Five Irish parties avoid the unpalatable truth

Eoghan Harris does his best to separate the Labour Party from its Connellian heritage and argues that Connelly himself would be less than impressed with Eamon Gilmore’s one way bet on the public sector interest. That of course is a moot point, but he notes that the roots of the problem lie with Fianna Fail’s bizarre benchmarking deals of 2002:

Let’s start with pay. Peter Cassells, the respected former leader of the ICTU, says the Irish economy cannot recover until average public sector pay falls below that of the private sector. By that stern standard, last week’s CSO figures make for grim reading.

Contrary to practice all over Europe, public sector earnings here are higher than private sector earnings, and have been so since the first round of public sector benchmarking in 2002. Both the CSO and the ESRI put the gap at about 20 per cent, after variations in age and qualifications are taken into account.

The gap is not going away. In the 12 months to the end of June, private sector hourly earnings amounted to €19.32 while public sector hourly earnings stood at €28.81. That’s a gap of nearly €10. As well as being wrong it is also why we are not recovering.

And:

Connolly, like Marx, believed that every political party is the party of a class. But uniquely, the minority Irish public sector managerial class maintains not just one party but five parties to protect it!

That is why last week all five parties conspired to cover up that there was no need for heavy taxes or cuts in health if they were prepared to take on the public sector unions by cutting either public sector pay or pensions or numbers.

Last week, in the lead-up to the Budget, all five parties failed to follow up on Ed Walsh’s statement that if we benchmarked public pay against Northern Ireland we could save €15bn. It’s easier to take on the sick than the public sector unions.

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  • Wilde Rover

    So, the developers, bankers and their gombeen politicians wreck the country and the public sector is now the bad guy? There is a point to be made about public sector pay but this seems to be stretching it to incredulity.

  • Neil

    benchmarked public pay against Northern Ireland we could save €15bn

    Yeah but you can pick up a 2 bedroom gaffe in Belfast for about 450 quid. You wouldn’t get a parking space in Dublin for that.

    Not comparing like with like. For instance the approx 20 euro hourly wage would yield an annual wage of over 38k. As an average, taking into account the differences in currency it’s nearly twice the average wage in NI, and that’s before you look at the average near 30 euro public sector wage bill.

  • Ronan McDonald

    “In the 12 months to the end of June, private sector hourly earnings amounted to €19.32 while public sector hourly earnings stood at €28.81. That’s a gap of nearly €10.”

    Comparing earnings between the private and public sectors like this isn’t at all helpful. The public sector will always earn more on average, because it contains many more professionals with degrees (teachers, doctors, etc), and very few unskilled workers compared to the private sector. I don’t know why Eoghan Harris feels able to claim that the gap is “contrary to practice all over Europe”.

  • bigchiefally

    The fact that bankers, developers, politicians and the ordinary punters who helped them have made a mess of the economy is undisputed. This though doesnt stop the disparity between public and private sector pay and benefits from being both true and also another major cause of the economic problems Ireland, and to a lesser extent NI are having.

    Very few problems have one cause and one solution. The deficit in the south is not one of these problems so it is entirely right to talk about one of the problems and a solution for it in isolation.

  • Harris’s tendentious gropings fail at first touch of a headline: If Connolly came back he wouldn’t be a Labour voter.

    If he (and other commenters here) do not understand the difference from and the distance between Wobbly Connolly and 21st century social democracy, heaven help all of us.

    Beyond that, are we really expected believe Sindie indulges in ideological debate of any quality?

  • Itwas SammyMcNally whatdoneit

    If the boy Connolly were asked his opinion he would probably remark that he wouldnt have started from here and that would be fair enough as he has probably been spinning in and shouting from his grave that the country was heading for disaster long before Anglo and Co went mammaries up.

    Other more eartlhy voices had been telling the Warriors of Destiny/Corruption (and FG ) for some time but they were simply being ridiculed by the government and main oppostion and of course the media (including the Independent) as they collected revenue from property supplelments that had outgrown the phone book.

    But that does not mean that the the Plain People of Ireland are not clearly paying themselves too much and they still need to take their economic medicine in spite of the factthat the mad men who ran Anglo etc and the dumb/corrupt government/regulators are largely responsible for their plight.

    Neil,

    if the ‘market’ were allowed to find its own level i.e. the 2,800 ghost estates put up for sale – it would be a lot cheaper to work in Dublin.

  • Greenflag

    The celebrated anthropologist Clifford Geertz half jokingly suggested that all states/governments can be sorted into 4 types :

    Pluralist: In which the State is seen by it’s people as having moral legitimacy . (the UK, ROI, Germany, Sweden etc)

    Populist : In which government is viewed as an expression of the people’s will. ( Nazi Germany , Peron’s Argentina , Mussolini’s Italy , Ceacescu’s Romania )

    ‘Great Beast’: In which the rulers power depends on using force to keep the populace or a large part of it cowed . (East Germany , North Korea, Stalinist USSR, etc)

    ‘Great Fraud’ :

    In which the established elite uses smoke and mirrors to convince the people of it’s (the ruling party) inherent authority, high ethical standards and concern for all the people of the ‘nation’ and not just the few at the top .

    Every State is a mix of all or some of the above ‘sorts’ but I would think that the ‘Great Fraud ‘ type has been very much in vogue this past decade from the USA to ROI to Greece etc :(.

  • pippakin

    The south does have serious problems and I will be surprised if we are not made to pay a high price, including a gradual decrease in public sector employment and wages. I doubt there will be much debate, just vacancies unfilled and unions agreeing to lower pay increases. It will work because all public sector employees know the alternative is the private sector and that, if anyone could find work, is much worse.

    Labour offer a realistic alternative to the big two and it is not unreasonable to hope they will put all workers rights first and introduce real penalties to ensure such a disaster is never allowed to happen again.

    There is something unhealthy about this crash. It is so clean! No dirty hands, no one held accountable and no, or hardly any, real mud slinging.

  • Neil @ 12:02 pm & Itwas SammyMcNally whatdoneit & 1:21 pm:

    Last week, I had to sit beside a good lady at a formal dinner: she too bemoaned the devastation uncontrolled property development did to Ireland. Her views on NAMA and ghost estates were declared in a singularly unladylike manner. Whether unloading those properties willy-nilly onto the open market is a good idea, …

    Meanwhile, it’s Monday, so I’m catching up with the back-pages and supplements of the weekend heavies. And here, in the Economist, is an attempt to compare world house prices (page 90).

    This suggests Irish prices (down at the bottom of the column) are down 17% on a year earlier, but still 13.2% overvalued. If that makes hairs rise on the back of one’s neck, Britain (up 3% over the year) is cardiac-arresting: 32% overvalued.

    Text comment:
    The British housing sector’s talent for defying gravity may be on the wane. The pace of annual appreciation has slowed over the summer. British housing is still overvalued — outright falls may loom.

    Without rushing to the shelves in the garret, I doubt that was a topic Jim even registered, except for that bit about: Abolish the Slums, the poverty of the men, and the sweating of the women and girls, and you will be making war upon vice in Dublin.

    Hmm: no. Still can’t make it appropriate. Doubtless the ineffable Harris would do better.

  • pippakin @ 1:48 pm:

    Probably all fair comment.

    I suspect the last sentence might need adjusting in a few months time. I don’t see the pain not having consequences.

    He was a right old swine, pantophobic, but Chesterton often got it right:

    We hear men speaking for us of new laws strong and sweet,
    Yet is there no man speaketh as we speak in the street.
    It may be we shall rise the last as Frenchmen rose the first,
    Our wrath come after Russia’s wrath and our wrath be the worst.
    It may be we are meant to mark with our riot and our rest
    God’s scorn for all men governing. It may be beer is best.
    But we are the people of England; and we have not spoken yet.
    Smile at us, pay us, pass us. But do not quite forget.

    I reckon that’s why they’ve installed new lamp-posts around Redfellow Hovel: twice the height, so the gallows arm is safely out of reach.

  • Greenflag

    Now here’s a Scotsman who explains exactly why the UK’s budget probably won’t work and indeed why the Republic’s won’t either and he uses one of my favourite expressions 🙂

    ‘the fallacy of composition ‘

    The insert video at the bottom is about one of the best 5 minute lessons in common sense economics that helps explain this crisis . And his ‘solution’ is at least credible .
    Not that George Hoover Osborne or Mr Cameron will take notice .

    Our Government needs to tell the EU /IMF that balancing the books by 2014 is economically destructive and that 2020 would make a lot more sense -ditto for the UK .

    http://www.npr.org/templates/story/story.php?storyId=130791197

  • pippakin

    Malcolm Redfellow

    I have a ladder…

  • Itwas SammyMcNally whatdoneit

    MR,

    “but still 13.2% overvalued”

    Probably more like 50% based on sales and declining employment. Government should introduce some protection for negative equity for those forced to move and let the market correct itself with a controlled release of property.

    The developers (those who own more than 1 house) are still being protected from their mistakes – rental prices have not fallen nearly far enough – better to allow Dublin to become on of the most affordable cities in Europe and the only one with no one on the housing waiting list.

    …the banks would see the value of their assets decline but also see a steep increase in mortgage business.

  • It’s tedious to see contemporary socio-political criticisms being shoe-horned into the dramatis personae of some long dead figure as if it somehow conferred some authority to them.
    So Bertie’s favourtie senator opens up on the public service? What’s the next step in this jig, FF announcing that public opinion accepts that cuts must be made to the public service wages bill (indeed, don’t Eoghan Harris and James Connolly both agree on this point)?

    Palatable or not (Connolly can no longer comment on these issues), a number of areas of expenditure are likely to be re-examined. I’d expect a flat-rate water charge, plus (at least) means-testing (and perhaps a re-organisation) of child benefit along with a further drop in welfare payments. There will also be tax increases, although actual job cuts in the public service seem unlikely (there was a decline of 2.5% in numbers between 2009 and 2010 due to non-filling of vacancies, presumably there will be further drops in 2010-11 anyway).

    The real big question is will the government have the political gumption (and moral courage) to tackle those on pensions? The public pay bill rose from 13.6 billion to 15.1 billion from 2005 to 2010 (i.e. by 10.8%) and dropped in the last two years. The pensions bill rose from 1.35 billion to 2.235 billion (i.e. 65.6%) over the same period, with the largest increases in the last two years. Decreases of any kind were not passed on with various government figures citing vague legalities over there ‘being an expectation’ that rates would stay the same. Given that the soft targets of taxes and stealth taxes have been, effectively, the under 40s, the real challenge in the budget is to reverse some of the increases in pensions for higher public service grades (and one must presume they are at least over 50, if not 60, benefitting from community weighting in health insurance and car insurance, free travel etc, plus they probably don’t owe much in the way of mortgages, if at all). Even a return to 2008 levels of expenditure would knock half a billion off the public bill. But will FF and the Greens manage it, or Labour, of FG?? Probably not.

  • Greenflag

    ‘But do not quite forget.’

    The spirit of Wat Tyler lives 😉

  • Dewi

    Australia 63.2% overvalued…and it’s not as if they ain’t got a bit of space….

  • Greenflag

    Back in the eh ‘good ‘ old days of the mid 1980’s our Finance Minister’s pater and then Minister was able to make the excuse for high unemployment and out of control public sector spending with the ‘excuse’ that after all we were only a small island and shure we could’nt be expected to create jobs for everybody blah blah blah. There were simply too many of us . At the time some 250,000 young Irish left and probably less than half that number ever bothered to return .

    Now where can they go ? Merthyr Tydvil ? Those with high tech skills can emigrate to advantage perhaps but for most they will be competing in a world economy dragging itself into a worldwide depression because somebody has to pay for the banks ‘greed and stupidity’ because the banks certainly won’t 🙁

    To them that hath it shall be given and to them that hath not -even that which they haven’t got will be taken from them twice over !

  • Itwas SammyMcNally whatdoneit @ 2:32 pm:

    Sorry: should have read that one more carefully.

    You are essentially on the right lines with your account. However, to be fair for once, isn’t that what is being proposed? Michael Finneran (for slow learners: RoI Housing Minister) is out there kicking butts of local authorities and housing associations to adopt, complete and rent the “ghost estates” as social housing. Way to go, Mikey!

    Alas! The graphic of the ghost estates (click on http://ghostestates.com/main.php?g2_view=map.ShowMap) shows how far he has to go.

  • Itwas SammyMcNally whatdoneit

    Malcom,

    Good map – hope there will be more releasing on to the market than there will be knocking down.

  • Munsterview

    Some chance!

  • Munsterview

    I get the UK Country Life weekly and most property is in the one to the three and a half million pound range. These properties seem to be moving along smartly, no great fall off in advertising and many major auctioneering sales companies listing regular pages of dozens of sold properties as proof of their success.

    While the housing market is acknowledged at 30% over value by a few David Williams types, there seems to be little general acknowledgement of the extent of the problem, much less talk of a ‘soft landing’. Seems the same crazy optimism as here in the South that the rules do not apply and that in some way the UK is different.

    There is a very farmilar ring to all of that for anyone on this Island, seems the other bigger Island will have to learn the hard way too. !

  • pippakin

    MV

    Oh dear your bias is showing again….

    The UK housing problem is likely to be much shorter and smaller than our catastrophic situation because they have a real housing shortage and we have almost more houses than people. An exaggeration I know but no more so than yours.

    Country Life??? I would hardly look there for a realistic picture of UK house prices. Ireland too has its prized possessions problem is not so long ago the average price of a terraced house in Dublin rivalled those on offer in Country Life. Another problem is the houses on sale are showing the same prices as they did a couple of years ago. For the same houses!

    Unrealistic all round. Try Rightmove.co.uk for British Property prices and Daft.ie for Irish. Again not likely to get a true picture but better by far than Country Life!

  • Greenflag

    MV ,

    99.5% of Britons do not buy or live in houses advertised in Country Life . London has had several booms and busts in property since the 1960’s . I’d heed pippakin’s recommendations . I suspect he’s right also about the UK ‘housing problem’ being less than ours although NI will probably be hit harder than the rest of the UK .

  • pippakin

    Greenflag

    I think the north is suffering from much the same twofold problem as the south. over priced houses and far too many of them.

    UK house prices are overpriced but I think in patches. The housing shortage is genuine and will help feed the recovery.

    The best thing that could happen in Ireland is they get rid of some of those ‘ghost estates’, the ones in the middle of nowhere with no infrastructure and take over the others as council houses.

    A more realistic approach to house sales would help as well. £250,000 for an ordinary house that’s been on the market for two years or more is just plain silly. Do what every shop does start talking ‘Huge Reductions’ in other words real selling not patronising lies.

  • Munsterview

    Pip,

    I never said or implied that Country life dealt with the average market, it do however cater for the stockbroker belt and shire tories. Any wobbles in the financial/property market are reflected in the One Million + market there.

    Our madness was reflected by the fact that hardly any Irish ‘Big House’ were offered for sale in this publication in recent years, those in the bottom two thirds of the market were on average twice the price of their UK counterparts.

    Even still as the Irish Times weekly European comparison examples show, it is possible to get what would be regarded as a ‘Big House’ in most of the Continent whatever of the UK for the asking priceprise of a four med in an upper middle class area in Dublin of a family six bed in the same area in Galway, Limerick or Cork.

    I fail to see where there was any ‘bias’ on my part in what I posted, I merely reported a what seemed to be a trend in a certain market segment that because it is also so well keyed in to the financial sector, is usually among the first to reflect trends.

    That current trend seems to indicate that the property pricing problems are currently being ignored and like here some years back it is a case of ‘motor on James’ regardless!

  • pippakin

    MV

    Apologies if I misjudged you but Country Life would only cater for those at the top end of the ‘stockbroker’ belt.

    By and large the houses on sale in Country Life do not drop prices easily either in the UK, here or actually anywhere else. It’s the same reason that when you look at the US market, going through hell at the moment, you will still find the up market remains up market.

    Country Life almost reflects a by gone age and there is a market for that, mostly I imagine from the wannabes and if onlys. Tell me is Lady Muck still announcing her engagement to Lord Crap in there. I would buy it but I have to feed the cats…

  • Greenflag

    pippakin,

    While I agree generally that prices have to come down we should bear in mind they ought never have gone up to the extent they did in the first place . A modest 3 or 4 bedroom should never cost more than 3 or 4 times average annual salary/wage in a country like Ireland . Understandable that in some locations in Dublin /Cork/Limerick/Galway it might be a little more .

    While what the Minister is attempting to do is admirable I’d prefer they could establish a fair market price for some of these ghost estates and turn them into ‘rent to buy’ council houses thus making them accessible to those on lower incomes .

    The ‘oversupply’ of housing is supposed to be some 17% at present . Under normal market circumstances that should be about 6 % so the ‘real ‘ oversupply is closer to 10% .

    What we need to bear in mind is that if there were a drastic say halving of house prices this would in itself be enough to push the economy into further recession if not tip the scales to depression. The rationale is that there are more than enough people in negative equity right now and to increase that number dramatically would push consumer spending down even more -which along with the upcoming budget cuts could slow down recovery for a decade or more .

    Our public sector pay scales have just like in the mid 1980’s become too much of a burden on the private sector so again with the above danger in mind they will have to reined in /reduced over a number of years . Otherwise many of our public sector servants can look forward to their children and grandchildren taking the boat / jet to somewhere else to make a future .

  • pippakin

    Greenflag

    i have heard the 50% drop before. I hope it is not that bad, surely if the government take on some of the empty properties, and the rent to buy scheme sounds like a good idea, that will help steady the market. If they can regenerate the first time buyers and push the banks to lend that will help too.

    Public sector wages will have to adjust but I hope slowly over time. RTE is talking severe cuts tonight. I hope they are exaggerating.

  • Gerard

    Eoghan Harris: ‘I still retain a strong sense of how his (James Connolly) mind worked’. Whatever we might say about this particular party animal we certainly can’t say he lacks self esteem.

  • Munsterview

    And we can take his word for it…….. if anyone is an expert in this particular area and can talk, or should I say bombast from personal experience, Harris can !