Wednesday 16 January 2019

David McWilliams: Teachers need to learn hard lessons about pay

DID you ever have a teacher who was compassionate to his or her students? Did you have a teacher who took so much interest in individual pupils that they'd take the time to worry about whether the student was good enough for honours or pass papers? This was done with the welfare of the pupil in mind. Sometimes a pupil struggled with the complexities of an honours paper and just couldn't get it. The teacher who advised that pupil to drop down wasn't being harsh but was being fair and honest. Nothing is worse than irrational expectations which are subsequently dashed.

I have to 'fess up. I have a soft spot for teachers. I am from a family of teachers on one side. Both my mother and one of my sisters are teachers, as are my uncles and aunts. Further back, there are teachers dotted around all over the place, so I am genetically pro-teacher. I also remember the teachers who influenced me years ago. These people made a huge impression on me and changed the way I looked at the world.

So it is with a certain amount of familial trepidation that I write this piece. However, it must be said loudly -- particularly because sometimes teachers aren't the best listeners.

Sensible teachers are being led up the garden path by their union leaders and their expectations will be dashed, leading to anger.

I heard the INTO national conference on the radio yesterday. Did you? If you did, you would have heard a union leadership who are living in cloud cuckooland. On the radio, I heard fighting talk about the Croke Park Agreement and how it is sacrosanct.

In normal times, few would disagree that teachers should get their dues. They should be well paid and well resourced. In fact, resources in primary should be increased, over all other levels of education, because we know that the more resources that are thrown at young children, the greater the outcome, in terms of kids from poor backgrounds getting a better education and a better 'leg-up' in life.

But from the point of view of salaries and pay rates, it seems that the idea that our country is bankrupt has evaded the teachers' union leaders.

Teachers are not being singled out, nor are they being picked on. There just isn't the cash out there.

It is very obvious that what is going on right now in Ireland is a titanic battle for the last of the troika money. It is the scrap for the last of the resources. But the cake is shrinking. Just witness the fall in industrial production, houses prices and credit aggregates in recent weeks. This means that everyone's share will shrink with it, particularly if you are paid from a public purse which is getting smaller and smaller.

The story of the next few years will be one of wages falling relative to profits throughout the country. This is the natural process of economics in a credit crunch and the teachers are likely to suffer as a result.

Have a look at the accompanying chart because it explains one of the most important developments in the economy right now. It measures the ratio of profits to wages.

If a fight between profits and wages sounds Marxist, that's because it is. Sometimes the best place to start in economics is with Marx. It might not be the best place to end up, but Marx is a good starting point.

According to Marx, there is capital and there is labour and they are in constant battle with each other. The return to labour is wages and the return to capital is profit. As one goes up, the other must go down.

The chart shows the return to labour and capital going back 14 years. Contrary to popular rhetoric, Ireland was a great place to be a worker in the boom, at least in terms of the return to labour. In contrast, it was a dreadful place to invest, in terms of the return to investment, profits.

In every year from 2002 to 2009, the ratio of wages to profits in the economy split in favour of wages. A full 10pc of total Irish income switched from profits to wages. This is a big swing.

It was one of the complaints you heard in the boom from small businesses, like bars and restaurants, that they couldn't get workers and when they got them, they were so expensive that profit margins collapsed.

As unemployment fell, wages went up for the individual and obviously the general wage bill did too. This is what is supposed to happen. As most of us gain our income from wages, the object of all economies should be higher wages.

Because what's the alternative? Lower wages? A low-wage objective is hardly the way to run a society.

Many people, unfortunately, reacted to this increase in wages by taking on more and more debts and therefore their wage increases and employment opportunities were matched with more debt.

NOW that the economy has turned, the natural tendency is for those big trends we saw in the boom to be reversed completely. As capital and credit are scarce, the return to capital will rise. So profits will rise in the years ahead in Ireland.

In contrast, the trend that is beginning to emerge in wages will become more and more evident. The boom process will be reversed and the Marxist analysis about who gets what will run it course.

This will also mean, as profits rise, that more and more people will try to set up businesses because you will make much more by taking risks now relative to looking for an employed position.

It has other ramifications too.

But for the Croke Park Agreement, the writing is on the wall. The State can't afford it. Never mind all the spin we are seeing and hearing right now from the likes of the NTMA or the Department of Finance. There will be no going back to the markets next year. The Spanish and Italian bond markets are getting hammered. There is no way in the world that anyone is going to lend to Ireland, unless we offer a realistic way out of this and stop pretending that national wage deals signed in 2010 have any realistic hope of being paid.

It strikes me that the union bosses are leading their members up a garden path if they keep telling them that the commitments entered into in the Croke Park deal can be met. This can only lead to disappointment. And there are few things more irresponsible than false hope.

Look at this from the context of a teacher who has to consider an ambitious student. Mammy wants him to do an honours paper in the Leaving Cert. But you, the teacher, know he's just not up to it and would be better off dropping to a pass and focusing on the subjects that he is good at.

What do you do? Do you tell him and save him the disappointment in August? Or do you raise his hopes, hopes that you know can never be fulfilled? It's your choice.

The union bosses have the same choice.

www.davidmcwillaims.ie

Irish Independent

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