

Gilmore predicts Ireland on track for third troika review

By Juno McEnroe, Political Reporter
Wednesday, September 14, 2011
IRELAND is on track to meet its obligations for the third review by EU and IMF lenders next month as part of the bailout agreement, according to Tánaiste Eamon Gilmore.
The Labour leader insisted that Ireland would meet its commitments when the EU/IMF/ECB officials visit Dublin in October.

The third quarterly review since the overall €67 billion rescue fund was agreed late last year is expected to focus on legislative commitments to further stabilise finances.

On its last visit in July, the troika warned of challenges for Ireland ahead of a tough budget.

But Mr Gilmore expects that Ireland will meet its bailout terms during the October review.

"We’re very confident about the third review," Mr Gilmore said.

"We’re implementing all of the measures that we committed to. There are some legislative measures which have to be brought forward in the third quarter. The Government has been addressing those and they will be ready.

"We’re confident that again in the third quarter that the troika will again give a positive assessment of how Ireland is doing."

A raft of legislation is expected to be brought through the Oireachtas in the coming weeks.

Mr Gilmore also called for a speedy rollout of changes to the bailout as agreed by eurozone countries as part of the European Financial Stability Facility last month.

The measures push out the repayment time of the €67bn loan to at least 15 years.

The changes also mean the cost of Ireland’s bailout could be cut by over €1bn a year, with other lenders set to follow the EU’s lead.

Read more: http://www.irishexaminer.com/ireland/gilmore-predicts-ireland-on-track-for-third-troika-review-167405.html#ixzz1XwX4EL2r

The issue that Mr G deftly avoided was public sector pay and the reform of the Health Service etc

Check out Ronan Lyons here

http://www.ronanlyons.com/2011/04/26/%E2%80%9Cslash-and-burn%E2%80%9D-anything-but-the-need-for-realism-in-budget-2012/

http://www.ronanlyons.com/2010/08/03/pay-bill-figures-show-the-need-for-public-service-transformation/


Any international comparisons? The international comparison is as it was last year.

Ronan Lyons found that Irish primary teachers with 15 years’ experience earn 22 per cent more than teachers in the other EU-15 countries and 13 per cent more than the average in the top ten EU economies. An Irish teacher, Lyons says, ‘earns more after tax than his or her counterparts do before they’ve been taxed in most other Eurozone members.’

Note that Ireland ranks 30th out of the 34 OECD countries in terms of the percentage of GDP spent on education. In other words, we don’t spend much on education, despite the high salaries. Teachers who argue that their pay packet is sacrosanct are effectively saying that service cuts are preferable.

Fairness dictates that the longer serving teachers bear the brunt of any pay cuts – those starting teaching actually begin on a salary that is 9 per cent below the average in the top ten EU economies.

Teachers and public servants are hard-working, educated and dedicated workers.

So what? No-one’s saying otherwise. Fact is, the country’s broke.

An Irish Times survey found that 7 out of 10 private sector workers have not suffered pay cuts.

The state pays the public sector, not the private sector. Secondly, about 270,000 private sector jobs have been lost – that is, approximately one in six private sector jobs. At the same point in the Great Depression in the 1930s, Ronan Lyons notes, the US had lost 18 per cent of jobs. This time around, the US has lost just 6 per cent of jobs. In other words, ‘Ireland is suffering a severe jobs depression – not just a recession’.

http://www.southernstar.ie/article.php?id=1734

Mr G said that public sector pay cuts are off the agenda with the Troika .

My question is very simple and precise.

What have the Troika or its constituent members actually said about Irish Public Sector pay ?

I would like to hear the facts of what the EU, IMF and ECB say cos I have a feeling its gotten lost in translation.

ardmacha

This is a seriously muddled thread, even by the low standards of this forum.

I would like to hear the facts of what the EU, IMF and ECB say cos I have a feeling its gotten lost in translation.

Why don't you read their reports then, rather than taking accounts from the Irish Examiner.

I'll even save you the trouble of Googling
http://www.imf.org/external/pubs/ft/scr/2011/cr11276.pdf

hmmm

CDfm wrote: »

What have the Troika or its constituent members actually said about Irish Public Sector pay ?

They don't really care how we cut, just as long as we cut. It's up to us whether we want to make the cuts by packing 100 kids into a classroom or cutting teacher pay, and with Labour in power that decision was already made by the electorate.

CDfm

ardmacha wrote: »

This is a seriously muddled thread, even by the low standards of this forum.

Why don't you read their reports then, rather than taking accounts from the Irish Examiner.

I'll even save you the trouble of Googling
http://www.imf.org/external/pubs/ft/scr/2011/cr11276.pdf

Thanks for the link, though I have seen it before, I am putting things in perspective based on Mr G's public pronouncements. I hope the "G" in Mr G meaning government spending is not too obscure.

2/3 of Government Revenue is on wages and this is being funded by a bail out facility and things are carrying on as normal.

Economics needs a certain level of prudence and the central theme here is labour costs vs service delivery.

hmmm wrote: »

They don't really care how we cut, just as long as we cut. It's up to us whether we want to make the cuts by packing 100 kids into a classroom or cutting teacher pay, and with Labour in power that decision was already made by the electorate.

Now that is not going to happen.

One of the key factors on joining the EU concerned bringing social programmes up to a minimum EU standard via the EU Social Fund for example with its fund matching programme or thru its Structural Funds .

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1562353/

http://eustructuralfunds.gov.ie/

They do care how we cut it. We may not care but they just might.

So there are ways where subtle pressure can be applied to Ireland to adjust its spending.

There is also the very real possibility that we move from being a low tax economy (which we were) to a high tax economy (like Denmark). That in turn can affect foreign direct investment which we rely on for economic growth.

Taxation policy can affect disproportionately as Irish businesses do not currently have access to microfinance so taking money out of the economy by way of tax can affect business incomes and is not neutral because it is spent on civil/public service wages but has an affect on the "real" economy .

(If we had our own currency mechanisms such as currency devaluation would have been an option.)

The deal with the Troika also involves economic growth assumptions so cutting spending is just one half of the equation - stimulating economic growth is the other.

ardmacha

2/3 of Government Revenue is on wages

This is untrue. Only one third of government revenue is spent on wages and the net cost of wages, after taxes and levies is paid on them, is a bit over one fifth of government revenues.

The difference between one third and two thirds is fundamental and hardly accidental.

CDfm

ardmacha wrote: »

This is untrue. Only one third of government revenue is spent on wages and the net cost of wages, after taxes and levies is paid on them, is a bit over one fifth of government revenues.

The difference between one third and two thirds is fundamental and hardly accidental.

Sorry my mistake but lets not fall out over it.

You should be able to do the figures on the back of a fag packet.


For a quick look at government revenues


And the tax take is

Income tax and VAT combined are expected to deliver more than €24.3 billion of the Department's overall tax target of €34.9 billion this year. But a weaker than expected labour market and the knock-on effects on consumer confidence appear to have taken a toll on receipts of both types of tax.

http://www.irishtimes.com/newspaper/breaking/2011/0404/breaking42.html

And public sector pay is

Start with public sector pay. It is among the most discussed aspects of government spending. One reason is its sheer size – the public sector pay and pensions bill is the second largest expenditure item after welfare spending. In 2010 it amounted to €18.2 billion, or just over one quarter of total public expenditure (excluding bank bailout costs). Another reason is that many in the private sector believe it unfair that those who enjoy the greatest job security are, in many cases, paid more than they are and more than counterpart public sector workers in peer countries.

http://www.irishtimes.com/newspaper/finance/2011/0819/1224302695124.html

So it is still over 50 % of tax receipts and exceeds total state income from income tax by 50%.

Give or take a billion

Irish taxes raise 36 billion and around a 1/3 each from income tax , VAT & others.

That means all of income tax and half of VAT receipts go on public sector wages or there abouts.

So with all the other expenditure earmarked where is the "G"component to come from to stimulate the economy. Certain spending has a multiplier effect as it gets spent in the economy.

And on the question asked ;


I am being told here that maintaining public sector pay is sacrosanct and will not be cut and the Troika are happy with that.

I am also being told that there is no issue on this public sector pay when the public sector workers are

paid more than they are and more than counterpart public sector workers in peer countries.

As we are being funded by way of huge loans by the Troika surely there is some level factored in to stimulate economic growth or the growth assumptions if any being made are justified in some way.

Dannyboy83

Bear in mind, no cuts does not mean public sector staff will retain the same net income.

As you said, we are moving toward high tax.
If you earn more, you lose more.

Say one earns 50k now; their net income is 35k
As tax increases over the coming years, that will move toward 30k then 25k.

It's a terrible way of doing it, as it basically removes all incentive for people to work harder, but that's the way they're gonna do it.

CDfm

Dannyboy83 wrote: »

It's a terrible way of doing it, as it basically removes all incentive for people to work harder, but that's the way they're gonna do it.

It is a very inefficient way of doing it.

It is hard to imagine that there will not be a backwash effect as opposed to a multiplier effect.

I can't get a handle on it at all.