Sunday 24 March 2019

Bonuses not just for Christmas - or for semi-State workers

The problem isn't that good staff in semi-States get bonuses, but that the rest of us don't and are overtaxed

When the topic of performance-related bonuses comes up with new recruitment or staff reviews, the word “discretionary” is very much the operative word
When the topic of performance-related bonuses comes up with new recruitment or staff reviews, the word “discretionary” is very much the operative word

Marc Coleman

You better not shout. You better not cry. You better not pout. I'm telling you why. Because when Christmas comes around again in about 12 month's time, Santa Claus could be coming to town in the form of a nice bonus payment. That is, if you work in some semi-state companies at least.

For many, news last week that boys and girls in some semi-state firms got a visit from Santa was hard to take. In particular, news that managers at An Post received €3,000 in their Christmas stockings, while National Treasury Management Agency (NTMA) staff picked up a collective €76,500.

The Irish Water saga has made us suspect that Santa was quaffing too much mulled wine while making up last year's list. And for those who have opened their Christmas stockings year after year only to see a lump of coal, it seems that those who do all the shouting and pouting get all the great pressies.

But should we take out our frustration on all semi-State workers? To be sure, the Irish Water saga seems to be a classic case of a bad Santa. But that cannot be said of all or even most semi-State companies. The problem is less that staff at NTMA and An Post are receiving bonuses and more that the rest of us are not getting bonuses. Or (enough) tax cuts. The NTMA and An Post are two well-run organisations. But for the NTMA, we may have had to endure a second bailout with all the trauma that would have involved for taxpayers. Instead, we exited the bailout a year ago and in no small part due to the NTMA.

Add to that the fact that quick and clever footwork by its staff saved us hundreds of millions in debt repayments and pre-funded our State well in advance of what could - depending on how events in Greece pan out - be a very a difficult year for small borrowing nations like Ireland. Considering all that, is the €76,500 shared between NTMA staff so unreasonable?

We could, of course, go back to a situation where bodies like the NTMA did not save us millions and we did not pay any bonuses. But that would be a losing proposition, both for taxpayers and NTMA staff. The NTMA has had the smarts to incentivise good staff performance, which we have all benefited from. Compared with the alternative - spending hundreds of millions on one-size-fits-all pay increments - a transparent system of bonuses (ie NTMA-style not Irish Water-style) is a good deal for us all.

For front-line staff - teachers, Gardai, nurses and some other public workers - pay increments motivate workers where effort is more collective and where workers have dedicated themselves for life to a career of public service and foregone more lucrative careers as a result. For more professional staff types, however, pay increments are becoming harder to justify. But we still have to reward good performers. What about An Post? This week it was rapped on the knuckles for paying managers €3,000 each. But its latest annual report shows a group profit of €5.7m, compared to a group loss of €17.5m the year before. As people abandon sending letters and cards for emails and texts and as the Government continues to oblige An Post to deliver mail where no private sector operator would go, that performance isn't to be sniffed at.

An Post's latest annual report also shows its revenue rising, despite a fall in mail volume. Partly because, for the first time in seven years, the company upped the price of a stamp to 68 cent. But when you consider that the EU average price of a stamp is 71 cent that price isn't so unreasonable.

But even in loss-making entities - and sometimes especially in loss-making entities - bonuses can be justified. During the boom, we had a myth that said a profitable company should pay its management bonuses. We soon discovered that many boom-time profits occurred not because of good management, but in spite of bad management, as a credit surge made even the worst of managers look good. The obverse also applies: many loss-making companies in recent years - some semi-States included - made losses for economic reasons that were beyond managerial control and, but for good management, handling a tough situation would have made even bigger losses or gone under. This is why the government should stand back and - provided they do so transparently - allow semi-state companies to reward their staff.

Of course, the media has a right to demand that the reasons for giving bonuses and the amounts involved should always be published. But the media also has a responsibility to accept that some work harder than others or are just better at their jobs, and provided no favouritism or cronyism is involved, a fair reward for a fair effort should not be the cause of misplaced begrudgery.

And those complaining that "taxpayer resources" are being squandered should be clear what they are saying. Taxpayer resources are deployed on a far wider range of beneficiaries than the semi-state sector. The food sector, for instance, is one where consumer prices are kept relatively high due to vast resources effectively propping up prices with a far greater impact on hard-pressed consumers than semi-state bonuses.

Of course, the bonus culture has been abused. The perception that bonuses were being paid indiscriminately to Irish Water staff was a key cause of public anger. But Irish people are intrinsically fair. They want good staff rewarded. When tens of thousands of people marched in the streets this year, it wasn't because bonuses were paid per se. It was because the public were not convinced they were being paid fairly. Likewise the fact that up to 2,000 workers were hired as shoo-ins - without a competitive interview process - was always likely to stir public anger at a time of still high unemployment. Meritocracy is the new watch word for the Irish public sector. We have been shouting for it for years. And it could save us hundreds of millions in pay increments in the future. And greatly improve fairness and performance in the public sector. But from now on, bonuses must be for grafters, and shouters and pouters should be left with coal and carrots.

Sunday Independent

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