We must cut the wages of friends in high places
At last, a bit of leadership from the Irish government, but from a most unexpected quarter.
It was two Fianna Fail backbenchers who responded to public fury about the decision to exempt more than 600 senior officials from the full public sector pay cuts, because they have already lost their performance bonuses. This may be the only pay issue which unites both private and public sector workers.
After a quarter century in office, Fianna Fail ministers have become so used to being inside the tent that they prefer the support of 620 fellow inhabitants to more than a million outside.
Not so their backbenchers — an unprecedented number of whom have reason to worry about their seats. Tipperary South TD Mattie McGrath was “totally disgusted” that he could not get anyone to second his motion against the bonus exemption at the parliamentary party meeting.
Dublin North TD Michael Kennedy went further — appearing on radio to argue the case. He then went on from that to criticise the work to rule by public sector workers in more convincing tones than either Mr Cowen, or even Mr Lenihan, has managed.
Not so sure about the vote winning there; but fair play to him.
It is all very strange. One would think, given the state of the opinion polls, the search would be intense for any popular measure which did not damage the public finances. There are few such on offer, but the emoluments of the people at the top of the administrative system is surely one.
But one sees the human difficulty. After all these years, ministers know most of these people personally. They owe a debt to many of them for dedicated work down the years. And the fact is that, however large their salaries may look, losing more than €20,000 a year without warning would cause real difficulties in many households.
Those at the top have another advantage: their numbers are so small that it makes no difference to the public finances how much they are paid. Nor does it make any difference to the savings how much they are cut.
In every other sense, the numbers are not that small. The elite — whose performance is so vital to the common wealth that they require bonuses on top of their hefty salaries — numbers more than 600. To take just two categories, we are asked to believe the work of 160 assistant secretaries in the civil service, and 124 senior HSE officials, is of such quality that they need to be rewarded with up to a fifth of their salary.
Still, even 620 such bonuses makes no direct difference to a €19bn deficit. The indirect effects are another matter. Allowing top salaries to bound after those of bankers, software managers, or whoever, was bound to lead to pay pressure further down.
There can be no doubt disallowing these bonuses for cuts will make it far more difficult to reconcile the bulk of staff to their fate. But there are deeper problems about the setting of top government salaries than the present political difficulties created by the financial crisis.
Even though the last review recommended reductions, its amended terms of reference still look like dangerous nonsense.
They not only continue to use private sector comparisons; they seek to maintain real disposable income — living standards — to |a level deemed appropriate for such people.
Public sector pay is not about comparisons or living standards, but about political choices. A country decides how much taxes it wishes to pay. That gives it the size of its public sector.
Within that, it must decide how much goes on transfers to citizens, how much for equipment and so on, and how much for pay. Having decided on the pay bill, |another choice must be made as |to the difference between top and bottom.
The second problem is the appalling cynicism of ministers and senior public servants which this bonus scheme illustrates. Every word said about the reasons for its introduction in 2002 was a barefaced lie. It was not about rewarding merit and excellence; it was about more pay, and lots of it.
It has now been scrapped, but for all the wrong reasons. To get any agreement on delivering the public service we deserve for €55bn a year, the bubble-era chasm between pay at the top and bottom of the Government sector needs to be reduced significantly. From the top.