Fine Gael should be tearing up the Croke Park deal
But the party lacks the bottle to tackle public pay and will opt to axe jobs instead, writes Marc Coleman
Published 27/02/2011 | 05:00
In his famous book, Decline and Fall of the Roman Empire, Edward Gibbon wrote about Rome in the third century. What he wrote could also be applied to what's happening right here, right now, in Ireland.
Friday was election day, and that's always a good day to bury bad news. In December's Budget there was the news that, while established older public servants would have their salaries protected, newer entrants to the civil service -- weaker, younger and more vulnerable frontline staff -- would suffer a 10 per cent cut.
On Friday the news got worse: while new entrants to frontline positions will still take that cut, those cuts won't apply to those entering the top positions.
Gibbon would have nodded sagely. He knew that when the relationship between those in power -- Caesars -- and those they rely on for protection and advice -- the Praetorian Guard -- becomes too cosy, the only way is down.
With €50bn of the bailout needed to fund public pay and pension liabilities -- mainly of existing staff -- and a further €100bn in future liabilities, the cost of the bank bailout, awful though it is, pales in comparison. But, unlike the banks, politicians depend utterly on the public service.
Our new emperor isn't to blame for this. But his pension entitlement as a former teacher is a symbol of an age- old problem. Despite only a few short years working as a teacher, Enda Kenny is entitled to a pension of €30,000 a year and a lump sum of €100,000, an entitlement he has honourably foregone. But the very existence of this entitlement shows how the mutual interest of politicians, public sector unions and senior civil servants has coalesced to bankrupt the Exchequer.
Just who are the Praetorians? Not the teachers, certain-
ly. Like the frontline troops, they do the real and hard work for modest pay.
No, the Praetorians are the troops with the cushy number of guarding the palace. Safe from the hardship of the frontier, they should earn less than the frontline troops. If anyone should take a 10 per cent pay cut, it is entrants to higher civil service positions where pay is way above EU norms. But because they protect the Caesars, the Praetorians are also close enough to stick a knife in. A file leaked here, a parliamentary question badly answered there, and a minister's career is over.
Gibbon understood the problem well. He explained how, flexing their muscles, the Praetorians terrified Caesar into pushing their pay up to twice that of frontline troops. And to increase their hold on Caesar, they greatly expanded their number. As a result, the number and quality of troops on the frontline fell, the barbarians broke through, and the rest is history.
To see how little things really change, now consider what is happening in Ireland.
As we have seen, new entrants into the Praetorian Guard will be exempted from cuts applying to frontline troops. Now let's look in detail at what these Praetorians earn. Despite cuts to their pay in December 2009, assistant secretaries (generals) earn between €127,796 and €146,191. And, just as in Gibbon's Rome, their numbers have expanded greatly -- 60 per cent since 1998. Higher principal officers (centurions) earn between €85,957 and €105,429. Their numbers are up 462 per cent on 1998. (By the way, the salaries of TDs are linked to their pay scale. More on that in a while.) Higher assistant principals (minor officers) earn between €67,913 and €84,295 and are up 339 per cent since 1998.
By now you've got the picture. And who better to prove it than that brilliant historian, Martin Mansergh. Last December he opposed cuts in politicians' pay by pointing out that politicians' pay was linked to senior civil service pay grades -- which were, in turn, protected by the Croke Park deal. The public sector's own pay data (from the Central Statistics Office) shows how, just like ancient Rome, the pay differential between frontline troops and Praetorians has grown: public pay is on average 47 per cent above private pay levels. Former Ictu General Secretary Peter Cassells has warned that full employment is impossible unless frontline troops with riskier jobs earn more than Praetorians.
So Fine Gael should be tearing up the Croke Park deal.
But it is scared of the Praetorians. It has, however, pointed out that "the only way to protect public service pay is to reduce staffing levels", and this is a start.
To save €1.2bn by 2014 via job cuts, tens of thousands will have to be dumped on to the dole, forcing households to cut back on food, clothing and heating. Apart from human misery, this will hurt domestic spending far more than the alternative policy of cutting public pay above the average industrial wage, a policy with a proportionately greater effect on import spending (cars and holidays).
The following frightening anecdote drives the point home further. Last October, a respected pensions professional told me how a prominent politician -- to whom he had complained about the transfer of €2bn in liabilities of public sector pensions funds (universities and Fas) to taxpayers -- reacted to his complaint with fury by saying: "You are attacking my pension!" The way this politician regarded this query as an "attack" on his pension speaks volumes about how Praetorians and Caesars depend on each other.
As well as Praetorians, there are the the enforcers. Caesars also depended on a plethora of propagandists and philosophers whose modern equivalents are the publicly funded think-tanks, quangos and so on. They have excellent salaries and pensions.
You will frequently hear these enforcers talking about how taxes are "too low". But the truth is clear: between 1982 and 1987 a Fine Gael/Labour coalition hiked taxes, only to see GNP grow on average by a mere 0.3 per cent. Between 1987 and 1992, a minority government with opposition backing achieved an average 3 per cent growth.
Fine Gael won this election because it understands that tax hikes have failed. It must now appoint a new Praetorian guard that will defend the interest of the people, rather that its own interest.
Marc Coleman chairs the National Forum, which will host a meeting with Ray MacSharry and Alan Dukes on what the Tallaght Strategy means for the new government, Royal College of Physicians, Dublin, Thursday, 6.30pm