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Brendan Keenan: Leo's 'Gdansk macabre' only shows how we're tripping up on reform

TYPICAL. You wait for weeks for a report to hop on to and four come along at once -- even if one smartly did a U-turn and disappeared.



They all had different destination blinds but, in their various ways, they illustrated the complications beneath the economic and financial crisis.

The disappeared was, of course, the report on the ESRI (Economic and Social Research Institute) website on the costs of going to work versus staying at home. One chooses one's words carefully, because it was not an "ESRI report".

Nothing unusual in that. There are lots of working papers from the ESRI which, to the chagrin of the institute, the media likes to shorten to "ESRI report". But this one, it is claimed, was not even put on the website by the ESRI; although it undoubtedly took it off.

It is a pity that the row got in the way of the content. It does seem surprising that the cost of going to work had not before been factored in to comparisons with social welfare. The key question is not the size of these costs, or even the non-cash benefits which come with social welfare (which the ESRI has measured), but the basis on which payment rates are decided.

And not just social welfare. The same applies to public sector pay. The things not measured in pay, or open to different interpretations, dwarf those for social welfare benefits.

Pension benefits, allowances and, incredibly, the guaranteed "increment" rises which are still being paid, never counted in national wage agreements which in theory treated public and private workers the same.

The Great Recession makes the practicalities even worse. It is easy to advance a theory for a small, open trading economy. Pay rises in the private exporting sector should be the benchmark by which total public sector emoluments and social welfare benefits were set.

Like Mahatma Gandhi's description of Christianity, the only trouble with benchmarking is that it never was tried. When the answer which came up was found to be wanting, they tore up the rule book and shredded the files.

The theory is fine; the practicalities would be horrendous. Yet the issue of public/private shares in the economy, which has been

'The EU Commission, of all people, were the ones expressing most concern about the direction of events -- or should that be lack of direction?'

central to every financial crisis since the foundation of the State, has not gone away. Indeed, it reappeared in those other reports, in the shape of our old friend the Croke Park agreement.

Oh yes, I almost forgot the eccentric-looking vehicle that hove into view behind the lumbering reports from the IMF, EU Commission and Croke Park Implementation Body. This was Leo Varadkar's 'Gdansk macabre', where he said there might have to be compulsory public sector redundancies, even if Croke Park meets its targets.

That is not the Government's position. Likewise, the view of the Civil and Public Services Union that it is time to reverse some public sector pay cuts because everything is going so well under Croke Park is not exactly the trade union view. But like so much else, it suggests that, underneath, little has changed in the processes which helped bring us to the present sorry state.

The EU Commission, of all people, were the ones expressing most concern about the direction of events -- or should that be lack of direction? It is not clear exactly what they had in mind when they spoke of the need for burdens to be shared equally, although one wonders what the Labour Party makes of such comments from Brussels.

Two obvious candidates are income and impact. The old question as to whether a 10 per cent cut for someone earning €200,000 is the same as 10 per cent for someone earning €20,000 resurfaces for pay cuts, as it once surfaced for tax cuts.

The commission was more specific about the risk to public services. If these get worse because of staff shortages, so as to preserve pay rates, who will be the main victims? The first answer may be seen in the pressures on the public health service as those who can no longer afford private insurance throw themselves on its mercies.

The fundamental questions are not asked or, if they are asked by Leo Varadkar or Prof Richard Tol, the response is panic, not attempts at answers. One fundamental question is whether public spending as a whole, public sector pay, and social welfare rates, are compatible with an economy which, we now know, is not better than the eighth richest in the EU.

As I say, even if one thinks the answer is that they are not, it is extraordinarily difficult to know what to do about it. But doing what has been done so far will not be enough. The EU and IMF are delicately hinting -- and presumably being stronger in private -- that the 2015 targets are not going to be met. Austerity may not be working, but reform has yet to be tried.

Sunday Indo Business