Tuesday 16 July 2019

Don't let the unions divide us with fat cat fairy tales

With the State on its knees, the last thing we need is to have workers at each other's throats, writes Brendan O'Connor

Easy street: A mass demonstration took place in Dublin city yesterday, organised by the ICTU, in response to the pension levy being imposed on public sector workers.
Easy street: A mass demonstration took place in Dublin city yesterday, organised by the ICTU, in response to the pension levy being imposed on public sector workers.

In these difficult times, people are demanding comfort, and there is nothing more comforting than reducing the complexity of the credit crunch world to old-fashioned good and evil. The black-and-white certainties of Hans Christian Andersen are the moral equivalent of mashed potato, and so we have wilfully swallowed the nursery food, the adult fairy tale that is the story of the bad bankers.

The story goes roughly like this: bankers, led by Sean FitzPatrick, who is an evil count, are all greedy crooks who screwed the country while we slept, like Sleeping Beauty. They were aided and abetted in this by the developer hobgoblins that live in tents in Galway where they rule over their slaves -- the tribe of Fianna Fail.

These bad, bad people got together and ruined everything, but the ones to suffer are the public sector workers who are entirely innocent of everything and who are being asked to pay the price for the greed of the bankers and the developers and Fianna Fail.

It's an appealing, simplistic little picture: fat cats bad; workers and little people good. And, to a certain extent, it is true. But of course, life is a little bit more complicated than that, and as much as a witch-hunt on bankers and developers and capitalists is a nice way of letting off steam, we shouldn't take our eye off what's actually been going on this week either.

The real story this week was that the public sector was slowly mobilising itself to hold the country to ransom; to demand that Ireland essentially beggar itself to keep them in the style they are accustomed to.

Last week, the public sector began a process of attempting to bully the rest of us into borrowing more and more money to give them what are, in real terms, pay rises (deflation means that constant pay equates to pay rises in real terms).

Public-sector unions say their members are entitled to these pay rises, which will come out of the public purse, despite the fact that they are already paid considerably more than their colleagues in the private sector.

Representatives of public-sector workers are threatening the rest of us, based on fairly bogus arguments. Their central claim appears to be that they, and they alone, are being asked to pay for an economic crisis that they didn't even cause. It is true that public-sector workers did not cause the economic crisis. But neither did the rest of us.

In fact, if the public-sector union leaders were to look around, they would discover that there is an economic crisis everywhere. Countries that had no property bubbles, or no Celtic Tigers, are all suffering. There is, in fact, a very severe global recession going on. It is not unique to this country.

The public sector unions should also note that the vast majority of private sector workers are not fat- cat bankers. In fact, for all the talk of low-paid public sector workers, there is actually a greater proportion of low-paid workers in the private sector. We don't see their stories being trotted out on Prime Time with the regularity with which we see the sob stories of special-needs teaching assistants, who are paid a pittance. But they are there.

And there are far more of them in the private sector than there are in the public sector. And these low-paid private sector workers didn't cause the economic crisis either, and they are paying for it, too.

Which brings us to the other big lie on which public sector union bosses base their argument. They have consistently argued that their workers have been singled out as scapegoats, that they alone are being asked to suffer, and to pay for the recession, and that they are somehow being victimised in a way that no one else is.

This is probably the biggest lie of all. Of the 2,000 or so Irish people who have lost their jobs every week for the last year, virtually none of them was a public sector worker.

Private sector workers who have kept their jobs have, in the main, seen pay cuts and severe reductions in the value of their pensions, if indeed they have pensions at all.

The objective truth, quite simply, is that if anyone has been victimised by this recession, it is the private sector.

In general, the objective truth is this: two of the main aims of benchmarking were to underpin Ireland's competitiveness and to ensure equity between public and private sector workers. We now know that public sector workers were already earning a premium over private sector workers before benchmarking.

Then, in a secretive process that was never justified to the taxpayer, the gap between the private sector workers and better-paid public sector workers was widened. The deal was supposed to be that public-sector workers would now be paid like private sector workers, but they would also work like private sector workers.

There is very little evidence of these practices ever coming into the public sector. In fact, as we speak, after several committees and reports, they are still trying to figure out how to get the public sector to work more like the rest of us do.

And while wages are dropping, and working conditions are getting harder right across the private sector -- by necessity it should be said -- the public sector are vigorously resisting any interference with their feather bed. They want it every way. And, more unbelievably, they are self-righteously marching around town about it.

So benchmarking's aim of equity between public and private sector workers has not happened.

Economist Ronan Lyons, who has done some work on this area, demonstrates, using CSO figures, that the average public sector worker, at 49 grand plus, actually now earns 30 per cent more than the average private sector worker, at 37 grand plus.

He also shows that the gap between the two has steadily grown over the past decade. In fact, he shows that public sector pay is five years ahead of private sector pay. It took the average private sector worker until 2008 to earn as much as the average public sector worker was earning in 2003. And let's not forget that what public sector workers are being asked to endure now is not strictly speaking a pay cut. They are actually being asked to pay more towards their pension.

Finance Minister Brian Lenihan clarified the public sector/private sector pension issue a bit this week with some cold, hard facts: The total cost of a state pension for a public sector worker hired after 2004 is over 26 per cent of his gross pay. That worker currently pays 4.8 per cent of this cost. Most civil servants pay about five per cent of their salaries towards their gilt-edged pensions and their enormous retirement lump sums. Less than half of private sector workers have any pension from their company. So much for equity.

As for the secretive benchmarking process's aim of underpinning Ireland's competitiveness, clearly that's gone by the wayside, too.

Again, a few simple, objective facts: There is no sector in this country that is going to offer another domestically generated boom. Therefore, the only way this country can start earning again is through some form of exporting.

To do this we need to become more competitive. Without the option of a currency devaluation, the only way we can do this is by cutting costs, which means, among other things, cutting wages.

This is quite simply the only way Ireland is going to get back in the game. Most people in the private sector have now accepted this. The country is also facing bankruptcy, and in order to balance the books, needs, among other things, to cut costs, or there is a very real danger our economy is actually going to fail.

Against both these national imperatives -- to become competitive again and thus secure some kind of future, and to keep our sovereign finances solvent -- the public sector reaction to the pension levy is disastrous. It is serving to destroy our competitiveness and could actually destroy the whole economy.

No one wants a civil war between public and private sector workers at this point. This is one of those times in our history when we all need to pull together.

Unfortunately, in Ireland, these are the very times when the split can be the first thing on the agenda.

The last thing we need to be doing now, and the last thing the world needs to see us doing, is engaging in some kind of grubby squabble with each other -- "Look at the Irish. Their economy is going down the toilet and they've all taken to the streets. It's a third world country there now."

One of the most disturbing symbols being sent around the world right now must be that of the gardai out protesting. Instead of policing the protests outside Leinster House, the cops are now participating in them.

There have even been suggestions that the gardai at Dublin airport are operating a work-to-rule in terms of delaying passengers to question them and examine their passports.

Gardai have denied this is happening, but passengers suggest otherwise.

If true, it means that gardai are now using their state- sanctioned powers as a form of protest. That's a pretty serious matter and, again, it smacks a bit of the third world.

There is no question that some bankers, builders and politicians in this country have behaved badly and have helped to get us into the mess we are in. But this is no reason why everyone should start behaving badly.

Public sector unions are now behaving selfishly, dishonestly and irresponsibly. And if they keep up their antics and their threats, they will find that sympathy from the rest of us -- who are not fat cats, who did not cause the downturn, and who are suffering a damn sight more than they are through all this -- will wear thin very quickly.

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