Ireland : Public sector pay 48% higher than private sector in 2007

RTE report that the CSO have issued figures showing that public sector hourly earnings were 47.6% higher than in the private sector in 2007.

Do you think this gap is sustainable?

RTE report.

  • Rory Carr

    Certainly not. It is quite disgraceful that the private sector are getting away with paying such low wages to those workers who create the wealth which the indolent shareholders then cream off often investing their ill gotten gains overseas where they can get away with paying workers even less.

  • Mack

    Are you available for salary negotiations Rory?

    Ultimately the bulk of the gap will have to be made up that way, but that does require that public sector increases are no longer, erm, benchmarked to private sector pay increases (in particular the top paying private sector companies).

    Incidentally, despite a depression which is savaging private sector pay levels and forcing the government to hugely increase taxes on labour (why do socialists favour high income tax levels, by the way? It struck me recently this doesn’t make sense, surely they should favour taxing other things – like consumption or capital) public sector weekly rates increased 3.4% this year.

    http://www.rte.ie/business/2009/0629/cso.html

  • Scamallach

    The problem as well is that this is self perpetuating, i.e. educated people will continue to follow the money to the public sector.

    Mack, how does this ratio compare with other western economies? Even taking into account the large number of service industry employees employed in the private sector, I would always have guessed that private sector wages were higher??

  • Framer

    It’s a new heavily unionised Labour aristocracy supported by Militant Socialists.

    There will be tumbrils in the streets before this one is dislodged.

  • Mack, it might be helpful to link to the report itself.

    On your suggestion that public sector pay is ‘benchmarked’ to the private sector, the report says that public sector pay increases in the report period were lower than those in the private sector. And that the difference is mostly explained by differences in education levels, age of the employees and length of time in the job.

  • Mack

    Ciaran –

    A recent ESRI report suggested a 20% differential in pay once difference in education levels were accounted for. On page 30, you’ll still see that public sector salaries are significantly higher at each level of educational attainment (e.g. €27 for private sector degree holders vs €39 for public sector degree holders). Also bear in mind some of highest earners in the private sector are dynamic young salesmen and the like who often aren’t degree qualified.

    The idea that people should get paid more based on their age or the length of time on the job is nuts 😉 (I.e. a 56 year old demanding more money for doing the same job as a 26 year old, simply wouldn’t be hired in the private sector and would be first in line for the chop come any cut backs if already so employed).

  • Mack

    Although in all fairness, wrt the above comment the survey puts the median hourly rate in sales €11.20 per hour and an average of €14.08 – which strikes me as low – it looks like it either excludes commissions (or the survey period was a bad time for commissions, 2007 recession) or the Sales category excludes positions with higher earnings potential…

  • Mack

    By the way the private sector / public sector differential for Males with a degree is of the order of 44% (A €12 difference is 44% of €27), less, but still in the same ballpark as the overall differential. It’s very similar for females with degrees too..

  • Driftwood

    Why doesn’t the republic just reduce public sector pay by another 30%? By levies or otherwise. My guess is that they would all stay anyway, fearing survival (and actual real work) in the private sector.
    When you overturn a rock in to the sunlight, it’s Darwinian playground time.

  • Mack,

    Taxing consumption is the most regressive form of taxation, unless it is luxury goods. Everyone needs roughly the same amount of food, heating oil etc. But taxes on these hit the poor much much harder than the rich. This is why the left prefers income tax. Although we also believe in taxing capital too.

    As for the pay differential I suspect that a lot of this has to do with what Rory said in comment one. Having said that, there are people in the public sector in the Republic earning too much money. Politicians being the prime example.

  • Framer

    Garibaldy

    Then get a law passed making private sector employers employ at public sector rates and take the extra cash needed out of their ‘profits’ rather than put up prices.

    And prepare for the Ukraine in the 1930s.

  • Comrade Stalin

    Garibaldy,

    The public sector in general terms is very well paid in the south, and that is because the government has been weak in standing up to the public sector unions and facing down their unreasonable requests for remuneration. I do not mind people being paid a fair day’s wage but I think this is exceeded in the RoI. Especially for politicians.

    The issue of gold-plated pensions for public sector workers, paid for by raiding private sector pensions, is a very serious one in both the UK and Ireland and I think the days of generous public sector pensions are numbered.

  • Davros

    Yup, the question for a young person today is do you emigrate somewhere with positive population growth thus avoiding paying for public sector codgers to do nothing for a 1/3 of their lives or do you try and jump onto the last carriage of the final salary gravy train and hope they don’t cancel it?