Croke Park II preliminary Talks started today

beeno67 · 14-05-2013 09:17AM

barneystinson wrote: »

If I'm recruited as an Assistant Principal in the Civil Service tomorrow the starting salary is 65k (paying full A1 class PRSI).
I work for 40 years and retire at the top of the AP scale (€80.5k).

Would you get recruited at that level age 25-28? just asking, I dont know. Also you are assuming no promotion for 40 years.

barneystinson wrote: »

The scale doesn't increase in real terms over the duration (i.e. it rises only in line with inflation).

But pay rates will rise over the next 40 years way above inflation. Do you think if, as part of CP2 the government said "pay would be linked to inflation for the next 40 years with no special increases" would the unions accept that? Of course they wouldn't.

barneystinson wrote: »

I pay 6.5% p.a. in pension contributions.

Applying a 2% "real" rate of return (i.e. in excess of inflation) on the contributions over 40 years, that equates to a pot of nearly 305k, based on my contributions. If the employer matches the employee's contributions, that equates to €610k in total.

2% real rate of return. Are you joking? Money in pension funds is subject to an initial charge usually about 5%. Then every year after that there are service charges up to about 2%. Then on top of that is the pension levy of 0.8% (does anyone really believe that will be abolished. You then believe after all these charges the return will still be 2% a year greater than increases to PS pay. No chance. For example in the 15 years between 1996 and 2011 in UK, before charges average pension fund growth was 4.5%.

barneystinson wrote: »

I get a €120k lump sum on retirement - that leaves €490k in the pot.

The state pension, which I've paid 40 years of A1 PRSI to earn, is €12k p.a., and my total pension is €40k p.a. - so that's a pension to be paid out of my pension pot of the difference, €28k p.a., out of a pot of €490k. I make it 23 years I'd have to live after retirement to exhaust that pot of money (490k x 102% - 28k etc...).

Annuity rates at present are about 4.5% so to get a return of 28k a year you need a pension pot of About €620,000. Add an additional €120000 for your lump sum and your pension pot needs to be €740,000. Obviously as it is now at this level some of your contributions may not be tax deductible.

sharper · 14-05-2013 09:32AM

creedp wrote: »

And again when the figures don't suit ... throw a tantrum .. time to put the rattler back in the pram

And again someone has made a specific argument why a set of numbers cannot be used the way you're trying to use them (in this case, those that produced the numbers explicitly said they cannot be used to draw the conclusions you are drawing) and rather than argue your case you flail about and avoid discussion.

Rather than attacking vinylbomb with completely baseless rhetoric why don't you deal with the issue he has highlighted.

Godge · 14-05-2013 09:43AM

vinylbomb wrote: »

OK, well the numbers that I have evidence for suggest you're way off the mark.

And your numbers.......well, they are anecdotal so....y'know....and stuff.

The numbers you have suggest that the public sector have taken bigger cuts on average than the private sector. Do you accept this?

If you do, we can all move on.

creedp · 14-05-2013 09:58AM

sharper wrote: »

And again someone has made a specific argument why a set of numbers cannot be used the way you're trying to use them (in this case, those that produced the numbers explicitly said they cannot be used to draw the conclusions you are drawing) and rather than argue your case you flail about and avoid discussion.

Rather than attacking vinylbomb with completely baseless rhetoric why don't you deal with the issue he has highlighted.

What issue is this .. that CIF don't accept CSO figure which show that construction wages reduced by an average of 11% during the worst recession in history in Ireland and in which the construction sector sufferred disproportionally worse than any other sector of the economy or the CSO finding that some construction workers have seen pay rise of between 5.8% between end 2011 and 2012?

Given that the CIF referred to small sample in the context that " they don't point to any particular trend" as "Anyone who is still working and maturing in their career would be advancing anyway in their earning" I would argue that he is only questioning the claimed wage increase rather than the wage reductions - but I'm open to other opinions there.

Going back to Vinybombs own linked document which he provided in support of a claim that construction wages reduced by 50% .. I for one can't find this reference but instead I get this stuff in retort to figures I supplied

OK, well the numbers that I have evidence for suggest you're way off the mark.

And your numbers.......well, they are anecdotal so....y'know....and stuff.

Well they weren't anecdotal and while some disagree with CSO figures when it suits because they are probably taken out of context I am simply referencing published data which has not been refuted despite the apparent specific argument being spoken of here. If that document provides a basis for the specific argument then point to it and, basless rhetoric aside, we'll all be happy.

sharper · 14-05-2013 10:37AM

creedp wrote: »

What issue is this .. that CIF don't accept CSO figure which show that construction wages reduced by an average of 11% during the worst recession in history in Ireland and in which the construction sector sufferred disproportionally worse than any other sector of the economy or the CSO finding that some construction workers have seen pay rise of between 5.8% between end 2011 and 2012?

The fundamental problem is you're trying to tease out average pay numbers from figures that don't lend themselves to the kind of comparison you're trying to make.

Private sector numbers cover a myriad of different companies with different roles, different pay levels, new jobs being created, old ones disappearing, people moving between them extensively and so on.

The public sector is centrally planned and consequently lends itself better to averaging.

You're trying to isolate one aspect of the economy (average pay across a couple of million workers), compare that isolated aspect to the public sector and use it to make an argument about what should or should not be cut.

If your premise was true (that private sector economic activity was largely unaffected) then we wouldn't have a deficit problem in the first place.

sharper · 14-05-2013 10:45AM

Godge wrote: »

The conclusions are quite clear. There was a huge bubble in wages and employment in the construction sector. It burst. People lost jobs and had their wages cut in that sector. Elsewhere in the private sector, things continued as normal and people got wage increases. Now there are people getting jobs as well.

I think you're forgetting the small matters of the global recession and global financial crisis.

From Q4 2008 to Q4 2012 four sectors saw increases in average earnings while nine saw decreases (see http://www.cso.ie/en/media/csoie/releasespublications/documents/earnings/2012/earnlabcosts_q42012.pdf)

vinylbomb · 14-05-2013 11:19AM

creedp wrote: »

Going back to Vinybombs own linked document which he provided in support of a claim that construction wages reduced by 50% .. I for one can't find this reference but instead I get this stuff in retort to figures I supplied

Page 9

The construction sector (within the private sector) had the greatest decrease in its wage bill over both periods covered (this had also been the case between Q3 2008 and Q3 2009 when a decrease of 28% had been
recorded in the total wage bill of the matched enterprises). Between 2009 and 2010 the reduction was 23% followed by 7% between 2010 and 2011.

Godge · 14-05-2013 11:24AM

sharper wrote: »

The fundamental problem is you're trying to tease out average pay numbers from figures that don't lend themselves to the kind of comparison you're trying to make.

Private sector numbers cover a myriad of different companies with different roles, different pay levels, new jobs being created, old ones disappearing, people moving between them extensively and so on.

The public sector is centrally planned and consequently lends itself better to averaging.

You're trying to isolate one aspect of the economy (average pay across a couple of million workers), compare that isolated aspect to the public sector and use it to make an argument about what should or should not be cut.

If your premise was true (that private sector economic activity was largely unaffected) then we wouldn't have a deficit problem in the first place.

I have already explained how this could happen. If you have taxation on a narrow base and that base disappears, then you have a deficit problem.

Ireland in 2008 was hugely over-dependent on a bloated construction sector for tax revenue in VAT, Stamp Duty, CGT and Income Tax. When that tax base collapsed, it brought the banks with it and we had an expenditure increase linked to a tax base erosion.

Outside of the construction sector and those dependent on it, things continued as normal.

vinylbomb · 14-05-2013 11:25AM

Godge wrote: »

The numbers you have suggest that the public sector have taken bigger cuts on average than the private sector. Do you accept this?

If you do, we can all move on.

I do. And to be honest, I've taken a pay cut as part of that.

But I've never argued for equity. I'm working on the basis of simple economics.

If your employer is borrowing to pay you, sooner or later your employer will go bust.

Godge · 14-05-2013 11:26AM

vinylbomb wrote: »

Page 9

The construction sector (within the private sector) had the greatest decrease in its wage bill over both periods covered (this had also been the case between Q3 2008 and Q3 2009 when a decrease of 28% had been
recorded in the total wage bill of the matched enterprises). Between 2009 and 2010 the reduction was 23% followed by 7% between 2010 and 2011.

That refers to total wage bill, not average wages.

For example if the numbers employed dropped by 60% and the average wage went up by 20%, you would see a drop in the wage bill of 50%. The statistics fit well with one point I have consistently made - private sector employees waved their redundant colleagues out the door while they took pay rises.

Riskymove · 14-05-2013 11:30AM

vinylbomb wrote: »

If your employer is borrowing to pay you, sooner or later your employer will go bust.

applying private sector economics to poublic sector is misleading though

The public sector is not primarily funded through people paying for a product, it is funded through taxation measures

And it is not borrowing just to pay wages

I imagine few Private Sector enterprises spend around two thirds of their money on things beyond staff costs

sharper · 14-05-2013 11:57AM

Godge wrote: »

I have already explained how this could happen.

We're not talking about some hypothetical thought experiment here - we're talking about what actually happened.

Outside of the construction sector and those dependent on it, things continued as normal.

Well "those dependent on it" include the entire service providing domestic economy which is a pretty big deal and severely undercuts your premise.

The export sector is recovering now but was in severe trouble between 2008 and 2010.

sarumite · 14-05-2013 12:02PM

Godge wrote: »

That refers to total wage bill, not average wages.

For example if the numbers employed dropped by 60% and the average wage went up by 20%, you would see a drop in the wage bill of 50%. The statistics fit well with one point I have consistently made - private sector employees waved their redundant colleagues out the door while they took pay rises.

For most (all?) employees, the choice of redundancy v's pay cuts was not an option given to them. As such, I am not really sure how informative your point is.

sharper · 14-05-2013 12:10PM

Godge wrote: »

The statistics fit well with one point I have consistently made - private sector employees waved their redundant colleagues out the door while they took pay rises.

Company A makes widgets, employees 100 people at an average of €33k

Company B makes software for the export market, employers 100 engineers at an average of €45k

Company A can no longer compete with China and goes bust, 100 people are made redundant. This pushes up the average wage. Company B has no redundancies but hires 20 new engineers at €47k which also pushes up the average.

Godge's conclusion "They're waving their redundant colleagues out the door while taking pay rises".

The private sector is engaged in every economic activity imaginable and is not centrally planned. Workers outside unionised sectors rarely see pay increases by staying put, they get increases by switching jobs and switching roles.

It would be a very very bizarre company that was making staff redundant while also handing out general pay increases to in place remaining employees.

Godge · 14-05-2013 12:27PM

sharper wrote: »

Company A makes widgets, employees 100 people at an average of €33k

Company B makes software for the export market, employers 100 engineers at an average of €45k

Company A can no longer compete with China and goes bust, 100 people are made redundant. This pushes up the average wage. Company B has no redundancies but hires 20 new engineers at €47k which also pushes up the average.

Godge's conclusion "They're waving their redundant colleagues out the door while taking pay rises".

The private sector is engaged in every economic activity imaginable and is not centrally planned. Workers outside unionised sectors rarely see pay increases by staying put, they get increases by switching jobs and switching roles.

It would be a very very bizarre company that was making staff redundant while also handing out general pay increases to in place remaining employees.

Who said they were general pay increases?
How do you explain the current situation whereby average wages and employment are both increasing at the bottom of the economic cycle whereby the normal situation is to see new jobs created at low rates?

sharper · 14-05-2013 12:35PM

Godge wrote: »

Who said they were general pay increases?

You did - you said people were waving their colleagues out the door with pay increases. You're mashing together various companies and sectors into some bizarre fantasy that lets you justify ignoring job losses because those remaining are "doing well" rather than the reality which is that people working in organisations that are shedding jobs are living in fear for their own jobs.

How do you explain the current situation whereby average wages and employment are both increasing at the bottom of the economic cycle whereby the normal situation is to see new jobs created at low rates?

We've discussed this - this is an assumption you have made. One of the best performing sectors is IT which rarely creates jobs at "low rates" relative to the Irish economy. You want other people to disprove your assumptions.

antoobrien · 14-05-2013 01:19PM

Godge wrote: »

Who said they were general pay increases?
How do you explain the current situation whereby average wages and employment are both increasing at the bottom of the economic cycle whereby the normal situation is to see new jobs created at low rates?

Unless there is specific targeting of higher paid employees when cutting jobs, any job losses will mean an increase in the average wage as the bulk of employees get paid lower amounts. This is borne out in the breakdown of the numbers of people in the various PS wage, as well as the revenue income distribution stats both of which were posted in various threads before.

creedp · 14-05-2013 01:23PM

vinylbomb wrote: »

Page 9

The construction sector (within the private sector) had the greatest decrease in its wage bill over both periods covered (this had also been the case between Q3 2008 and Q3 2009 when a decrease of 28% had been
recorded in the total wage bill of the matched enterprises). Between 2009 and 2010 the reduction was 23% followed by 7% between 2010 and 2011.

That reference is to the 'overall pay bill' not pay rates and those reductions relate predominantly to reduction in employment. I don't think anybody would be surprised about the pay bill being reduced substantially due to unprecedented reduction in demand for construction.

creedp · 14-05-2013 01:34PM

sharper wrote: »

The fundamental problem is you're trying to tease out average pay numbers from figures that don't lend themselves to the kind of comparison you're trying to make.

Private sector numbers cover a myriad of different companies with different roles, different pay levels, new jobs being created, old ones disappearing, people moving between them extensively and so on.

The public sector is centrally planned and consequently lends itself better to averaging.

You're trying to isolate one aspect of the economy (average pay across a couple of million workers), compare that isolated aspect to the public sector and use it to make an argument about what should or should not be cut.

If your premise was true (that private sector economic activity was largely unaffected) then we wouldn't have a deficit problem in the first place.

I was basically referring to the fact that published data illustrates that construction wages fell by an average of 11% during the worst contraction in the sector in living memory. I did not attempt to impute anything from that to wage rates across the private sector. I don't think I ever called for pay cuts for anyone .. that's exclusively the preserve of the anti-PS brigrade - I did make the point that what's good enough for the PS might also possibly be appropriate for the private sector, i.e. if wages in the construction sector reduced further this might create additional demand for constructions services. This is an argument that has been used to justify paycuts in the PS, i.e. don't be so self-centred and take pay cuts in solidarity with your colleagues.

I fully accept your position regarding the diversity across the private sector and that's all very fine but when it suits people they get very angry that CSO figures show that the average wage in the private sector is 50% below that of the PS. So now at least we know that such a comparison is futile and simply used to create a non-existent basis for slashing of pay across the PS.

sharper · 14-05-2013 01:44PM

creedp wrote: »

I was basically referring to the fact that published data illustrates that construction wages fell by an average of 11% during the worst contraction in the sector in living memory. I did not attempt to impute anything from that to wage rates across the private sector.

If I've mis-attributed the argument to you than I apologise - the argument I'm talking about is the one which goes "The private sector has taken at most a 11% cut so why should public sector workers be asked to take more than that?". In that context, the 11% figure has no value.

creedp · 14-05-2013 01:47PM

sharper wrote: »

Company A makes widgets, employees 100 people at an average of €33k

Company B makes software for the export market, employers 100 engineers at an average of €45k

Company A can no longer compete with China and goes bust, 100 people are made redundant. This pushes up the average wage. Company B has no redundancies but hires 20 new engineers at €47k which also pushes up the average.

Godge's conclusion "They're waving their redundant colleagues out the door while taking pay rises".

The private sector is engaged in every economic activity imaginable and is not centrally planned. Workers outside unionised sectors rarely see pay increases by staying put, they get increases by switching jobs and switching roles.

It would be a very very bizarre company that was making staff redundant while also handing out general pay increases to in place remaining employees.

How big would company A have to be relative to the overall 1.5m private sector workforce to have anything but a miniscule impact on the avergae private sector wage?

Are you making a definitive statement that no company that made people redundant since 2009 awarded a bonus or pay rise to its remaining staff?

sharper · 14-05-2013 01:57PM

creedp wrote: »

How big would company A have to be relative to the overall 1.5m private sector workforce to have anything but a miniscule impact on the avergae private sector wage?

It's an example - I'm not saying that literally a single company had this effect.

The trend I'm trying to illustrate is that a contraction in one sector with an expansion in another sector can raise the average all on its own.

Are you making a definitive statement that no company that made people redundant since 2009 awarded a bonus or pay rise to its remaining staff?

No I'm not saying that, I'm saying it would be highly unusual for redundancies to be made at the same time as pay rises are rewarded. Some organisations are large enough to have poorly performing and well performing operations going in different directions but at that scale you're as good as working in different companies anyway.

It's entirely possible an organisation that saw redundancies in 2009 is awarding pay increases in 2013, that's because they turned the business around and are now making a profit. The workers in those companies experienced years of uncertainty about their jobs, pay and conditions, hardly "waving their colleagues out the door with pay increases" is it?

creedp · 14-05-2013 02:15PM

sharper wrote: »

If I've mis-attributed the argument to you than I apologise - the argument I'm talking about is the one which goes "The private sector has taken at most a 11% cut so why should public sector workers be asked to take more than that?". In that context, the 11% figure has no value.

Yes the context was that average reductions in the construction industry which has suffered a calamatious collapse at 11% compared to average pay cuts in the public sector of between 12% and 15% (as you say yourself much easier to estimate in the PS). The point being that the PS has already taken significant pay cuts. That's it in a nutshell. I'm obviously not saying those 2 figures are directly comparable but in the absence of more detailed breakdown it is a yardstick form which to operate. If I was to be very cynical I could have compared the wage rates of a sector in the private sector which has not seen any significant reduction in pay and said the PS should actually be awarded a pay rise!!

By the way you made a reference to the change in the composition of the private sector workforce having an impact on the overall average wages/increases in wages (the Company A and Company B example). I was interested in reading the following from Vinylbombs very illuminating link which might provide some food for thought -

In the period Q3 2008 to Q3 2009 the compositional effect was +1% (i.e. the increase in earnings of 2% would only have been 1% if there had been no compositional change). While earnings fell between 2009 and 2010 the compositional effect was the same (+1%). In the case of Q3 2008 to Q3 2009 the positive compositional effect appeared to be most heavily linked to the heavier loss in employment in the private sector than the public sector. This was not the case to any large degree for the subsequent periods so for the comparison between 2009 and 2010 it must be assumed that the compositional effect related to changes in composition across the more detailed sectors. Between 2010 and 2011 no compositional effect was measured.

It can of course also be the case that composition effect could occur both within enterprises and within sectors in a manner which cannot be measured through the EHECS survey. One example would be a new enterprise starting up which had lower earnings for all occupation groups. If such an enterprise entered the sample of EHECS it would reduce average earnings levels. However based on the very broad coverage of the EHECS survey, the relatively low rates of change recorded in published estimates and lack of measurable compositional effect on trends there is no evidence to support any substantial compositional effect beyond what has been measured. As with much of the activity covered in this paper there are undoubtedly instances of compositional change which have an effect on earnings within enterprises but they would not appear to be having a substantial effect on average earnings levels.

Sorry for editing but I just wanted to the table in page 29 of he aforementioned document which illustrates that even in small enterprises average hourly earnings have not reduced from Q1 2008 and even average weekly paid hours are now recovering to approx 96% of their Q1 2008 levels. I find this all of this very interesting .. thanks again Vinylbomb

sharper · 14-05-2013 03:05PM

creedp wrote: »

even in small enterprises average hourly earnings have not reduced from Q1 2008 and even average weekly paid hours are now recovering to approx 96% of their Q1 2008 levels. I find this all of this very interesting .. thanks again Vinylbomb

As I mentioned elsewhere in a discussion with Godge, in modern times wages are "sticky" in that they don't respond very quickly to changes to labour demand.

Within the private sector when a company is in trouble the following tends to happen:

1. Workers are made redundant.

2. Hours for existing staff are reduced.

3. Any new hires are brought in at a reduced rate.

4. If the company is still in trouble, hourly rates are reduced.

5. Company fails.

Also as above wage rates for employees staying put tend not to change much, either up or down. Whether you still have a job or not and the hours you get may change a lot which will affect your actual income.

The public sector doesn't do compulsory redundancies and reducing service levels (by having staff work shorter hours) is often not possible because of the nature of the work. That leaves reducing the hourly rate as the only real option to actually save money.

Hence if you ignore compulsory redundancy and ignore actual take home pay then you'll also be ignoring the primary mechanisms the private sector has for responding to a downturn in business.

Yes the context was that average reductions in the construction industry which has suffered a calamatious collapse at 11% compared to average pay cuts in the public sector of between 12% and 15% (as you say yourself much easier to estimate in the PS).

The calamitous aspect of the construction sector collapse was in employment levels. We can expect wage levels in non regulated areas also collapsed but from the perspective of the economy it's small fish compared to the sheer numbers that lost their jobs.

Also note that if you use like-with-like (i.e. CSO average pay) you get a reduction for the public sector of 4.4% for the three years upto Q4 2012. This won't include the pension levy of course but that's not going to triple or quadruple the number.

creedp · 14-05-2013 03:54PM

sharper wrote: »

Also note that if you use like-with-like (i.e. CSO average pay) you get a reduction for the public sector of 4.4% for the three years upto Q4 2012. This won't include the pension levy of course but that's not going to triple or quadruple the number.

Agree, pay reductions in 2010 were between 5% and 8%, given the fact that the majority of the PS are on the lower end of the scale and there has been some adjustments upwards due to increments - 4.4% reduction is a fair average. Of course when added to the average 2009 pension levy of 7.5%, we are looking at an average reduction of approx 12%, hence my connection to the average reduction in construction wages over the same period.

vinylbomb · 14-05-2013 03:59PM

I'll be leaving this thread now.

As it is it looks like CP2 will go through in some form or other.
One of the more dispiriting elements of this is that those on higher salaries negotiate a separate set of reforms to wages to the other unions.

I'm not for reducing wages in the lower paid ranks, as CP2 never was.
That has been completely missed as a result of the union rabble-rousing.

Such is life.

Riskymove · 14-05-2013 04:03PM

sharper wrote: »

1. Workers are made redundant.

PS had both early retirement and voluntary redundancy schemes

also had incentivised career break scheme

2. Hours for existing staff are reduced.

OT was severly reduced or stopped altogether in many PS areas

3. Any new hires are brought in at a reduced rate.

reduced PS salary scales (and new pension arrangments) were brought in for new staff

4. If the company is still in trouble, hourly rates are reduced.

Pay cut in 2010 and now second pay cut sought

also cuts to alowances etc

ardmacha · 14-05-2013 04:03PM

The public sector doesn't do compulsory redundancies and reducing service levels (by having staff work shorter hours) is often not possible because of the nature of the work

Of course it is possible, it just results in a lower level of service. In places like California if the State does not wish to pay people it puts them on short time, which is an honest approach. In Ireland, people want the service without paying for it.

Riskymove · 14-05-2013 04:04PM

vinylbomb wrote: »

One of the more dispiriting elements of this is that those on higher salaries negotiate a separate set of reforms to wages to the other unions.

?

I'm not for reducing wages in the lower paid ranks, as CP2 never was.
That has been completely missed as a result of the union rabble-rousing.

Such is life.

No paycut for under 65k

paycut for voer 65k remains

creedp · 14-05-2013 04:40PM

vinylbomb wrote: »

I'll be leaving this thread now.

As it is it looks like CP2 will go through in some form or other.
One of the more dispiriting elements of this is that those on higher salaries negotiate a separate set of reforms to wages to the other unions.

I'm not for reducing wages in the lower paid ranks, as CP2 never was.
That has been completely missed as a result of the union rabble-rousing.

Such is life.

What has been missed as a result of the rabble rousing? That low paid PS workers on €64,999 remain untouched while someone on €65k plus is hit for 5.5% on all income and will have increments suspended? I'm glad you are fully in solidarity with low paid workers on over €60k a year.

In my opinion if graduated pay cuts were being proposed, something like say 1% up to €35k (maybe exempt 1st €15k?) 2% on income between €35k and €65k, 5% between €65k and €100k, €8% between €100k and €150k, and 10% on all income over €150k - I would be much more likely to support as I would perceive it as more equitable. Its not the cut that the real issue - not that I (or anybodt else for that matter) would welcome one of course - is the perceived inequity that is the real no, no for me. What are the chances of that being supported though?? Instead the rabble rousing you refer to it would be more accurate to say the rabble rousing is now about exempting even more PS workers from cuts with an even greater proportion of savings coming from those over €65k. The outomce of that is there's not a snowball in hell chance of the €300m a year being saved - who care though as FG and IBEC will be toasting champagne on the latest 'sucess'!

Croke Park II preliminary Talks started today

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