Am I alone in feeling puzzled as to why revelations about the scale of our banking crisis seem to be followed so swiftly by outpourings of rancour towards the public service? (The chart shows how interest in the public sector, measured by number of web searches from Ireland, surged after the first anouncement of the bank guarantee scheme in September 2008, and again after the publication of the NAMA legislation in September 2009. The current surge, following the fallout from Minister Lenihan’s speech and the conclusion of talks on the proposed public sector agreement on March 30th is too recent to appear clearly on the chart).
After all, there is no direct connection between the financial burden that the failings of bankers have imposed on the state on one hand, and the perceived failings of public servants on the other. There is, of course, a fiscal connection: the property bubble that fed reckless behaviour in the banking system also promoted (through its accompanying stamp duty receipts) the political fantasy that it was possible to increase spending on public services and reduce taxes at the same time. But it is unclear why this mismanagement of the economy should have resulted in such extraordinary levels of hostility to the public sector as a whole.
The argument in favour of urgently addressing the ‘structural deficit’ created by the collapse of the property market through dramatic cuts to public expenditure – even as the state makes almost unimaginably high financial commitments to the banking sector – appears to centre on the reaction of the notorious ‘bond markets’ which, we are told, will punish us if we don’t mutilate our society in this way. I am unqualified to comment on the merits of this argument – although Michael Taft has an amusing commentary on it over on progressive-economy. But even assuming that the argument is correct, and that we have no choice but to reduce our public services and lower the standard of living and working conditions of our public servants, why should the process be accompanied by such bile?
There are two kinds of explanations discernible in public discourse. One is that there has been a spontaneous upsurge of mass anger at the extravagant terms and conditions prevailing in an inefficient and ‘bloated’ public sector. But there are reasons to be more than a little suspicious about this. The hostility has come in surges marked by subtle but interesting changes in the terms of the debate – from a focus on the supposed ‘pay premium’ to one on the security of tenure enjoyed by (some) public servants and on our ‘gold-plated’ pensions. The argument about pay differentials appears to have lost some energy in the face of unarguably severe reductions in pay, and also, I suspect in the context of the reversals of pay cuts to senior civil servants, and of pay increases at NAMA and Anglo-Irish Bank. Furthermore, research showing that pay differentials between public and private employees were greatest at the lower end of the income scale must have increased the risk that people might begin to think unacceptably bad terms and conditions in segments of the private sector formed at least part of the problem. The current hyperbole surrounding job security and pensions will likely diminish in the face of similar ‘real world’ insights. It will dawn on us that not all employees in the public sector enjoy permanent positions. We will remember that security of tenure is indeed one of the reasons why, historically, so many Irish families encouraged their children (daughters in particular) to enter the public service – but that these are our relatives, friends and neighbours. And anyone who takes a deep breath and thinks calmly for a moment will realize that the absence of pensions in the private sector is the real pension problem faced by the country.
So what other explanation is there for the waves of public sector bashing? Members of the union leadership have suggested that anti-public sector hysteria has been cynically orchestrated. They have argued – as Jack O’Connor did on Monday’s ‘The Frontline’ – that the underlying motivation has been to reduce pay across the board, in the private as well as the public sector. A venerable strand of labour market theory in sociology suggests that employer groups are better able to foment divisions amongst employees when the workforce is ‘split’ across ascriptive social categories like race and ethnicity. So what, if anything, makes the public/private divide in Ireland so amenable to this kind of manipulation? The recent growth in public sector occupations has largely taken the form of an increase in professional female occupations. The numbers of people employed in public administration, education and health grew by about 180 thousand between 1998 and 2007, but fully 130 thousand of those people were women working in education and health. (The data are derived from Table 1.2 in a report by the ESRI to the Equality Authority. Women comprise the great majority of public sector employees (about 70 percent in 2007 if we treat those three sectors as a rough approximation; 64 per cent in 2006 according to an analysis of the National Employment Survey). Correspondingly, the public sector accounts for a substantial proportion of all female jobs (about a third in 2007). In this context, a comment reported from one of the recent teachers’ conferences – “We are not overpaid babysitters” – is telling. I believe that when the history of the present moment is written, the anger directed at the public sector will be understood as part of a wider pattern of social contention surrounding the transformation of social care and education from a vocation – associated mainly with religious organizations and with women whose primary role was perceived to be that of unpaid worker in the home – to a set of modern professional services.
There is more to it, of course. The cynical amongst us will think it rather convenient that the public should be so distracted when vast public resources are being transferred to zombie banks and ghost developments. And it must be acknowledged that some commentators are sincere in their belief that the private sector is always and everywhere superior to the public sector, even though their unwavering faith in this dogma seems extraordinary in the face of the global financial crisis. But it is no coincidence that, over the coming weeks, so much will depend on the votes of teachers and nurses.
Jane Gray
Ireland after NAMA 
April 14, 2010 at 2:09 pm
“Unacceptably bad terms and conditions in segments of the private sector formed at least part of the problem” – I think you’ve hit the nub of the problem here, in two key areas.
1. Non-union policies in large chunks of the private sector have effectively removed any real value of union membership from a huge number of private sector employees. This has in a sense socially and culturally divided them from their unionised counterparts, whom they perceive to be a “pampered elite.” The lack of understanding and mythologising regarding pay and job security on the part of public sector seems to drive much of the debate without knowing what these workers do, how many there really are, and what their real world terms and conditions of work and pay are.
2. PSRI rebate policies designed to mitigate against the impact for employees hit by “restructuring” in globalised private sector jobs are being vastly abused by a huge number of unscrupulous employers who are using the 60% statutory redundancy rebate to subsidise programmes to transfer Irish jobs to non-Irish locations. The law currently permits an employer to class offshoring of a job as a “redundancy” as long as it is transferred anywhere other than Ireland. This effectively means that profitable operations can use such rebates to subside massive job relocation programmes and offer severance packages to employees sufficient enough not to cause an outright workplace riot. This is being done at the expense of the taxpayer who has already provided massive subsidies to such companies.
I do think that the acceptability of outright refusals to acknowledge the right to collective bargaining in many workplaces has generated this, and a change in this law would force employers to change their track. The LRC is riddled with cases of mistreatment from private sector, non union workers who have been unable to use local procedures to prevent problems on the part of unscrupulous employers.
Flexible working terms are doubtlessly being massively abused, often as much out of ignorance as intention. If employers were forced to collectively bargain as is the case in much of Europe, there would be at least some better chance that employers could exploit workers lack of awareness of their rights and thus prevent clogging up LRC time with such cases.
April 15, 2010 at 12:36 am
@ Laura
“And anyone who takes a deep breath and thinks calmly for a moment will realize that the absence of pensions in the private sector is the real pension problem faced by the country.”
Anyone who thinks about it will realise that those in the private sector will most likely end up on the old age state pension of currently around 220 Euro a week because their pension funds are have been wiped out or they never had any pension in the first place. Meaning the could not afford or accepted the inevitability of an “old age’ pension.
But what about this;
According to the Comptroller and Auditor General the outstanding public sector pension liability at the 31st of December 2008, was 108bn Euro. This is the accrual in respect of the state pensions to public servants. Since when is 108bn (now 112bn) and rising all the time, not a huge problem?
Good God, Ireland is a country that only managed to raised tax revenues of 32 million last year but it is a case of 10bn here 20bn there, no problem. 112bn contingent liability for public service pensions no problem! There is a problem and it is a very big one.
It was described by the Colm McCarthy at a lecture I was at in the Royal Irish Academy as a great big Ponzi scheme. When someone of that stature starts to scratch his head, you know there is a big problem and the rose tinted glasses are of little benefit. Just look at the way our sovereign debt is being piled high every month in order to come up with the 40% of public servants pay that we don’t have. Never mind the gold plated pensions which will probably evaporate as they become more and more unsustainable.
The annual cost of most of these pensions is “financed by “current revenues” in the year of payment”, even a child knows that this madness is unsustainable.
The NPRF was supposed to be ring fenced from being raided by the government. It was not. Furthermore, it was articulated by none other than Patrick Honohan before the fund was established that it should not be invested in Irish corporations or institutions. (open to political interference) Sadly, this has not happened.
Anyone remember a company called Bewley’s with nice assets in various locations around the city? It went bust, a tipping point came when there was not enough money in the till to pay retired staff. Same principal applies to our government. Currently, there are bond holders that still buy Irish government securities. But how long will that situation pertain for? As our debt to GDP surpasses the Rogoff and Reinhart tipping point of 100% events will become more and more unpredictable. We are well past that point now and when NAMA and other OBS (off-balance-sheet) items are included (latest ones these promissory notes). The situation is unsustainable and the fact that the NPRF has been raided and pumped into insolvent banks means, to all intents and purposes the fund no longer exists. Many of the problems are in the public sector, soon to be riven with strikes. The banks did what they do and that is try to get away with whatever they can unless they are regulated. The smoking gun points at the near non existent regulation emanating from the department of finance, the central bank and regulator who both shared a building in Dame Street.
April 15, 2010 at 12:38 am
Of course that should have been 32bn in state revenues last year! It is late!
April 15, 2010 at 8:01 am
A search for public sector does not imply bile. Granted if you watch the Frontline there is quite a degree of contention portrayed, but this has always struck me as being somewhat engineered. As you point out most people have at least one close relative in the public sector, so is the volume bile a reality, or something manufactured to put the public sector on the back foot? I was on the receiving end of some bile from my teacher in-laws who ranted about the private sector until I calmly suggested that the people working in Spar and Centra formed more of the private sector than the bankers who were the real target of their ire. Again, a search for public sector doesn’t reveal the motive for the search, which may well be simply a case of curiosity?
April 15, 2010 at 5:06 pm
“The argument in favour of urgently addressing the ’structural deficit’ created by the collapse of the property market through dramatic cuts to public expenditure…”
is motivated for most economists by the perils of borrowing to fund current expenditure. This country borrowed to fund current expenditure to disastrous effect during the late 70’s and 1980’s. In addition, the bond markets are more pressured now than they were back then.
April 15, 2010 at 7:04 pm
@Jane Grey
Brilliant analysis. It shows the cynicism of our establishment. I don’t remember repeated media campaigns against the following, where a billion euro could have also been saved/raised:
1. Tax reliefs (€8Bn per TASC).
2. Quangos and non-priority spending (another 3Bn at least of McCarthy not cut).
3. Repealing blanket bank guarantee pre-Sept 2008 (tens of billions).
4. Property taxes introduced.
5. Income taxes raised.
6. Wealth tax.
7. Property speculation profits windfall levy?
The timing is a giveaway. Don’t look at the TENS OF BILLIONS we are pouring into the banks to…er…(not)get credit flowing to business, look at the EVIL PUBLIC SECTOR WORKERS who are draining a billion or two from us.
April 15, 2010 at 7:24 pm
[…] NAMA and the Public Sector. What’s the connection? « Ireland after NAMA […]
April 17, 2010 at 10:17 pm
“There is no direct connection between the financial burden that the failings of bankers have imposed on the state on one hand, and the perceived failings of public servants on the other’
Huh?
Regulator
Central Bank
Dept. of Finance.
“Perceived failings”?
Don’t think so.
Course, they’ll all get their pensions……
April 19, 2010 at 12:07 pm
There is no connection. that is, other than the fact that banks were supposed to be under the control of public servants who totally failed in their duties to the tax payer and the general public.
They promulgated and practiced a policy of “light touch” or no touch regulation and that proved to be a 100% disaster. For which they should be sued by everyone effected.
They have no moral turpitude so of course they expect everybody else to continue to pay for their mistakes and pensions based as they are on their sense of their own importance. Never let impending state bankruptcy or facts get in the way of one’s sense of importance.
April 20, 2010 at 9:44 am
[…] Gray on Ireland After NAMA makes an important point -which I missed last week – when wondering why there has been so much bile […]
April 20, 2010 at 11:29 am
‘I believe that when the history of the present moment is written, the anger directed at the public sector will be understood as part of a wider pattern of social contention surrounding the transformation of social care and education from a vocation… to a set of modern professional services.’
Interesting point but the game needs to be raised considerably and that starts with a very big carving knife being applied to the sector as a whole.
It doesn’t help that we sometimes hear union representatives talk about the employers conspiracy to bring down wages as a whole. I recently listened to someone high up in the ASTI complain that we never hear politicians talk about raising corporation tax or ‘profit margins being reduced’.
As a young man who needs work, it’s not encouraging to hear our educators talk like that. We may as well tell international employers to stay the **** away and what then? I join the public service and take a smaller piece of a shrinking pie?
Perhaps I don’t understand how a leftist economic strategy would play out here but I don’t see how the state can be responsible for yet more people without wages going down anyway.
April 21, 2010 at 1:00 am
The history of the public sector is that, as a group they will support whatever faction is in government even if they totally disagree with their policies and find the policies to be stinkingly unjust. The line is they must implement the unjust policies as “it is our job and there is nothing we can do about it”. How convenient! I can think of the figure 6,000.000.
Was it churchill that said this was a country run by civil servants for civil servants. Well what a great job they have done. Only 150bn in debt so far.
These are the rules that public servants and their unions play by and they were written over 100 years ago. I would not elevate the argument to the ranks of psychology, sociology or philosophy or even theology and angels on heads of pins. The facts have not changed in over 100 years and through two world wars. This is what is in the mind of all civil and public servants.
A) Our jobs are guaranteed
B) Our Pensions are guaranteed
C) We remain Middle Class
D) We have ample opportunities for advancement within grades and departments
E) Our salaries are guaranteed
These were the conditions demanded in 1909 and nothing has changed since then accept maybe that shortly we face default on loans we cannot afford.
April 21, 2010 at 9:39 am
Unfortunately, I would disagree. The likely worst case scenario of sunk/irretrievable cost of NAMA-plus-bank bailout by 2020 is probably somewhere in the region of €25bn (about €13bn on NAMA, absolute worst case, and then factoring in some money on recapitalisation that we never see again).
The cost of the structural deficit over the same period – lost money that will also incur servicing costs in perpetuity – is likely to be €125bn in a good scenario, and in a worst case scenario is probably closer to €200bn.
I’m certainly not in favour of NAMA as an unnecessary gamble, but in the grander scheme of things, it is the distraction from the bigger worry of the deficifit – certainly not the other way around.
April 21, 2010 at 7:34 pm
@ Ronan L
Some confusion! i was thinking of six million jewish people and the excuses made by the perpetrators.
The cost of NAMA is going to be the 54bn paid out for 73bn of “assets” then we have the non performing loans that are already down to 40% of the first 15bn but which will be worse on subsequent transfers. And then as you point out the real cost is the sovereign debt costs. Plus the enormous social costs by way of unemployment, penury, emigration and division of society into have’s and have nothing’s. The full horror story will be revealed in due course when the public have got used to the idea of NAMA. The professions who caused NAMA are now intent on spinning pure gold out of it. They do not want the truth to come out at the beginning better to save that for later on when the public are used to NAMA and when they think it is a fait accompli.
Consider the reality of the market that NAMA will operate in. There will be very little credit, no appetite in banking for risk as they try to de-leverage and find new ways of making money which will be outside of Ireland. Any NAMA maneuvers are likely to increase the supply side of the equation even further.
The dirt that was in the system should have been left alone. Sure, banks would have went bust but the pieces would have been picked up by other financial institutions who would have stepped in if the price was right. Martin Wolf, had a piece in today’s, FT ( wednesday 21st) under the heading, “The challenge of halting the financial doomsday machine” Wolf asks, “can we afford our financial system?” and says the answer is a definite “No”.
By allowing banks to outgrow the economy the tax payer has been put on the hook by it’s own FF/Green government who seems to view all banks as being of “systemic” importance, while strangely putting the real economy on a funeral pyre and torching it. The real economy has become the shadow economy while the banks have become the “real” economy. A reversal of this philosophy is needed immediately for obvious reasons.
Worst of all, is the risk that the government will try to create another property bubble so they can justify NAMA, and not look so stupid for incinerating so much of tax payers money. This is the government plan and I would be afraid to say on this site just how far FF or FG/Labour will go to re-ignite that bubble. Suffice to say that NAMA is worst than the repartitioning of the country and will be the spark that starts the next social revolution in Ireland.
April 26, 2010 at 4:04 pm
[…] think it really matters. The opinion was hardly unique, nor separable from the amorphous glut of anti-public sector sentiment currently hanging pungently like a plume of volcanic ash clouding our mental horizons. The […]
June 25, 2010 at 6:24 pm
[…] figures for female government employment are 54 percent in Italy, 64 percent in Ireland, 60 percent in Australia and 64 percent in […]