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How can private sector grow when it can't compete with wages like this?

By David Vance

Published 12/11/2015

David Vance
David Vance

Most politicians, economists and business people agree Northern Ireland desperately needs to rebalance its economy by encouraging greater growth in the private sector, thus creating more jobs and bringing greater prosperity for all.

However, discussions on how to achieve this outcome tend to ignore the elephant in the room - the bloated public sector.

Despite the hysterical rhetoric from public sector trade unions, the public sector here has never had it so good.

In 2014, public sector workers in Northern Ireland were earning a staggering 40% more than those employed in the private sector.

Women in the public sector earn 68% more than their private sector counterparts and for men the gap is 33%.

To put it another way, public sector labour costs now account for almost 60% of public expenditure in Northern Ireland. That's Soviet levels of state dominance.

This bloat is manifest in all sorts of areas. It's not just local council bosses who are now relishing six-figure salaries.

Nearly 100 staff at Queen's University are in receipt of £100,000-plus.

The number of six-figure salaries has increased to 87 - up from 81 the previous year. Nineteen earn £150,000-plus.

The top earner - vice-chancellor Patrick Johnston - earns £249,000.

The PSNI has 65 officers on £100,000-plus salaries and is able to provide final packages of almost £200,000 in one case.

NHS budgets in Northern Ireland have never been under such pressure, but that has not restrained the health trusts paying hundreds of senior salaries from £155,000 to a whopping £250,000-plus.

The wealth-creating private sector cannot conceivably hope to compete with the salary levels afforded to those who work for the state, never mind the holidays, the pensions and the tenure of employment.

That's the reason why so many of our brightest young people leave Northern Ireland to seek careers elsewhere, or choose the easy option and enter the gilded halls of the public sector.

With this dominant state sector, there is little scope for the private sector to flourish and business organisations here know that - hence their drive for lower corporation tax.

There is little political will to change things. Truth be told, those at Stormont are also prime beneficiaries of the financial largesse of the state and so oppose dealing with its essential dysfunctionalism.

To create a more prosperous society, we must confront the bloated public sector and cut it down to size.

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