Social partnership could have left Irish workers paying more tax than would otherwise have been the case because the process boosted public service pay, a leading economist said yesterday. Barry O'Halloran reports.
Mr Jim O'Leary, lecturer in economics, National University of Ireland, Maynooth, told the Chartered Institute of Personnel Development (CIPD) annual conference yesterday that, as a result of social partnership, the average public service worker is paid more than 13 per cent more than their private sector counterpart.
Mr O'Leary, who resigned from the benchmarking body that awarded the public sector a pay increase valued at €2 billion, told the audience that international comparisons of public and private sector pay showed that, when taking account of variables such as age, qualification, status and other factors, public sector workers were better paid than their equivalent in private industry.
He pointed out that the experience in other countries had shown that the gap narrowed between the two groups in economies that were growing rapidly.
However, he said that this did not appear to be the case in Ireland.
He said that research he and two colleagues carried out showed that public service workers were paid a premium over their private sector counterparts in 1994, just as the Irish economy was set to enter a period of rapid growth.
"We found that in 2001, the latest year for which we have done an analysis, the average public sector worker had a premium of 13 per cent," he said.
"All things being equal, a public sector worker of the same age, experience and qualifications earned 13 per cent more than their private sector counterpart, at a time when public sector pay was supposed to be lower than in the private sector.
"The premium that we found in 2001 was not significantly different from the premium that we found for 1994. Partnership may have increased the rate of growth in public sector pay. So, far from increasing the scope for tax cuts, partnership may actually have reduced the scope for tax cuts, so the cuts were lower than they otherwise might have been."
Mr O'Leary argued that social partnership had failed in other ways to live up to expectations. He produced figures to show that between 1991 and 2002, pay in industrial manufacturing exceeded the norms laid down in the national pay agreements that anchored the partnership process in eight of those 12 years.
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