Sunday 18 August 2019

Public sector staff 'wildly rich in terms of pensions'

Ibec CEO Danny McCoy. Photo: Colin O’Riordan
Ibec CEO Danny McCoy. Photo: Colin O’Riordan

Anne-Marie Walsh

The chief executive of the main employer group has said that public servants are "wildly rich" compared with their counterparts in the private sector, in terms of their pensions.

Danny McCoy, of Ibec, has said that the value of pensions and job security will have to be central when the Government makes a decision to give further increases on top of those due under the Lansdowne Road Agreement.

But he said it would be "unrealistic and naive" to think public servants would not get a pay rise in talks with the Government. He also said the Government should not commit to fully restoring all the pay cuts suffered during the recession. A further €1.4bn is outstanding.

"It would be unrealistic and naive to think there won't be a pay increase, but the question will be what scale it's at for the economy and if its representative of the true value of the pension and so on," he said.

He said that although in general, public sector workers were on modest salaries, they were "wildly rich" when taking into consideration their pensions.

Public sector pensions are generally calculated as half of salary with full service - which is rarely the case with the private sector.

"There is a perception that they're all on big salaries, but that's not right. So teachers are on €60,000 and if they get half of that, they've €30,000 a year, but it's the fact that it (the pension) got escalation," he said. "So, it's not as if they're wildly rich, but they are wildly rich relative to the others who didn't go down that route at the age of 25."

He said there was a perception that someone on a €25,000 pension was not rich, given that those on the dole get around €13,000 a year. "It doesn't seem spectacular, but each of those have to have a €1m pension pot to have that," he added. He said pensions were explosively expensive and the cost of a pension like that for the workforce would be trillions of euro.

Mr McCoy said it was reasonable to hold talks on a deal to follow the Lansdowne Road Agreement early, as the economy had performed far better than the Government predicted.

Read more: Warning that public sector wage rows could drive up costs for Irish companies

"However, just because resources are generated doesn't mean that the first people who have a dibs on everything is public sector workers."

He said the private sector has a huge amount of demands, including improvements in public infrastructure and tax cuts.

"This is where the Government needs to show leadership," he said. "The public sector is not designed for the public sector workforce. It's designed for everybody in society."

He said that public sector pay should be determined by a centralised pay agreement every two years, so there would not be the "appalling vista" of recent weeks when unions were "leap-frogging" in the wake of a €50m pay deal for gardaí.

He said if the private sector was paying 2pc to workers and the Government was paying 0.5pc in tax cuts as it did in the last Budget, that was a 2.5pc disposable income increase for the average worker - although not every worker was getting it.

"Arguably, what would be wrong with a situation where the private sector paid 1.5pc, a half came from tax cuts and the Government took the other half from the employers and said 'this is for public infrastructure'?

"Because at the moment, we're not doing the public infrastructure because of the fiscal rules. Ireland is in the throes of a private affluence, public squalor crisis."

At the same time, he said the population was surging and there were now nearly 4.9 million people living in Ireland.

"I suppose that goes to the heart of the pay dynamics, is that what gains a person has from getting a pay rise if they can't access public infrastructure, be that roads, schools, hospitals, or housing?" he said.

Irish Independent

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