Wednesday 16 April 2014

Marc Coleman: Government must stop pandering to the unions and start listening to the people

'We must tirelessly repeat truth because we continually repeat errors." Once again the Croke Park deal is on the table. Once again commentators groan at having to analyse and comment on it. But as the wise Goethe said, the truth must be repeated as long as error persists and if commentators sometimes give the appearance of hamsters treading on a wheel, that is only because their job is to shadow the movements and follies of others.

And the Croke Park deal is a folly. And a failed folly. Enda Kenny has let the cat out of the bag: with a further €1bn to be cut in public pay and pensions, the deal has failed to achieve anything other than token savings. But the failure goes much deeper than this.

Unemployment figures released by the OECD last week show that Irish unemployment is now double the OECD average. And that we are in a club of Portugal, Italy, Greece and Spain – countries where between one in three and one in two of all young people is without work.

This correlates with another finding, by the ECB, that these five nations are the only countries in the eurozone with a significantly positive gap between average public and average private pay. So even if we had no fiscal crisis – if the recession had just increased unemployment – we would have to act on Croke Park regardless. That is because our wage levels are too high to sustain full employment and because, as CSO data shows, public sector average pay being 47 per cent above private pay (only Portugal and Greece are similar in this respect), public pay must give first.

In the work that made him most famous, Goethe described a pact of evil between Dr Faust and the devil. Retaining Portuguese and Greek public/private pay differentials while our young lie idle shows that the Croke Park deal is and always was a Faustian one.

On Monday RTE finally "debated" the issue but, excepting Patricia Callan, no one had the guts to call the deal for what it was: an affront to taxpayers forced on us at virtual gunpoint (the threat of strike action). One panellist even meekly described the absence of strikes as a positive aspect of the deal. But, as we know on this island, appeasing bullies is never positive.

ESRI research was also cited that pay differentials exist to account for "education and qualifications". But just as too many commentators overestimate the impact of public sector strike action on our economy, they also greatly overestimate the relevance of education and qualifications that are, in fact, highly dispensable. To consumers of public services, the competence and delivery matters far more than the number of university degrees.

The indirect but huge contribution the Croke Park deal makes to keeping youth unemployment chronically high – by keeping wages and taxes too high – wasn't discussed on Monday. But at least the deal's direct impact in costing 30,000 jobs in the last three years was.

To paraphrase one guest on Frontline, it is better to have 10 people earning €40,000 than four people earning €100,000. For as long as trade union bosses insist on paying salaries like up to €83,000 for local authority arts officers, €106,000 for chief librarians and €145,000 for professors, we are preventing ourselves from hiring far more needed and lower-paid frontline workers.

Right now a chief librarian in a local authority earns five times what a graduate nurse does. Pat Kenny might have talked about this, but didn't. Ludicrous assertions – that questioning Croke Park is dividing public and private sector workers and that cutting middle and top level public pay "takes money out of the economy" – also went unchallenged.

The real divide in Ireland is caused by the Croke Park deal itself, a deal which forces an insecure majority to protect a secure minority. And the alternative to pay cuts – tax cuts on insecure private sector workers, or job losses – have a far more devastating impact on economic demand.

But then as one of the most protected parts of the public sector – even after cuts, RTE staff earn multiples of their counterparts' salaries in the private sector – it may be unrealistic to expect it to really challenge the Croke Park deal.

On one point, however, trade unions are correct: there should be no further job cuts, voluntary or involuntary. They are also half right to point out that public pay has already been cut. What they omit to point out is that, despite these cuts, levels of public pay remain high by any comparison. So while the 2002 benchmarking exercise was rightly discredited for lack of transparency, a new fair and transparent exercise could yield positive results.

By choosing a weighted average of eurozone public pay levels and adjusting for cost of living, pay and equivalent pensions above some reasonable threshold could be steered to a permanent anchor that will allay fears of future cuts. Furthermore, by identifying this anchor and steering towards it over three years, public servants can be given years to do what we in the private sector are given only minutes to do: adjust to pay cuts.

Cutting top pay will also achieve something trade unionists should be supportive of: great equity in the public pay gap.

As Richard Boyle's 2011 study shows, top level pay in our public sector is 7.7 times greater than bottom level pay. In Scandinavia the gap is 3.8. What trade unionist could seriously object to emulating Scandinavian pay equity in our public sector?

But the key point is that fewer highly paid jobs mean more modestly paid ones. As Goethe said: "The rich want exquisite wine but the people want more wine." Trade unions may want to preserve exquisitely paid jobs. But the people want more jobs. And it is time, finally, for the Government to listen to the people and to give them what they want.

Marc Coleman presents 'Coleman at Large' each Tuesday and Wednesday from 10pm on Newstalk 106-108pm; follow @marcpcoleman on Twitter

Sunday Independent

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