Notes on the Front

In a previous post, I suggested Turlough O’Sullivan suffered from an unfortunate quirk – he couldn’t bring himself to saying the words ‘low-paid’ with inserting the rider ‘so-called’. I proposed the appropriate therapy – read the facts. But a reader of this blog, Yvonne, has diagnosed another malady Turlough suffers from – innumeracy.

Prior to re-entering the previously collapsed pay talks, Turlough was giving us the benefit of his computations.

"The first target must be a rigorous appraisal of current expenditure. Given that public sector pay accounts for 50 per cent of all current expenditure, there is no room for further pay increases in the coming year."

Wow, 50 percent. Half of all Government’s day-to-day expenditure – on health, education, transport, housing, etc., etc. – goes on the wages of public sector workers. This is quite a figure and, if true, would make me re-think my entire Weltanschauung. But before I take the dramatic of joining Fine Gael and start bashing foreigners, I thought I might just look up the numbers for myself.

Let’s look at the budgetary tables produced by the Department of Finance. According the Department of Finance’s budgetary tables, current expenditure in 2008 is expected to come in at €44.8 billion. The Exchequer Pay and Pensions Bill comes in at €18.8 billion. Now, I’ve run this through my own calculator a number of times and you know what it comes out as? 42.0 percent (if you want to get really precise, it comes in 41.99921 percent).

So, 50 percent and 42 percent: now I know we all have a tendency to adjust figures a bit up or a bit down to make our point more dramatically. If something comes in at 48.9 percent you’re entitled to say ‘nearly half’. But 42 percent is a long ways from half.

But Turlough’s malady stretches to more than just 8 percent. In a previous post I pointed out that these public sector pay bill figures are headline, or gross, figures. However, the Exchequer gets back some of this expenditure in income tax, PRSI, pension, VAT, excise, etc. It’s hard to estimate this figure but let’s take a conservative stab at it.

Let’s say the Exchequer recoups 15 percent in all those taxes and levies and charges. If so, then the public sector pay bill falls back 35.6 percent. Now that’s a long way from half.

But Turlough’s malady gets worse. He used the total pay and pension bill as a proportion of current expenditure. But public sector employees also work on the capital budget – even in a minimal administrative manner. If we are going to compare like with like, we would have to subtract the time-sheets of public sector workers who work on capital expenditure. If this were done, the 35.6 percent shrinks even further.

So, from being ’50 percent of current expenditure’, we’re now looking at a figure that is closer to a third. If Turlough’s computations are an example of how corporate Ireland does their company books, then no wonder we’re having problems with our competitiveness.

Of course, it may not be a malady or a defect in his calculator. Turlough’s twisting of these pay figures has little to do with his concern for Exchequer finances. That’s not his job. His brief is to argue for a pay freeze and real pay cuts in the private sector. Therefore, going after public sector pay is tactical.

He knows he has the ear of the state’s biggest employer – the Government. And because our one-size-fits-all centralised wage negotiation mechanically links public sector pay with the private sector – to hammer public sector pay is a neat way to keep the private sector at bay. That’s the game plan. And now that we know this, we should expose it.

Starting with Turlough’s malady and his inability to read very simple accounts.