Apples and Oranges

Sconsey

I see a lot of comparisons floating about looking at public versus private sector wages, it occurs to me that these are invalid considering the comments made by the union leader on 6 One news this evening.

He was asked about the pensions and how they are guranteed by the state and he came out with someting about that being a condition of public sector work when they joined up and they were entitled to it...fair enough.

The presenter also asked about all the private sector workers losing their jobs, he confirmed that yes public sector workers have job secutiry..fair enough.

He then went on and said all he wanted was the public sector workers to be treated equally with the private sector! if he wanted them to be treated equally shouldn't he be campaigning for guranteed pensions for everyone, ensuring no private sector workers could be made redundant?

I know I may be stating the obvious but, it's a load of balls comparing the two wage rates unless someone can put a value on the pensions and a value on the job security most senior public servents enjoy. The inequality is far greater than just the average wages.

Scofflaw

While this has obviously come up as a topic in nearly every debate in this forum, it would be useful to have quantitative-only estimates of the value of pensions and job security.

I know there's an estimate by the most recent benchmarking group that PS pensions make a PS salary the equivalent of a 12% higher private sector salary, but is there any quantitative estimate of what job security is worth?

Here's one such estimate from an Australian report - that from an Australian worker's point of view a secure job paying $10/hour is equivalent to an insecure job paying $14/hour, which suggests job security counts for quite a lot. This study, on the other hand, has job security valued at about 20% of salary.

cordially,
Scofflaw

Zzippy

With regard to pensions, take the "average" PS worker on allegedly €50,000 a year, and lets compare him/her to a private sector worker on €50,000 a year.
Both pay 6.5% PRSI, which entitles them to the State Contributory Pension of €230 a week. But oh wait, no it doesn't, only the private sector worker gets that. The State pension is not paid to the PS worker, or rather, it is included in their PS pension, as they have paid for it.
Lets say both are on €600 a week take home pay (I'm open to correction on what the take home of a 50K salary is). When the PS worker retires, he/she will get €300 a week pension. That includes the €230 a week State pension that they have paid for. So the PS pension is actually €70 a week. Since the pension levy, the PS worker pays about 10% of gross salary on top of his PRSI contribution for that €70 a week.
The private sector worker, on the other hand, has to invest in a pension fund if he wants to top up his €230 a week State pension. If he invests 10% of his gross salary over 40 years he will probably get a lot more then €70 a week (any pension consultants here who can give a guesstimate?). But wait, thats not all. It won't actually cost him 10% of gross salary, as he gets tax benefit on his pension contributions. It will cost him about 6% of gross salary. The PS worker, on the other hand, gets no tax benefit for his "pension contribution" aka the pension levy, it comes off gross salary, yet he still pays PAYE on his gross salary also.

I accept that for higher paid public servants, the pension is a very generous benefit, but since I've heard the 50k figure being bandied about here so much I would point out the real pension story for someone on that salary. Since this is apparently the average PS salary, this is indicative of what most PS workers will qualify for.
I don't know how you would quantify job security, but when comparing pensions, the average PS worker is not as well off as portrayed by commentators here and elsewhere.

Naz_st

Zzippy wrote: »

With regard to pensions, take the "average" PS worker on allegedly €50,000 a year, and lets compare him/her to a private sector worker on €50,000 a year.
Both pay 6.5% PRSI, which entitles them to the State Contributory Pension of €230 a week. But oh wait, no it doesn't, only the private sector worker gets that. The State pension is not paid to the PS worker, or rather, it is included in their PS pension, as they have paid for it.
Lets say both are on €600 a week take home pay (I'm open to correction on what the take home of a 50K salary is). When the PS worker retires, he/she will get €300 a week pension. That includes the €230 a week State pension that they have paid for. So the PS pension is actually €70 a week. Since the pension levy, the PS worker pays about 10% of gross salary on top of his PRSI contribution for that €70 a week.
The private sector worker, on the other hand, has to invest in a pension fund if he wants to top up his €230 a week State pension. If he invests 10% of his gross salary over 40 years he will probably get a lot more then €70 a week (any pension consultants here who can give a guesstimate?). But wait, thats not all. It won't actually cost him 10% of gross salary, as he gets tax benefit on his pension contributions. It will cost him about 6% of gross salary. The PS worker, on the other hand, gets no tax benefit for his "pension contribution" aka the pension levy, it comes off gross salary, yet he still pays PAYE on his gross salary also.

I accept that for higher paid public servants, the pension is a very generous benefit, but since I've heard the 50k figure being bandied about here so much I would point out the real pension story for someone on that salary. Since this is apparently the average PS salary, this is indicative of what most PS workers will qualify for.
I don't know how you would quantify job security, but when comparing pensions, the average PS worker is not as well off as portrayed by commentators here and elsewhere.

Hold your horses there now, there's a few numbers that need adjusting there:

1) Net take home pay from 50k is ~700, not 600.
2) Public service pension entitlements are calculated off gross pay, not net pay.
3) So a public sector working on 50k will get ~€520 per week pension, which as it happens is the same weekly take home pay of the average industrial wage (which is ~35k)
4) Public service pensions also include a lump sum payment (in this case 75k) tax free on retirement.
5) The public sector pension levy also gets tax relief
6) Private sector pensions are Defined Contribution, not guaranteed defined benefit, and are effected by instability in the markets (e.g. anyone retiring now is fcuKed and has seen on average 30% of his total pension savings evaporate)

So bottom line, I think the average PS worker is exactly as well off pension-wise as portrayed by commentators here and elsewhere.