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Reverse wage-round increases that benefit senior public servants more than others

The pension levy represents a huge missed opportunity. If what we need is an economy-wide wage cut, then that is what should have been delivered. One option would be to reverse the wage increases agreed under recent pay rounds, and I can see a number of political advantages to this.

First, since those pay rounds disproportionately benefited senior public servants such as myself, reversing them would not only lower overall wage levels, but narrow income gaps within the public sector as well. Second, wages would decline, not just in the public sector, but in sheltered private sector companies such as the ESB.

This would clearly be fairer, as well as being what is required economically. Third, while such a policy would reduce the public sector pay bill, this could be presented by Government as a beneficial side effect of a policy that was required to maintain employment. In this way we could have avoided the extraordinarily unpleasant, unnecessary and dangerous scapegoating of public sector workers. Finally, such a policy would have had the advantage of being honest and transparent.

In an essay describing the lessons to be drawn from the successful Swedish fiscal consolidation of the 1990s, Jens Henriksson wrote: "A consolidation programme has to be designed as a comprehensive package. An ad hoc hodge-podge of measures will only have a limited chance of success. Presenting the consolidation measures in one package makes it clear to all interest groups that they are not the only ones being asked to make sacrifices.

"The idea is to signal that you are not partisan and that the budget deficit is a general problem that everyone should participate in solving. As a politician you can never explain why you need to cut pensions alone. But if, at the same time, you cut child benefit and unemployment insurance and raise income tax for the richest, you are on safe ground. The idea is to not single out the losers."

Seen in this light, it is clear just how inept the Government's handling of our crisis has been to date.

I do not hear Ireland's trade union leaders saying that under no circumstances will they accept a lowering of their members' living standards. I do hear them saying that they resent public sector workers being singled out; and (more worryingly) that they are opposed to an attempt to simulate devaluation by cutting wages. However, their objection there is that while wage cuts only hurt workers, devaluations hurt everyone. Again, it is being singled out that bothers them.

Surely there is a political deal to be struck here. We do need to lower the cost of labour in order to save jobs. That does not mean that workers should bear a disproportionate share of the burden when it comes to reducing the ballooning budget deficit. We can't afford a government that long fingers crucial decisions by subcontracting them to commissions: get the politics wrong, and the economic consequences will be disastrous. The time for comprehensive action is now.

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