Public sector retirement echoes Celtic Tiger madness

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.