For those interested in the Public / Private sector wage debate

Long Onion

I found this article to be succinct, balanced and clear. I was going to add it to one of the other threads but they have become bogged down in the silo mentality and it would possibly get missed amidst the arguments.

The points that stood out for me were:

1) You are better off in the public sector (financially)
2) A good part of the average wage gap is made up by those in part-time/temporary employment
3) No study yet published takes account of the pensions levy
4) Accurate comparisons are impossible due to the nature of the work involved so trying to say exactly how much better off the public sector is, is futile.

Hope you find it as interesting as I did.

Public vs private: the facts
04 October 2009 By Cliff Taylor

As the debate about pay in the public versus private sector becomes ever more intense, figures are being thrown back and forward.

To say this can be confusing is an understatement. Public sector unions, in particular, have been quick out of the blocks to try to rubbish recent data from the Economic and Social Research Institute (ESRI) and the Central Statistics Office (CSO). So what are the facts?

There is such heated debate on the subject for one simple reason – it can be difficult to find exact comparisons for many public and private sector jobs.

There are no private sector gardaí or prison officers, for example, and to whom do you compare the work of someone employed in a government department? To someone doing an administrative job in an SME? Or someone working in a big multinational?

What the studies of relative pay in the private and public sector thus try and do is, as far as possible, compare like with like. They try to compare people of roughly the same age, education and experience. There are standard accepted ways of doing this, though no-one pretends that such comparisons can ever be 100 per cent accurate.

Last week, the Impact trade union said that the latest figures produced by the CSO were ‘‘entirely flawed because the CSO itself has confirmed that it had not compared real jobs in the public or private sector’’ and that it was impossible to take the CSO and ESRI figures seriously because they kept producing different estimates.

However, the CSO has been entirely consistent and transparent in the figures it has issued and the ESRI has also clearly outlined its methodology. The CSO’s National Employment Survey 2007 showed that average hourly earnings were 47.6 per cent higher in the public sector and average weekly earnings were 32.6 per cent higher.

While this data is correct as far as it goes, it makes no attempt to adjust for the fact that, on average, public sector employees tend to be older, more experienced and better educated. For example, about 40 per cent of public sector employees have third level qualifications, compared to about 20 per cent of those in the private sector.

The latest CSO figures published last week take the 2007 data and adjust for factors such as education, experience and hours worked.

The adjustments made are detailed and are explicitly outlined in the CSO report, as is the fact that it is not possible to compare exactly private sector jobs for public sector jobs. The gap is still large.

On average public sector pay is found to be 19.1 per cent higher than in the private sector. When a slightly smaller group is taken – those in permanent, full-time employment – the gap is a bit lower at 12.6 per cent.

In passing, we can note that this suggests that the public sector rewards part time employees much more generously, presumably reflecting arrangements in areas such as job-sharing, which are more favourable.

There are significant differences, depending on gender and pay levels. Women are paid, on average 22.9 per cent more in the public sector, while the gap for males is just 14.9 per cent. Meanwhile, the gap is much larger for lower-paid employees than for those at the higher end of the spectrum.

Given that the CSO’s job is to produce statistics, its data must obviously be taken seriously. No one can dispute that, for people of the same age and education, the public sector pays, on average, more.

A range of other studies points to similar results. The recent ESRI study estimated that the pay gap in 2006 – a year earlier than the latest CSO data – was almost 22 per cent. It estimated that it had more than doubled, from just under 10 per cent in 2003.

This 2003 estimate was within the 6 – 10 per cent premium estimated for that year by background work done by Ernst & Young and Oxford professor Dr Anthony Murphy in background papers for the most recent public pay benchmarking study.

The 2007 benchmarking report itself recommended increases for 15 of 109 public sector grades examined, where it found that pay was below the private sector on the basis of a detailed job evaluation comparison.

These increases were generally for higher-level employees and were backed up by the Ernst & Young/Murphy study. This found that, in 2003, while public sector employees were paid more on average, at the higher levels this was not the case.

The more recent ESRI and CSO studies indicate that this position has now changed and that, at all levels, people with similar age, education and experience earn more in the public sector.

There are other factors, too, which must be considered.

These include pensions – where there is dispute on the relative value of public and private provision – and job security. Of course, the figures do not take account of the impact of the recent public sector pension levy and private sector job cuts.

However, in terms of basic pay, the message from all the studies is clear – you are better off financially if you work in the public sector

Tipp Man

[quote=Long Onion;62400550

1) You are better off in the private sector (financially) [/font]


However, in terms of basic pay, the message from all the studies is clear – you are better off financially if you work in the public sector[/quote]

Doesn't your opening paragraph completely contradict his summary at the end, both of which i have quoted, or was it a typo on your part??

Long Onion

Tipp Man wrote: »

Doesn't your opening paragraph completely contradict his summary at the end, both of which i have quoted, or was it a typo on your part??

Sorry - typo, will change it now (cheers:o)

InReality

I've worked in both.

The key difference , which I've seldom seen mentioned , is that in a private company you can be promoted as quickly as your ability allows.

This is not the case in the public sector.

Sea Sharp

Sorry - typo, will change it now (cheers)

It gets confusing doesn't it.
Also, why are people abbreviating to PS when it's Public Sector and Private Sector

P. Breathnach

InReality wrote: »

I've worked in both.

The key difference , which I've seldom seen mentioned , is that in a private company you can be promoted as quickly as your ability allows.

This is not the case in the public sector.

That is less true nowadays (not untrue, just less true).

jimmmy

Long Onion wrote: »

I found this article to be succinct, balanced and clear.
The more recent ESRI and CSO studies indicate that this position has now changed and that, at all levels, people with similar age, education and experience earn more in the public sector.

Can you provide a link : otherwise you must be joking : what a wind up, as every other study - including the ones by the ESRI etc - show the opposite.

You say "There is such heated debate on the subject for one simple reason – it can be difficult to find exact comparisons for many public and private sector jobs." ....well for many jobs it is possible to find comparisons - eg for security personnel - and when such comparisons are made, the private sector yet again comes off worst, not just in terms of pay, but also pension, hours worked etc ?
For other jobs, why not compare them with other countries ....I have compared the pay of the head of the Central Bank to other Central banks in another thread, along with the relative pay of Irish primary school teachers compared to other countries etc.

Quote :"No public service in the world has been found yet to have as high an average wage as the Irish public service. Not very surprising, when Cowen is higher paid than the prime minister of the bigger, industrialised countries like Germany, UK, France, Japan etc, and when the govt pays the head of our Central bank more than any other Central banker in the world earns. Going down the list of public servants, its interesting to compare the pay of primary teachers in 2007 with 15 years experience. In Ireland it was 38,340, In the Netherlands it was 32,270, in Norway its 26,370, in Portugal it was 25,340, in Sweden it was 23,250 and in France it was 23,100. This is according to a table on page 96 of the October issue of Business Plus magazine, available now in your newsagents.
Its not because teachers work longer hours in Ireland ; our school holidays etc are amongst the longest in the world. eg the OECD average is 1200 hours worked per year, in Ireland its 735.
If the govt cheques start bouncing here, which is the highest paid country for the p.s ? Ireland is the highest known yet, but there are a few countries it is difficult to get statistics on eg some of the African countries. Is'nt it nice to know our p.s. are champions of something / nobody has challenged them yet ? "unquote.

techdiver

InReality wrote: »

I've worked in both.

The key difference , which I've seldom seen mentioned , is that in a private company you can be promoted as quickly as your ability allows.

This is not the case in the public sector.

That's is a big part of the problem in the public sector. There are many good people in the public sector that carry the dead weight in their teams and see no extra award for it. If the public sector was like the private sector, the dead weight would be cut loose and the good people would be promoted and be better paid. The standardised system that exists doesn't serve anyone except for the lazy ones.

Long Onion

jimmmy wrote: »

Can you provide a link : otherwise you must be joking : what a wind up, as every other study - including the ones by the ESRI etc - show the opposite.

You say "There is such heated debate on the subject for one simple reason – it can be difficult to find exact comparisons for many public and private sector jobs." ....well for many jobs it is possible to find comparisons - eg for security personnel - and when such comparisons are made, the private sector yet again comes off worst, not just in terms of pay, but also pension, hours worked etc ?
For other jobs, why not compare them with other countries ....I have compared the pay of the head of the Central Bank to other Central banks in another thread, along with the relative pay of Irish primary school teachers compared to other countries etc.

Quote :"No public service in the world has been found yet to have as high an average wage as the Irish public service. Not very surprising, when Cowen is higher paid than the prime minister of the bigger, industrialised countries like Germany, UK, France, Japan etc, and when the govt pays the head of our Central bank more than any other Central banker in the world earns. Going down the list of public servants, its interesting to compare the pay of primary teachers in 2007 with 15 years experience. In Ireland it was 38,340, In the Netherlands it was 32,270, in Norway its 26,370, in Portugal it was 25,340, in Sweden it was 23,250 and in France it was 23,100. This is according to a table on page 96 of the October issue of Business Plus magazine, available now in your newsagents.
Its not because teachers work longer hours in Ireland ; our school holidays etc are amongst the longest in the world. eg the OECD average is 1200 hours worked per year, in Ireland its 735.
If the govt cheques start bouncing here, which is the highest paid country for the p.s ? Ireland is the highest known yet, but there are a few countries it is difficult to get statistics on eg some of the African countries. Is'nt it nice to know our p.s. are champions of something / nobody has challenged them yet ? "unquote.

http://www.thepost.ie/newsfeatures/public-vs-private-the-facts-44779.html

Here's the link for you.

jimmmy

techdiver wrote: »

If the public sector was like the private sector,...

Many self-employed people without any business now find themselves in a position where they have bills etc coming in, little or no income, and yet they are unable to sign "on the dole"....because they would not get it.

Contrast the position in the public service....look at all those who work in the planning dept for example....now than very very few people are submitting applications for planning permission , what are these people doing .....apart from getting paid ?

jimmmy

Long Onion wrote: »

http://www.thepost.ie/newsfeatures/public-vs-private-the-facts-44779.html

Here's the link for you.

Thank you and I agree with much of what they say i.e. you are better off financially if you work in the public sector.

Boskowski

jimmmy wrote: »

Many self-employed people without any business now find themselves in a position where they have bills etc coming in, little or no income, and yet they are unable to sign "on the dole"....because they would not get it.

Contrast the position in the public service....look at all those who work in the planning dept for example....now than very very few people are submitting applications for planning permission , what are these people doing .....apart from getting paid ?

They're being re-deployed to areas where it's much busier these days, like housing, welfare. They're not going to have these people sitting there waiting for the next housing boom... :-) They're not that bad.

ParkRunner

jimmmy wrote: »

....well for many jobs it is possible to find comparisons - eg for security personnel - and when such comparisons are made, the private sector yet again comes off worst, not just in terms of pay, but also pension, hours worked etc ?
.

Are you trying to compare security personnel to a Garda?

Idbatterim

there is almost no room to maneuver for the government, there are 3 main areas where you can cut back that will hit people directly, social welfare payments, private sector ie paye workers, or public sector and realistically the only option left that hasn't been severely hit is the public sector. There is still alot of fat on the public sector, while the others are almost down to the bone.

ardmacha

social welfare payments, private sector ie paye workers, or public sector

Public sector workers pay PAYE too and have been hit jsut as much by tax changes as anyone else. All public sector workers have had a pay cut while only a minority of private sector workers have. The obvious thing to do is to hit everyone to some extent, i.e. adjust PS wages, welfare payments and tax allowances for declining prices.

ParkRunner

Idbatterim wrote: »

there is almost no room to maneuver for the government, there are 3 main areas where you can cut back that will hit people directly, social welfare payments, private sector ie paye workers, or public sector and realistically the only option left that hasn't been severely hit is the public sector. There is still alot of fat on the public sector, while the others are almost down to the bone.

There must be some scope for a corporation tax increase at this stage. It is about the only tax rate that hasnt gone up recently and yet the amount of revenue taken in from corporation tax has risen compared to this time last year. In fact this would suggest that large multi nationals are cutting their employees pay in pursuit of larger profits!

http://www.finance.gov.ie/documents/exchequerstatements/2009/Excheqstatsept.pdf

As you can see too hitting public sector pay by an average of 7.5% has only raised 4million since its introduction!

jimmmy

ardmacha wrote: »

All public sector workers have had a pay cut while only a minority of private sector workers have.

If I was paid between 25 to 48% more like the public sectopr is ( depending on which report study you read, and whither it takes in to account the shorter working week in the public sector + other perks ) I would not mind a 5 or 10% pay cut either !....esp. if I had a nice secure job + pension to look forward to !

optocynic

ardmacha wrote: »

Public sector workers pay PAYE too and have been hit jsut as much by tax changes as anyone else. All public sector workers have had a pay cut while only a minority of private sector workers have. The obvious thing to do is to hit everyone to some extent, i.e. adjust PS wages, welfare payments and tax allowances for declining prices.

I do feel for the PS workers and their loss of 7% from their take home..
Yes, id will affect your living standards (slightly)... but I'm afraid, it is not a cut.. it is a long over-due (and tiny) contribution to a massively lucrative pension, that is guaranteed..

7% contribution... tell me, how much would an averga private sector worker have to contribute to a pension to get such a large output?

Yes, you do have less money... but it is not a CUT!.. it is simply BIK on a HUGE perk!

irish_bob

jimmmy wrote: »

If I was paid between 25 to 48% more like the public sectopr is ( depending on which report study you read, and whither it takes in to account the shorter working week in the public sector + other perks ) I would not mind a 5 or 10% pay cut either !....esp. if I had a nice secure job + pension to look forward to !

indeed , if richard branson and his entire family took a 20% pay cut yet no one else in the entire virgin family saw any reduction in pay , the bransons would still be in no possition to bitch

the ps , union indoctrinated mantra about all ps workers having taken a pay cut is in the same vein , its a statistic and nothing more

jimmmy

irish_bob wrote: »

the ps , union indoctrinated mantra about all ps workers having taken a pay cut is in the same vein , its a statistic and nothing more

I would love to pay 7% of my income or indeed 14% for that matter, if it entitled me to a guaranteed public sector pension, not reliant on the financial markets.

parsi

jimmmy wrote: »

Many self-employed people without any business now find themselves in a position where they have bills etc coming in, little or no income, and yet they are unable to sign "on the dole"....because they would not get it.?

I seem to recall hearing somewhere that everybody has the option to pay a full stamp and get full unemployment benefit. Self-employed folk often chose to pay a lower stamp on the basis that they would provide for themselves if needed.

Unfortunately as is often the case nothing was put aside for the rainy day - this isn't uncommon or unique after all most folk would take the extra money and spend it rather than saving.

jimmmy

parsi wrote: »

I seem to recall hearing somewhere that everybody has the option to pay a full stamp and get full unemployment benefit.

Not true. If it was true, there would be one or two hundred thousand extra people in the dole !

jimmmy

parsi wrote: »

Unfortunately as is often the case nothing was put aside for the rainy day .

A lot of people did put money away for the rainy day, but have seen it eaten by inflation ( eg 19,000 invested in Irish Life in 1986, when money was money, is only worth 33,000 today......it was even worse in some savings accounts, which only pay a fraction of a per cent interest, way behind inflation over the period ) or by the pensions disaster or in bank shares or invested in property now in negative equity.

parsi

jimmmy wrote: »

Not true. If it was true, there would be one or two hundred thousand extra people in the dole !

They would have to have paid the stamp _before_ their difficulties. Bit like insurance really - you can't just pay it on the day of the claim.

Wow. Imagine having had £19k spare back in 1986....

Kimbot

optocynic wrote: »

I do feel for the PS workers and their loss of 7% from their take home..
Yes, id will affect your living standards (slightly)... but I'm afraid, it is not a cut.. it is a long over-due (and tiny) contribution to a massively lucrative pension, that is guaranteed..

7% contribution... tell me, how much would an averga private sector worker have to contribute to a pension to get such a large output?

Yes, you do have less money... but it is not a CUT!.. it is simply BIK on a HUGE perk!

Entrants to the Civil Service from April 1995 onwards already paid 7.5% of their wage to their pension BEFORE the pension levy came into effect.

When a civil servant gets their pension its a topup to the state pension that everyone in this country is entitled to. You have seen the figures in other threads yet you still go on about how its gold plated, what is the large output you speak of?

Its gold plated to those ministers and those on the extreme top of the scale but not for people that have spend their lives at clerical officer grade.

optocynic

jonny24ie wrote: »

Entrants to the Civil Service from April 1995 onwards already paid 7.5% of their wage to their pension BEFORE the pension levy came into effect.

When a civil servant gets their pension its a topup to the state pension that everyone in this country is entitled to. You have seen the figures in other threads yet you still go on about how its gold plated, what is the large output you speak of?

Its gold plated to those ministers and those on the extreme top of the scale but not for people that have spend their lives at clerical officer grade.

Total pants!

Once again I ask. How much of my basic salary would I have to pay to a pension each month to receive a pension as lucrative as the PS one?

jimmmy

parsi wrote: »

They would have to have paid the stamp _before_ their difficulties.

Self employed pay a range of different taxes and still are not entitled to the dole / unemployment benefit. Even with a house in negative equity ye still cannot get it, unless the house was repossessed / sold.

coylemj

The biggest problem is this: Most public sector workers place no value on their gilt-edged pension for the simple reason that most people in general don't think about their pension. Sadly many self-employed people and people in the private sector who move jobs a lot don't think about it either.

The fact is that no amount of money could today buy you an Irish public sector pension, I'm not aware of any other country where public sector pensions are linked to earnings as opposed to inflation. All of the benchmarking pay rises for example were given to pensioners because once rates of pay for serving public servants went up, so did the pensions.

The cost of housing and/or interest rates go up so public sector workers demand more money. Result: pensioners get pay increases which can't be justified and which the country can't afford.

If you hear a public sector worker whinge about the pension levy, just tell them it's benchmarking, it cuts both ways.

coylemj

optocynic wrote: »

Total pants!

Once again I ask. How much of my basic salary would I have to pay to a pension each month to receive a pension as lucrative as the PS one?

Economists have recently claimed that you'd need to be contributing as much as 30% to buy an inflation-proof pension but I doubt that that would give you full protection since nobody and I mean nobody sells an inflation-proof pension. You can buy an annuity that increases at 3% or 5% per annum but nobody takes the risk on matching or beating inflation except the Government.

Inflation hit over 20% in the early 1980s when Charle Haughey let the public sector wages bill get out of control, anyone then on a private sector pension saw their income decimated, public sector pensioners were completely insulated from it.

jimmmy

Because of the shorter working lives of some public servants before they get their pension ( eg Gardai 30 years, Judges 15 years ), ps people in these sectors should be paying something like 48% and 80 % of their salary respectively if they were to pay for the full economic cost of their pension....this was confirmed by Eddie Hobbs on frontline RTE tv exactly 8 days ago.

Kimbot

optocynic wrote: »

Total pants!

Once again I ask. How much of my basic salary would I have to pay to a pension each month to receive a pension as lucrative as the PS one?

How is it gold plated tho mate? Do you even know how much it is or anything?
How much do you honestly think the PS pension is?