what exactly does a 10% cut in standard of living mean?

NewDubliner

jimmmy wrote: »

As well as pay, do not forget holidays ....they contribute to standard of living. A 10% cut for a public servant I know will mean he gets 28 days instead of 31 days....for the equivalent private sector worker I know ( same age + qualifications etc ) working in a multinational company in Ireland it means getting 19 instead of 21 days ? lol

You're not comparing like with like. In the PS, you have have been working there quite a while to qualify for 31 days leave.

I'd say the 10% is a low estimate, intended to reassure people. Unless that is, it's 10% a year for the next 5 as we try to get back on terms with our competitors.

ixoy

NewDubliner wrote: »

You're not comparing like with like. In the PS, you have have been working there quite a while to qualify for 31 days leave.

In the civil service though it's quite easy to qualify for time-in-lieu. If you do a 7.5 hour day for 3 weeks, you have an extra day off which bumps it to about 36. That 7.5 hour day would be closer to the norm in the private sector (least according to CSO stats I read recently). You do have to use them within the month, so they're not as flexible as regular days off but it's still quite good.

I'd say the 10% is a low estimate, intended to reassure people. Unless that is, it's 10% a year for the next 5 as we try to get back on terms with our competitors.

I doubt we could sustain a 50% drop in the likes of income - that'd be far too crippling with the likes of mortgages, etc. Best guess is that the 10% was plucked a bit of thin air, much like most of his economic policies for the last while...

NewDubliner

ixoy wrote: »

In the civil service though it's quite easy to qualify for time-in-lieu. If you do a 7.5 hour day for 3 weeks, you have an extra day off which bumps it to about 36. That 7.5 hour day would be closer to the norm in the private sector (least according to CSO stats I read recently). You do have to use them within the month, so they're not as flexible as regular days off but it's still quite good.

It's a fact that has been used by some people to inflate public sector advantages. The flexible hours mean that people who work late to solve a problem, can use the time later when things are not so busy. There's no extra cost to the employer, a win-win.

It's never a good idea to compare numerical working hours as quality, not quantity is what really counts. Increase working hours & you get 'presentism' and bigger utiliy bills.

ixoy wrote: »

I doubt we could sustain a 50% drop in the likes of income - that'd be far too crippling with the likes of mortgages, etc. Best guess is that the 10% was plucked a bit of thin air, much like most of his economic policies for the last while...

The sad thing is that that's where we have to get, somehow. Maybe if consumers sit on their wallets long enough we can get prices down.

ParkRunner

If we are going back to 2002 it looks like we have a good 5 years of boom ahead Payrises, flashy cars, overpriced property, immigration, balanced budgets, industrial peace, private sector not giving a crap what the public sector get because they are rolling in it :P

A 10% cut in the standard of living = A 50% rise in the numbers going to mass as they try to cope with reality.

Hagar

Deleted User wrote: »

No it means going back to the lifestyle from the income we had in 2002 which was hardly poverty.
....
Sensationalism much.

There is abject poverty in Ireland. There are people living on a knife-edge from day to day. A 10% drop in living standard for some people means a curtailing of social or entertainment activities for other people it bites much deeper. The drop in disposable income for the more fortunate will lessen the amount of spare cash they have to give to the poor either directly or through donations to charities. The dramatically lessening tax-take is seriously affecting the State coffers. The State funding for the really poor/destitute/homeless has always been inadequate, in this climate it is not going to get any better and the number needing that help is growing. Ask someone from the St Vincent de Paul or the Simon Community for their take on the situation. I think you will be shocked.

Sensationalism? Not much.

ixoy

NewDubliner wrote: »

It's a fact that has been used by some people to inflate public sector advantages. The flexible hours mean that people who work late to solve a problem, can use the time later when things are not so busy. There's no extra cost to the employer, a win-win.

There's no extra loss either - outside of the retail/contracting sector, I'd imagine many private sector workers wouldn't get any return on their overtime, even as time in lieu (it was advertised as a perk for my job for example, and we can't build up the same amount of time).

The flexi-time is actually quite a good system and I think it's something that should be rolled out to many places. It's a nice balance between working longer hours with a good reward that doesn't unduly pressure the employer.

It's never a good idea to compare numerical working hours as quality, not quantity is what really counts. Increase working hours & you get 'presentism' and bigger utiliy bills.

Perfectly true and there'd be people who would clock up extra hours just to get the pay. I still think there's a happy medium and we could increase standard hours to 7.5 and work from there.

The sad thing is that that's where we have to get, somehow. Maybe if consumers sit on their wallets long enough we can get prices down.

50% seems excessive though - why do we have to get there? 20% I could see but has any economy actually gone through 50%? If it didn't happen elsewhere in the world (which it probably needs to do too), I can't see people having any desire to stick around when they can no longer afford any luxuries and are living hand-to-mouth.

NewDubliner

ixoy wrote: »

I can't see people having any desire to stick around when they can no longer afford any luxuries and are living hand-to-mouth.

Where will they go? That's the way it is in the countries we compete with.

bobbbb

NewDubliner wrote: »

Where will they go? That's the way it is in the countries we compete with.

But if like dear Mr Cowen thinks, it will take us 5 years to recover, and it takes other countries 2 years, i see people waving bye bye to Ireland in 2 years.

Liam Byrne

Surely your "standard of living" INCLUDES the house you live in, the amount of light and heat that you have, etc ?

So it's not just about "disposable income".

If they copped themselves on and negotiated a 10% drop in everyone's loans and mortgages (fair enough in my book, considering we've given the banks billions of OUR money) then they'd be on to something and people would accept that it wasn't just the ordinary Joe Punter that was being screwed.

But no - no caveats or pain required on the part of the FF buddies that we paid to bail out.....only required by us.

ixoy

bobbbb wrote: »

But if like dear Mr Cowen thinks, it will take us 5 years to recover, and it takes other countries 2 years, i see people waving bye bye to Ireland in 2 years.

That's what I was getting at. From anything I've read, it's going to be crap worldwide for 2 years but only when we look to Ireland do I see people talking about 5 years minimum.

Surely your "standard of living" INCLUDES the house you live in, the amount of light and heat that you have, etc ?

So it's not just about "disposable income".

Well yes but the idea would be you'd take a far bigger hit on your disposable income to ensure your necessities are looked after first - do you take a 10% hit on heat or a 25% hit on eating/going out instead? I know which I'd rather.

NewDubliner

bobbbb wrote: »

But if like dear Mr Cowen thinks, it will take us 5 years to recover, and it takes other countries 2 years, i see people waving bye bye to Ireland in 2 years.

Those who can, yes. These could be our most talented people or all those polite Poles who run our supermarkets.

I'd also say that the the perceived drop in living standard might vary according to people's present expectations.

The downside of all of this is that the uncertainty will create a negative consumer-spending spiral and people in non-essential businesses/services will get hit badly. It's as if the banks want to scare us all into leaving our money in our accounts, so they can use it.

Liam Byrne

ixoy wrote: »

That's what I was getting at. From anything I've read, it's going to be crap worldwide for 2 years but only when we look to Ireland do I see people talking about 5 years minimum.


Well yes but the idea would be you'd take a far bigger hit on your disposable income to ensure your necessities are looked after first - do you take a 10% hit on heat or a 25% hit on eating/going out instead? I know which I'd rather.

That's my point; saying a "10% cut" is sugar-coating it, because there's half of the necessities that you simply CAN'T take a 10% cut in.

And so, given that a loan / mortage represents maybe 40% of your income, and the Government has done nothing to improve the cost of mortgages, car loans, heat, gas, electricity, phones, groceries, transport etc (and in some cases has made them worse through increased VAT), there's maybe 70% of stuff that people on minimum or relatively average wages simply CAN'T take a hit on, leaving the so-called "10%" to hit the remaining 30%.....if you do the maths, that's a 30% or more decrease in the "luxuries" and the bits that make life living.

BUT if the Government DID specify that the bank bail-outs required the banks to give society something back, and negotiated a cut in recurring living costs and transport, then EVERYTHING could come down by 10%, and it would be a lot fairer, and would also make Ireland more competitive for visitors and tourists.

ardmacha

BUT if the Government DID specify that the bank bail-outs required the banks to give society something back, and negotiated a cut in recurring living costs and transport, then EVERYTHING could come down by 10%, and it would be a lot fairer, and would also make Ireland more competitive for visitors and tourists.

Petrol costs have come down. Public transport is subsidised, do you really expect the government to increase its subsidy so that it can become cheaper, at a time when the government revenue is only three quarters of its expenditure!!!

Similarly if you cut everyone's mortgage who pays for this? The taxpayer, the people who have been financially organised and who didn't buy overpriced houses?

It is desirable that wages come down and that prices come down but saying that the government should subsidise things or reduce taxes when they are borrowing 10% of GNP, and having problems getting the money, is crazy.

What the government might usefully try to do is to bear down on uncompetitive markets which makes prices so high here.

Hagar

Hagar wrote: »

There is abject poverty in Ireland. There are people living on a knife-edge from day to day. A 10% drop in living standard for some people means a curtailing of social or entertainment activities for other people it bites much deeper. The drop in disposable income for the more fortunate will lessen the amount of spare cash they have to give to the poor either directly or through donations to charities. The dramatically lessening tax-take is seriously affecting the State coffers. The State funding for the really poor/destitute/homeless has always been inadequate, in this climate it is not going to get any better and the number needing that help is growing. Ask someone from the St Vincent de Paul or the Simon Community for their take on the situation. I think you will be shocked.

Sensationalism? Not much.

Completely disagree.
By the way donations to st V de P are actually up despite the gloom.

You are exagerating.Go to West Africa and you'll see widespread abject poverty.Go to Ireland of 2002 [which is what is being asked it seems in terms of tax reduced income] and theres widespread affluence.

Theres no good living to be made on the €200 a week dole today for sure,but theres no need for the melodramatics about it either,I'm aware of plenty "kids" drinking half of it away at the weekends.
Some have it tough,most don't.
There were far less lidl's and aldi's in Ireland in '02 aswell-they've currently got a stone of spuds for 69c.

Liam Byrne

ardmacha wrote: »

Petrol costs have come down.

No thanks to FF. They added 10c to the cost AND increased VAT.

Like I said, they should have built-in the public interest to the bank rescue package - lower the cost of existing and new loans, so that everyone could benefit....

You're right that some people borrowed stupid money, and that's partly their own fault, but there's blame all round - Govt and banks too.

The_Minister

Liam Byrne wrote: »

No thanks to FF. They added 10c to the cost AND increased VAT.

Like I said, they should have built-in the public interest to the bank rescue package - lower the cost of existing and new loans, so that everyone could benefit.....

Except that that would lower the amount of money that the banks were taking in even more, putting them at greater risk, and probably requiring a larger capital injection...

thebman

Liam Byrne wrote: »

No thanks to FF. They added 10c to the cost AND increased VAT.

Like I said, they should have built-in the public interest to the bank rescue package - lower the cost of existing and new loans, so that everyone could benefit....

You're right that some people borrowed stupid money, and that's partly their own fault, but there's blame all round - Govt and banks too.

They did reduce electricity prices although they falsely inflated them to "promote competition" too.

We pay the highest line rental in the world which has to come down for business (more and more people are just ditching their landlines).

Darsad wrote: »

Well for the trio at the top Cowen , Coughlan & Lenihan and I suppose the rest of the Dail it simply means their standard of living wont change they will just have 10% less to add to their savings but for the rest of us it means real sacrafices.

Actually it means finding a way of adding another 10% to their expense account :P

Or getting more political donations or dig outs from "friends".

NewDubliner

Liam Byrne wrote: »

Like I said, they should have built-in the public interest to the bank rescue package - lower the cost of existing and new loans, so that everyone could benefit....

Only those who have loans.

Ad the last thing we need is for people with uncertain future prospects taking on loans.

egan007

It MEANS that 90% of the people are still spending exactly the same as they were last year.

Hagar

Source: St Vincent de Paul.

People living on social welfare spend a significant part of their income on the very basics of life (food, energy, education, health) which have levels of inflation way above CPI.

Mair&#233 wrote: »

“The people now losing their jobs and joining the 850,000 people who were already living in or on the very edge of poverty...”

Not my words, that's someone who knows what they are talking about.

Akrasia

Lu Tze wrote: »

Wages need to be cut first. You can not force down the cost of services and products unless they force down their cost base. Otherwise they will be selling at a loss until they are in a position to lower the wage costs of the staff

They should be done in tandem. Just as a central bank would devalue a currency in one swift move, we would need to re-adjust wages and prices in one concerted move. This would be an emergency action, necessary because all other mechanisms have been removed from us.

All prices, wages rents, outstanding loan amounts with irish banks etc could be reduced by x% immediately overnight with severe penalties for those who try and cheat the system.

joolsveer

thebman wrote: »

They did reduce electricity prices although they falsely inflated them to "promote competition" too.

My ESB bill has not reduced in fact it is higher than before. Is it a case of "live horse and you will get grass"?

Akrasia

ixoy wrote: »

Well yes but the idea would be you'd take a far bigger hit on your disposable income to ensure your necessities are looked after first - do you take a 10% hit on heat or a 25% hit on eating/going out instead? I know which I'd rather.

to wear an extra jumper and keep the heating off?

Hagar

Hagar wrote: »

Source: St Vincent de Paul.
People living on social welfare spend a significant part of their income on the very basics of life (food, energy, education, health) which have levels of inflation way above CPI. Quote:
Originally Posted by Mairéad Bushnell (President of SVdP)
“The people now losing their jobs and joining the 850,000 people who were already living in or on the very edge of poverty...”



Not my words, that's someone who knows what they are talking about.

Their donations are ahead of last year though-social conscience perhaps.
Also knowing the profile of some of the people they give their Xmas parcels to locally,I have a lot of doubts as to their definition of poverty.
I do not donate to them on account of that.

faceman

10% seems very low to me. I would expect a figure of somewhere in the region of 35%.

essentially though, if you want to quantify it in monetary terms, increases in direct and indirect taxes will result in a decrease in an individual's disposable income and have a knock on effect accordingly.

Liam Byrne

The_Minister wrote: »

Except that that would lower the amount of money that the banks were taking in even more, putting them at greater risk, and probably requiring a larger capital injection...

And remind me again, who's fault is that ? The banks themselves.

This isn't about what's "good for the banks"....we're only required to make sure they don't go under for OUR sake, not theirs.

Bailing them out should not be a one-way transaction. If we pay to help steady the bank, and then it gets steadied, we should get something in return. Simple as that.

The "larger capital injection" is what the banks would maybe like to see, but once it's steadied (not steady, steadied) then it's up to the banking "experts" to stop being like pension "experts", where you give them money and it disappears down a hole and they still give themselves bonuses for being the "best performing pension fund" or whatever self-congratulating rubbish they can massage the statistics into showing.

If they give US money, we pay it back....usually on an agreed schedule with interest, based on an ability to pay; if we're giving THEM money, there should be SOMETHING in return; at the moment the "thanks" we're getting is a ****load of bonuses for their "top" guys and a closed shop approach to new loans (or so I've heard from car dealer who says that 50% of people aren't thinking of buying and the other 50% can't get loans).

Are they being prudent ? Maybe.....but they've helped cripple the economy by offering higher loans which helped fuel the higher prices (quite simply if no-one could get a 300,000 mortgage then no-one would have charged it for a house), and they're partly responsible.

So if we bail them out then they should AT LEAST do something in return.....

Stopping paying millions in bonuses to people who don't deserve them - using OUR money, remember - and instead using that money to steady the market would be a start.

Of course, we shouldn't have directly "bailed them out" at all.....what SHOULD have happened in a free market is that they should have reclaimed land from developers who couldn't pay (as they would do to you or me)....the Government rescue package could/should have been to step in and buy that at a lower cost (the bank gets something rather then writing it off and getting nothing) and using it for a community project - green space, local park, football field, playground, etc - which would at least have give people - those with loans and those without - an improved living space in return.

Zynks

Liam Byrne wrote: »

Are they being prudent ? Maybe.....but they've helped cripple the economy by offering higher loans which helped fuel the higher prices (quite simply if no-one could get a 300,000 mortgage then no-one would have charged it for a house), and they're partly responsible.

So if we bail them out then they should AT LEAST do something in return.....

Do you go to your local off-license and give them stick every time you have a hangover?

thebman

Zynks wrote: »

Do you go to your local off-license and give them stick every time you have a hangover?

That isn't a valid analogy IMO.

There was a shortage of supply and banks were willing to give these mortgages so people that wanted houses had to pay that much as there were other people willing to pay that much.

The banks were moronically irresponsible and should be penalised but are so far up the crapper and necessary for our economy that they have not been. The people responsible in the banks should be axed at least.

I also believe people that did take these loans out were idiots if they couldn't afford them or were uncomfortable paying them just to get a house. Rent if you don't want to buy at the market price. However, people being stupid does not make it okay for the banks to be stupid.

joolsveer wrote: »

My ESB bill has not reduced in fact it is higher than before. Is it a case of "live horse and you will get grass"?

Mines cheaper. Used more units and it is still way cheaper than the previous bill.

otwb

Liam Byrne wrote: »

And remind me again, who's fault is that ? The banks themselves.

This isn't about what's "good for the banks"....we're only required to make sure they don't go under for OUR sake, not theirs.

Bailing them out should not be a one-way transaction. If we pay to help steady the bank, and then it gets steadied, we should get something in return. Simple as that.

The "larger capital injection" is what the banks would maybe like to see, but once it's steadied (not steady, steadied) then it's up to the banking "experts" to stop being like pension "experts", where you give them money and it disappears down a hole and they still give themselves bonuses for being the "best performing pension fund" or whatever self-congratulating rubbish they can massage the statistics into showing.

If they give US money, we pay it back....usually on an agreed schedule with interest, based on an ability to pay; if we're giving THEM money, there should be SOMETHING in return; at the moment the "thanks" we're getting is a ****load of bonuses for their "top" guys and a closed shop approach to new loans (or so I've heard from car dealer who says that 50% of people aren't thinking of buying and the other 50% can't get loans).

Are they being prudent ? Maybe.....but they've helped cripple the economy by offering higher loans which helped fuel the higher prices (quite simply if no-one could get a 300,000 mortgage then no-one would have charged it for a house), and they're partly responsible.

So if we bail them out then they should AT LEAST do something in return.....

Stopping paying millions in bonuses to people who don't deserve them - using OUR money, remember - and instead using that money to steady the market would be a start.

Of course, we shouldn't have directly "bailed them out" at all.....what SHOULD have happened in a free market is that they should have reclaimed land from developers who couldn't pay (as they would do to you or me)....the Government rescue package could/should have been to step in and buy that at a lower cost (the bank gets something rather then writing it off and getting nothing) and using it for a community project - green space, local park, football field, playground, etc - which would at least have give people - those with loans and those without - an improved living space in return.

Hmmm...and the fact that people were lying on mortgage application forms had nothing to do with it (adding bonus's into basic income, renting rooms that they didn't intend to rent....). 100% and higher mortgages were taken out...by people who wanted them, not by people who were forced to buy houses by men with large sticks. The holiday home in Bulgaria was a 'must have' as were the two and three holidays per year and the new car.

Everyone is to blame for the mess that we are in. The bankers practised good business and made money because we demanded higher credit levels. They should have watched their backs and slowed up on lending, but we, the public, got what we demanded, and not what was forced upon us.

ardmacha

If we pay to help steady the bank, and then it gets steadied, we should get something in return

From whom are we to get the return? The banks' shareholder's funds are pretty much zero at this point. So the only money the bank can use to reduce loans etc is coming from the government, which is having to borrow it. So you propose that the government should borrow money, to be repaid by all taxpayers, and give it to particular individuals to pay off their loans. People (correctly) say that FF are irresponsible but they even they are not as irresponsible as this! The people who took out excessive loans are responsible for the present state of this country as much as the bankers.