Early Retirements in Public Sector – Absolute madness

Public sector retirement echoes Celtic Tiger madness

STEPHEN COLLINS

INSIDE POLITICS: THE CAPACITY of the Irish political system to fixate
on the trivial while vitally important issues go without serious
debate has been illustrated once again in recent days.

As Enda Kenny is denounced by the Opposition for stating the
blindingly obvious in Davos, a deep flaw at the heart of his
Government’s approach to the economic crisis continues to pass with
little adverse comment.

When it was elected a year ago, the Fine Gael/Labour Coalition
proclaimed that its mission was to create jobs, yet it is now pursuing
a strategy that will destroy thousands of vital public service jobs in
the months ahead.

The incentivised retirement of doctors, nurses, teachers and other
public servants, on very generous pensions, is a folly of enormous
proportions but there has been no serious questioning of the
underlying policy.

There might be some justification for it if the vacancies created by
the exodus were going to be filled by newly qualified young people but
that is not going to happen. The whole point of the exercise is to
reduce the number of public service jobs for good.

Given that the financial benefit to the exchequer from the process
will be relatively small, when the cost of pensions and lump-sum
payments for those who are leaving are factored in, the question
arises as to why the policy is being pursued at all.

There is an obvious incentive for public servants to retire early with
pensions and tax-free lump sums calculated on the basis of the
salaries paid at the height of the boom. Why the Government is
providing such an incentive when the country is in the throes of an
unemployment crisis defies rational explanation.

Tens of thousands of young people leaving college are being forced to
emigrate due to lack of employment prospects, while their parents’
generation is being offered financial sweeteners to retire early on
gilt-edged pensions the State simply cannot afford.

This is a continuation of the madness that prevailed during the Celtic
Tiger years and very far from the reforming outlook promised by the
Coalition when it took office a year ago. It is all of a piece with
the mentality that regards the Croke Park agreement as sacrosanct
regardless of the consequences for society as a whole.

Contrast the philosophy of Labour Party leader Eamon Gilmore, who has
stated time and time again that the Croke Park agreement will be
honoured come what may, with that of the British Labour leader, Ed
Miliband, who has had the courage to say that if it comes to a choice
between cutting jobs or pay in the public service he will opt for pay
cuts.

There is no doubt that the size of the Irish public service pay bill
is a problem for the exchequer but this is not because we have too
many public servants. The Public Sector Trends Report 2011, published
by the Institute of Public Administration, found that “numbers
employed in the public sector, as a percentage of total employment,
are not excessive by European standards”. However, it also found that
“the compensation of top and middle managers in central government is
towards the higher end of European norms”.

Rather than confront that issue, the Government has chosen to follow
the path of its predecessor and appease vested interests in the public
service by paying people to go rather than tackling the cost of pay
and pensions.

Even if it wanted to face up to the issue of pay in the public
service, the Government would face the difficulty that it has lost the
moral high ground through the way it has dealt with pay in the
political system.

Enda Kenny began well by cutting his taoiseach’s salary to €200,000
and applying proportional cuts to Ministers. However, the publication
of figures detailing the extraordinary pension entitlements of retired
office holders took some of the gloss off that decision.

Even more significantly, the huge salaries paid to some of the
Government’s advisers undermined the earlier good work. While the
Coalition may not legally be able to reduce existing pension
entitlements to former ministers, the salaries paid to its own
political advisers are directly under its control.

That Minister for Public Expenditure and Reform Brendan Howlin could
make an argument for paying his own adviser a salary of €133,000
showed just how out of touch with reality he and some of his
colleagues are.

There is no reason why any ministerial adviser should be paid more
than a TD’s salary of €92,672. That figure should have been
established from the very beginning of the Coalition’s term as the
maximum pay for an adviser. To be fair, most of the Government’s
advisers are paid less than that, but a number do have salaries of
over €100,000, with two earning €168,000. Political advisers do
valuable work but there is no justification for the taxpayer having to
fund such lavish salaries.

As for the Taoiseach’s comments in Davos, the controversy is a storm
in a teacup. Kenny’s reference to the Celtic Tiger years as “a system
that spawned greed to a point where it just went out of control
completely with a spectacular crash” was perfectly apt.

If he is to be faulted, it should be for the general absolution he
gave to the Irish people in his television address before the budget
suggesting that nobody need take any responsibility for the disaster.
Contrived controversies over so-called gaffes helped to obscure what
was happening during the boom. And it seems they are doing the same
now.