A different way forward?

CabanSail

An idea came to me recently.

It would seem to me that the simple facts are;

- The Government is borrowing large sums of money to keep pay it's expenses each week at levels which are not sustainable.

- There is huge pressure for Public Sector pays to be cut to reduce costs.

- The Unions have vowed that any further reduction in pay or conditions would result in a Industrial Action.


The way I see it is that there has to be something done to bring the economy back into balance. Unions may win or lose the battle for maintaining pay & conditions through Industrial Action, but either way a lot of further damage will be been done to the economy.

What I propose is a compromise postition, one that would help solve the current crisis. This could be a win/win situation for both the Government & the Public Sector Workers.

Rather than borrowing money from off shore banks to fund the current shortfall, that money could be borrowed from the Public Sector Workers. Instead of a wage reduction the pays could be reduced in favour of a form of Government Bond. This would then be refunded in the future when the economy has recovered. This would effectively be a savings scheme a bit like the SSIA. There could also be a voluntary aspect to make some extra contributions with certain incentives.

The money would taken and be returned in the future when agreed economic indicators have been met. The funds would of course be taken out before Tax. They could possibly be returned in the future post Tax & this could be the incentive to contribute above the compulsory amount. The amount to be taken could also be ramped up from a low amount for lower paid employees to a higher percentage for those earning more. The other advantage is that the "interest" paid back would not go to banks but rather the Irish people.

dvpower

I think ICTU put forward an idea a while back for a National Recovery Bond, but it was never taken up.

Your idea is very generous; a contribution from gross pay that isn't subject to tax on maturity and pays interest. Where do I sign up?

CabanSail

It doesn't pay interest. Yu just do not pay Tax on the money for that is the subject of the bond. It would probably be tied up for at least 4 or 5 years. So the interest is just that the money is returned Tax Free.

HollyB

That's not a bad idea, although I think that there should be a small amount of interest paid on the sum in years where there is inflation, so that the money is worth at least as much as it was when it was put in - ie. 0% in years when there is deflation and, for years with inflation, interest is calculated at inflation+0.25%.

CabanSail

I think the fact that the money is returned Tax Free should be enough & it's far better than losing it all together.

NewDubliner

CabanSail wrote: »

I think the fact that the money is returned Tax Free should be enough & it's far better than losing it all together.

Would you give money to a government that raided the ring-fenced National Pension Reserve fund to keep the current banker clique in business?

RCIRL

Ireland will never properly recover unless FF and all associated in decision making are wiped out along with the bad banks and developers. After wiping out those lot we can start fresh and then its time to look at the public sector and fix up that mess of overspending and poor service.

RCIRL

CabanSail wrote: »

An idea came to me recently.

It would seem to me that the simple facts are;

- The Government is borrowing large sums of money to keep pay it's expenses each week at levels which are not sustainable.

- There is huge pressure for Public Sector pays to be cut to reduce costs.

- The Unions have vowed that any further reduction in pay or conditions would result in a Industrial Action.


The way I see it is that there has to be something done to bring the economy back into balance. Unions may win or lose the battle for maintaining pay & conditions through Industrial Action, but either way a lot of further damage will be been done to the economy.

What I propose is a compromise postition, one that would help solve the current crisis. This could be a win/win situation for both the Government & the Public Sector Workers.

Rather than borrowing money from off shore banks to fund the current shortfall, that money could be borrowed from the Public Sector Workers. Instead of a wage reduction the pays could be reduced in favour of a form of Government Bond. This would then be refunded in the future when the economy has recovered. This would effectively be a savings scheme a bit like the SSIA. There could also be a voluntary aspect to make some extra contributions with certain incentives.

The money would taken and be returned in the future when agreed economic indicators have been met. The funds would of course be taken out before Tax. They could possibly be returned in the future post Tax & this could be the incentive to contribute above the compulsory amount. The amount to be taken could also be ramped up from a low amount for lower paid employees to a higher percentage for those earning more. The other advantage is that the "interest" paid back would not go to banks but rather the Irish people.

Sounds good but its not Ireland's way forward, its your idea on how to avoid pay cuts to the public sector.

HollyB

CabanSail wrote: »

I think the fact that the money is returned Tax Free should be enough & it's far better than losing it all together.

Speaking of losing the money, I assume that this plan would make provision for public sector workers who die during the period when the money is invested, so that their next of kin can get the payment, also tax free, at the end of the term instead of it being swallowed up by the government?

There'd probably be quite a bit of take-up on the idea if incentives are offered, like a small rate of interest during years with inflation, and some people might be willing to put aside quite a bit, especially if they're working overtime or getting special allowances. Even without interest, if the sum is tax-free and guaranteed to be tax-free and paid as agreed, with no clauses for the government to hang onto money longer than agreed upon (without the consent of those putting money into this scheme) or to decide that, actually, they're levying a 25% tax on all funds.

eoinbn

Won't work. The response will be that the members can't afford to be cut further, and I am sure some can't.

Alot of people are confusing the issue probably because of misdirected anger. People talk alot about sharing the pain, but that is a poor expression. It's not as if someone in the PS taking a cut in pay is going to help anyone in the private sector, or anyone on welfare. The reality is as tax receipts dry up, due to a massive downturn in the private sector, sending cuts must be made. And when the tax fall is as sharp as it has been then unforunately the cuts need to be pretty brutal.

wicklowmale

Eoinb i am sorry but you seam to be confused!

Why should the private sector be the brunt of job cuts, pay cuts etc?

Not one person has been let go from the Public sector yet

The PS is over employed.

The PS yearly wage bill is too high, considering the amount employed

The issue that the private sector have with the public sector is their lack of responsibilty in helping to get the country through this difficult time. We can all blame certain ppl or sectors for this recession, but we are here and we ALL need to get through this.

The PS needs to grow up and stop been manipulated by the union leaders who i am sure are very well off. How much do they earn and would you not think they should take a pay cut too to show solidarity? I am sure they would object!

leninbenjamin

the underlying problem with the public sector is that we simply aren't getting value for money. Delaying payments is not a solution. If we had started changing work practices 2 years ago when the signs were beginning to show we might have been able to put off whole scale pay cuts, but the reality is that we simply cannot sustain current levels.

You could avert payments and temporarily relieve the budget for sure, but that doesn't change anything with the fundamentals of the economy. At the end of the day, construction is gone, manufacturing is slowly contracting, our graduates standards have been falling so we can't lure any high skilled jobs and we have no signs whatsoever of any jobs being created to relieve the social welfare bill. Until we can get employment back on track, we simply cannot commit to spending money we do not have.

dresden8

wicklowmale wrote: »

Why should the private sector be the brunt of job cuts, pay cuts etc?

Not one person has been let go from the Public sector yet

This is a lie, the people who propagatate it are liars.

cm2000

I dont see how this would help the government position. If you borrow money from banks or from workers the balance sheet remains the same, the liability remains the same. I don't see how this will help our deficit at all. You simply owe the money to different people, albeit at a lesser rate.

MaceFace

CabanSail wrote: »

An idea came to me recently.

It would seem to me that the simple facts are;

- The Government is borrowing large sums of money to keep pay it's expenses each week at levels which are not sustainable.

- There is huge pressure for Public Sector pays to be cut to reduce costs.

- The Unions have vowed that any further reduction in pay or conditions would result in a Industrial Action.


The way I see it is that there has to be something done to bring the economy back into balance. Unions may win or lose the battle for maintaining pay & conditions through Industrial Action, but either way a lot of further damage will be been done to the economy.

What I propose is a compromise postition, one that would help solve the current crisis. This could be a win/win situation for both the Government & the Public Sector Workers.

Rather than borrowing money from off shore banks to fund the current shortfall, that money could be borrowed from the Public Sector Workers. Instead of a wage reduction the pays could be reduced in favour of a form of Government Bond. This would then be refunded in the future when the economy has recovered. This would effectively be a savings scheme a bit like the SSIA. There could also be a voluntary aspect to make some extra contributions with certain incentives.

The money would taken and be returned in the future when agreed economic indicators have been met. The funds would of course be taken out before Tax. They could possibly be returned in the future post Tax & this could be the incentive to contribute above the compulsory amount. The amount to be taken could also be ramped up from a low amount for lower paid employees to a higher percentage for those earning more. The other advantage is that the "interest" paid back would not go to banks but rather the Irish people.

Problem I see with it is that Ireland is a very high cost economy. This is forcing multinationals to move elsewhere. Until we get the entire cost base in the country back to sustainable levels, we are going to struggle to create new jobs of the scale our country requires.

Your plan, while it might sound nice and could actually get us out of the near term problem will just mean the cost of running this country will continue to be high.

bonkey

Lets keep this discussion on-track folks. The topic is not about job-cuts in the public or private sectors.