How do you fix a problem like the PS wage bill?

ardmacha

Now that private sector pay has fallen a new round of benchmarking should be done, downwards.

But public sector pay has fallen in general by more than private sector pay, so this would be swings and roundabouts exercise.

southsiderosie

frankosw wrote: »

And...?


Why didnt he become a teacher if its such a fabulous way to earn a living?

dhaslam wrote: »

I hope you aren't a maths teacher.

kceire wrote: »

I hope you are not an English teacher.

MOD NOTE:

This kind of juvenile sniping is exactly what we do not want to see in this forum. Cut it out.

loggedoff

woodoo wrote: »

It still is 15% because once their pay was cut they are 15% lower than they were promised in their contracts. They will still be on 15% less than they should be.

Say a public servants contract says that they will be on €40,000 after 10 years of increments and they will stay on €40,000 for the rest of their time there at that grade. If the government cut the pay by 10% then after the 10 years you will now only get €36,000, so now you will spend the rest of your days on €36,000. The 10% cut applies all along the incremental scale. If the cut had been applied to them in year 2 at sat 28,000 or year 6 at 34,000 they will still only get to 36,000 at the top as the whole scale was reduced by 10%.

That is the way increments work.

So let me get this right here.
A public servant is hired, and is told that he/she will get pay rises for 10 years.
In the meantime, the greatest recession/depression in living memory hits the country and we are running a massive deficit.
The public servant's pay rises are put on hold until the country is out of recession.
This is classed as a 15% pay cut?

Riskymove

loggedoff wrote: »

So let me get this right here.
......This is classed as a 15% pay cut?

no, I think you are taking him up wrong

the top of the scale is 15% less than it was so we are saving that notional amount as well as the actual reductions in the PS pay bill

loggedoff

Riskymove wrote: »

no, I think you are taking him up wrong

the top of the scale is 15% less than it was so we are saving that notional amount as well as the actual reductions in the PS pay bill

Then it's a 'notional' pay cut, or not a pay cut at all in lay mans terms.
If one is promised pay rises in good times and then the economy and the tax take collapses and these pay rises are stopped or put on hold, they can't be classed as pay cuts.
Reductions in the PS pay bill have happened because of reducing staff numbers.
That's all union double talk and it does the PS's credibility no good at all.

Curly Judge

Riskymove wrote: »

taxes plus the levy

An effectve tax rate of 63%?

woodoo

loggedoff wrote: »

Then it's a 'notional' pay cut, or not a pay cut at all in lay mans terms.
If one is promised pay rises in good times and then the economy and the tax take collapses and these pay rises are stopped or put on hold, they can't be classed as pay cuts.
Reductions in the PS pay bill have happened because of reducing staff numbers.
That's all union double talk and it does the PS's credibility no good at all.

Their pay has been cut.

If you have an incremental scale of 100, 200, 300, 400 and you cut it by 10% then you have a new incremental scale of 90, 180, 270, 360 now.

If the cut was implemented while you were in year 2 then you were cut to 180 but as you move to year 3 and are earning 270 some might say that your pay cut has been wiped out as if the 10% reduction didn't matter. It does matter because they should have been at 300 by then. And when they reach the top of the scale in year 4 they will be earning 360 instead of 400. The 10% still has an effect.

ardmacha

Then it's a 'notional' pay cut, or not a pay cut at all in lay mans terms.

Sure if you have to pay more tax this year, and you manage to increase your income next year anyway, as you grow more experienced at your job, then this would be a 'notional' tax increase, or not a tax increase in all, in layman's terms.

Riskymove

loggedoff wrote: »

Then it's a 'notional' pay cut, or not a pay cut at all in lay mans terms.

no, there are elements of both, as et out by the others

everyone took a certain % actual pay cut and there is also a notional saving which does not actually appear in the figures

Riskymove

Curly Judge wrote: »

An effectve tax rate of 63%?

yep, welcome to the cushy world of the PS

loggedoff

woodoo wrote: »

Their pay has been cut.

If you have an incremental scale of 100, 200, 300, 400 and you cut it by 10% then you have a new incremental scale of 90, 180, 270, 360 now.

If the cut was implemented while you were in year 2 then you were cut to 180 but as you move to year 3 and are earning 270 some might say that your pay cut has been wiped out as if the 10% reduction didn't matter. It does matter because they should have been at 300 by then. And when they reach the top of the scale in year 4 they will be earning 360 instead of 400. The 10% still has an effect.

You people actually believe this, don't you?
I work in the private sector, my income depends on how my company does financially.
If the economy had kept going at the rate it was, I would be earning twice what I am now.
It didn't and I'm not, but I get on with it.
The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.
To come on here and talk about 'notional' pay cuts is a disgrace.

waster81

loggedoff wrote: »

You people actually believe this, don't you?
I work in the private sector, my income depends on how my company does financially.
If the economy had kept going at the rate it was, I would be earning twice what I am now.
It didn't and I'm not, but I get on with it.
The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.
To come on here and talk about 'notional' pay cuts is a disgrace.

Your income probably depends on how much your company can overcharge and screw its customers for - the fact that you "could" have earned twice what you are just proves the point

ardmacha

The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.

This is exactly the point. The PS are expected to be responsible for the welfare of the weakest in our society, when this should be the responsibility of all citizens to an equal extent.

To come on here and talk about 'notional' pay cuts is a disgrace.

You're right there, are you going to stop doing it?

OMD

Riskymove wrote: »

yep, welcome to the cushy world of the PS

Rubbish. Time to back it up

Riskymove

OMD wrote: »

Rubbish. Time to back it up

back what up? its there in black and white in the PQ answer

OMD

Riskymove wrote: »

back what up? its there in black and white in the PQ answer

Back up your claim that you have an effective tax rate of 63%

dhaslam

It is the annual increments that distort the average pay statistics. Increasing pay to nearly double the starting salary after 25 years teaching, for example, doesn't make a lot of sense. If schools had a salary budget they wouldn't pay double just for years of service. When benchmarking was combined with increments the teachers were effectively getting a double pay rise.

Taking back extra pay with increasing rates of income levy isn't a proper way to deal with the situation.

The UK system doesn't have the same degree of difference between new and old teachers and also have different pay scales for different areas.

http://www.tes.co.uk/article.aspx?storycode=6000186

Riskymove

OMD wrote: »

Back up your claim that you have an effective tax rate of 63%

who said I have an effective tax rate of 63%?

it applies to people earning over €80,000

Godge

Curly Judge wrote: »

The taxes paid on 500 million are 312 million?

It was in a parliamentary question where the Minister is obliged to truthfully reply. If you have information to contradict this, maybe you should contact the Department.

The taxes and levies paid by a public servant on earnings above 80k would typically be as follows:

(1) Income tax - 42%
(2) PRSI - 4%
(3) Universal Social Charge - 7%

That gives a total of 53%.

In addition to that, the public servants pay the following superannuation-related charges:

(1) Superannuation - 6.5%
(2) Pension Related Pay Deduction - 10.5%

Added together, this would give a total of 17%. As tax relief is available at 42% on these payments, the net amount paid by the public servant is 58% of 17% which is 9.86%

Adding back to the 53% gives you a total of 62.86% paid on income over €80,000 which is the basis of the calculation in the parliamentary question of the net amount. The actual amount they used was 62.4% which suggests there was probably a small number of cases of other tax reliefs reducing the amount payable slightly or the more complicated superannuation deduction being used.

OMD

Riskymove wrote: »

who said I have an effective tax rate of 63%?

it applies to people earning over €80,000

Ok. Then prove PS workers earning over 80K have an effective tax rate of 63%.

Riskymove

OMD wrote: »

Ok. Then prove PS workers earning over 80K have an effective tax rate of 63%.

see previous post

PAYE workers on the higher rate have a marginal tax rate of 52%

the pension levy is 10.5% for PS over €60,000

therefore you get around 63%

Godge

OMD wrote: »

Ok. Then prove PS workers earning over 80K have an effective tax rate of 63%.

You probably missed my post, setting it out clearly and unambiguously for you. I will repeat it for you below.

The government takes 63% from every euro earned over 80k by a public servant.

Godge wrote: »

It was in a parliamentary question where the Minister is obliged to truthfully reply. If you have information to contradict this, maybe you should contact the Department.

The taxes and levies paid by a public servant on earnings above 80k would typically be as follows:

(1) Income tax - 42%
(2) PRSI - 4%
(3) Universal Social Charge - 7%

That gives a total of 53%.

In addition to that, the public servants pay the following superannuation-related charges:

(1) Superannuation - 6.5%
(2) Pension Related Pay Deduction - 10.5%

Added together, this would give a total of 17%. As tax relief is available at 42% on these payments, the net amount paid by the public servant is 58% of 17% which is 9.86%

Adding back to the 53% gives you a total of 62.86% paid on income over €80,000 which is the basis of the calculation in the parliamentary question of the net amount. The actual amount they used was 62.4% which suggests there was probably a small number of cases of other tax reliefs reducing the amount payable slightly or the more complicated superannuation deduction being used.

srsly78

Pension deduction isn't the same as other deductions.

My tax figures would look different too if you included the pension.

Riskymove

Godge wrote: »

You probably missed my post, setting it out clearly and unambiguously for you. I will repeat it for you below.

The government takes 63% from every euro earned over 80k by a public servant.

tbh its not that different for PS earning less than that

this marginal rate applies to workers on €60,000 or more

others on the higher rate (earning over €36,000-€60,000) are paying 10%, so they too have a marginal rate of around 62%

OMD

Godge wrote: »

You probably missed my post, setting it out clearly and unambiguously for you. I will repeat it for you below.

The government takes 63% from every euro earned over 80k by a public servant.

My problem was people referring to is as an "effective tax rate" which it clearly is not.

Riskymove

srsly78 wrote: »

Pension deduction isn't the same as other deductions.

My tax figures would look different too if you included the pension.

the pension levy is not like a regular pension contricution...it operates like a tax....they called it the "pension related deduction" to make it sound like it is a related to a pension....but it isn't

it operates like a tax....10% or 10.% is taken off the gross pay and put into the exchequer funds, just like PAYE...it goes towards services, social welfare etc

it is not invested for pensions or ringfenced to pay for pensions

it is a tax

Godge

dhaslam wrote: »

It is the annual increments that distort the average pay statistics. Increasing pay to nearly double the starting salary after 25 years teaching, for example, doesn't make a lot of sense. If schools had a salary budget they wouldn't pay double just for years of service. When benchmarking was combined with increments the teachers were effectively getting a double pay rise.

Taking back extra pay with increasing rates of income levy isn't a proper way to deal with the situation.

The UK system doesn't have the same degree of difference between new and old teachers and also have different pay scales for different areas.

http://www.tes.co.uk/article.aspx?storycode=6000186

I think you are misreading the link.

There is one main difference between the UK and ourselves. About halfway up the scale, a teacher must demonstrate that they can move to the advanced pay scale (or the chartered pay scale in Scotland). This is available to all teachers.

It means that the basic scale in England (outside London) runs from £21,588 to £36,756, an increase of 70% from bottom to top, achieved in a much shorter time-frame - ten or so years - compared to our 25-year scale. However, there are a lot of other allowances over there, similar to the situation here.

In Scotland, the scale runs from £20,427 to £39,942. Nearly doubling, again over a shorter period.

We would be better off looking at other aspects other than pay. We should be copying the arrangements and making it harder for teachers to progress up the scale, making it more dependent on performance. The other thing which they have and we don't is scales for high performers, above these scales again.

srsly78

Riskymove wrote: »

the pension levy is not like a regular pension contricution...it operates like a tax....they called it the "pension related deduction" to make it sound like it is a related to a pension....but it isn't

it operates like a tax....10% or 10.% is taken off the gross pay and put into the exchequer funds, just like PAYE...it goes towards services, social welfare etc

it is not invested for pensions or ringfenced to pay for pensions

it is a tax

Rubbish, are you trying to say you make NO contibution at all to your pension? I have to pay into mine, don't you?

Godge

OMD wrote: »

My problem was people referring to is as an "effective tax rate" which it clearly is not.

Riskymove wrote: »

the pension levy is not like a regular pension contricution...it operates like a tax....they called it the "pension related deduction" to make it sound like it is a related to a pension....but it isn't

it operates like a tax....10% or 10.% is taken off the gross pay and put into the exchequer funds, just like PAYE...it goes towards services, social welfare etc

it is not invested for pensions or ringfenced to pay for pensions

it is a tax

It is irrelevant for the current discussions as to what you call it. No matter whether you call it an effective tax rate or you call it public servants just paying for their pensions, it means that when the government cuts €100m off the salary scales of public servants above around 60k, it only gets about €37m saving.

The most important thing the PQ tells us is that reducing all public servants to 80k a year would only save €188m net (which is a 60% pay cut for some) and that is so far short of the €1bn needed that a pay cut in the order of 10-15% across all public servants would be needed to save €1 bn.

Like it or not, that type of cut would not be politically acceptable and could not be imposed without a cut in basic social welfare rates as it would make the dole an attractive option for nearly every single clerical officer or general operative.

Riskymove

srsly78 wrote: »

Rubbish, are you trying to say you make NO contibution at all to your pension? I have to pay into mine, don't you?

Yes, i do make contributions to my pension, firstly through my PRSI for the State pension I will recieve and secondly the superannuation payments I pay directly related to getting an occupational pension

the pension levy is, however, nothing to do with my pension - it is not being invested for my pension

If the levy was used to contribute to my pension then fair enough, but it is not

indeed there are some PS workers who do not qualify for a pension and yet have to pay the pension levy

it is a revenue-aimed tax

southsiderosie

Riskymove wrote: »

yep, welcome to the cushy world of the PS

waster81 wrote: »

Your income probably depends on how much your company can overcharge and screw its customers for - the fact that you "could" have earned twice what you are just proves the point

MOD NOTE:

If all you (or anyone else) have to contribute is blanket trashing of public or private sector workers in broad strokes, then just stop posting now before you get infracted. This isn't rational debate - it's just ranting. And per the charter, this is not Liveline.

loggedoff

So, would anyone like to answer the question?
How does not reaching the top of your pay scale in the 10 years you thought you would because of recessionary times count as a 15% pay cut?
Anyone?

srsly78

Riskymove wrote: »

Yes, i do make contributions to my pension, firstly through my PRSI for the State pension I will recieve and secondly the superannuation payments I pay directly related to getting an occupational pension

the pension levy is, however, nothing to do with my pension - it is not being invested for my pension

If the levy was used to contribute to my pension then fair enough, but it is not

indeed there are some PS workers who do not qualify for a pension and yet have to pay the pension levy

it is a revenue-aimed tax

If your super annuation is for your pension then why are you including it as part of your effective tax rate? The levy does go towards your pension too, even tho you will never admit it.

Celticfire

loggedoff wrote: »

So, would anyone like to answer the question?
How does not reaching the top of your pay scale in the 10 years you thought you would because of recessionary times count as a 15% pay cut?
Anyone?

Would it be seen as a cut if we weren't in recessionary times?

loggedoff

Celticfire wrote: »

Would it be seen as a cut if we weren't in recessionary times?

No, it would be seen as not getting a pay rise.

Celticfire

loggedoff wrote: »

No, it would be seen as not getting a pay rise.

It would be seen as the employer not meeting the agreed pay agreement as per contract of employment that was signed up to on the first day of work or a cut in pay. Increments and how they will be paid are clearly laid out on commencement of employment.

This is something that is considered when taking up employment within a public sector department.

Riskymove

srsly78 wrote: »

If your super annuation is for your pension then why are you including it as part of your effective tax rate?

as Godge sets out its included as a way to calculate the actual saving involved in a pay cut on PS, even if you were to take that deduction out the rate would still be around 60%

The levy does go towards your pension too, even tho you will never admit it.

in what way does it go towards my pension?

please tell me

Itchianus

loggedoff wrote: »

So, would anyone like to answer the question?
How does not reaching the top of your pay scale in the 10 years you thought you would because of recessionary times count as a 15% pay cut?
Anyone?

It has nothing to do with reaching the top of the scale - I took a 17% cut in pay to join the civil service a couple of years ago. I took it for a number of reasons, not least of which was the certainty of the pay increments which would enable my income to catch up with my private sector salary over time, subject to me performing satisfactorily in the role.

So yes, if the contract I signed isn't honoured by my employer while I'm holding up my end of the deal, that is effectively a pay cut to me, as I'm earning less than my contract states. And what's worse it's a pay cut that only applies to younger, more recently hired or promoted people, and by definition only applies to people who are performing in their role (since underperformers shouldn't qualify for increments).

Riskymove

loggedoff wrote: »

No, it would be seen as not getting a pay rise.

whatever you like to call it, the fact remains there is a saving from the actual pay cut people took and another saving from the fact that their pay did not rise in subsequent years to what it would have been before the cut

without this notional cut the PS pay bill would be higher than it is

waster81

southsiderosie wrote: »

MOD NOTE:

If all you (or anyone else) have to contribute is blanket trashing of public or private sector workers in broad strokes, then just stop posting now before you get infracted. This isn't rational debate - it's just ranting. And per the charter, this is not Liveline.

You people actually believe this, don't you?
I work in the private sector, my income depends on how my company does financially.
If the economy had kept going at the rate it was, I would be earning twice what I am now.
It didn't and I'm not, but I get on with it.
The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.
To come on here and talk about 'notional' pay cuts is a disgrace.

Sure we have blanket public sector bashing here and there are numerous examples throughout the thread

loggedoff

Celticfire wrote: »

It would be seen as the employer not meeting the agreed pay agreement as per contract of employment that was signed up to on the first day of work or a cut in pay. Increments and how they will be paid are clearly laid out on commencement of employment.

This is something that is considered when taking up employment within a public sector department.

Have you heard of the 'inability to pay' clause in the CPA?
Do you think a country running a €12 billion + deficit has an ability to award pay rises?

Idbatterim

The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.

thats what the unions are there to do, thats what they are paid for. The government is elected to govern, they are running the country, not the unions. I was hopeful tough or toughish decisions would be made by the new government after all their pre election blusto, not a hope with Labour in with FG. People may bitch about FG and i have no connection to them whatsoever, but they are prepared to tackle two sacred cows of welfare and CPA (rightly or wrongly)...

sarumite

Riskymove wrote: »

as Godge sets out its included as a way to calculate the actual saving involved in a pay cut on PS, even if you were to take that deduction out the rate would still be around 60%

personally I think including pensions contribution in the overall figure is a case of molding the facts to suit your argument rather than molding the argument around the facts.

loggedoff

waster81 wrote: »

You people actually believe this, don't you?
I work in the private sector, my income depends on how my company does financially.
If the economy had kept going at the rate it was, I would be earning twice what I am now.
It didn't and I'm not, but I get on with it.
The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.
To come on here and talk about 'notional' pay cuts is a disgrace.

Sure we have blanket public sector bashing here and there are numerous examples throughout the thread

That's a bit rich after your reply to my post you've quoted here.
Stating a perceived opinion is not 'bashing'.
Calling a pay rise not given a 'pay cut' says a lot about some PS workers.

waster81

The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.

This statement is nothing but crass idiotic and based in no fact at all and is public bashing -

My statement was however factual - private sector DID overcharge for their services thus pushing up prices of goods further inflating the economy and the pressure on wage increases

The only thing you got right so far that you have a "perceived" opinion - it has no basis in fact

woodoo

loggedoff wrote: »

You people actually believe this, don't you?
I work in the private sector, my income depends on how my company does financially.
If the economy had kept going at the rate it was, I would be earning twice what I am now.
It didn't and I'm not, but I get on with it.
The PS, on the other hand seem to think it's ok to have their unions hold the government to ransom in a time when deep cuts effect the weakest in our society the most.
To come on here and talk about 'notional' pay cuts is a disgrace.

I didn't mention the words notional paycut at all. That was another poster.

Your example of aspirational increases due to a booming economy are a world away from an incremental system that both employer and employee agree on in a contract. Signed in black an white by both.

skydish79

Idbatterim wrote: »

thats what the unions are there to do, thats what they are paid for. The government is elected to govern, they are running the country, not the unions. I was hopeful tough or toughish decisions would be made by the new government after all their pre election blusto, not a hope with Labour in with FG.

You do know that bank employees received pay increases on their basic pay

Idbatterim

You do know that bank employees received pay increases on their basic pay

your point?

Godge

sarumite wrote: »

personally I think including pensions contribution in the overall figure is a case of molding the facts to suit your argument rather than molding the argument around the facts.

You don't get the point. If the government cuts public service pay by €500m (putting a cap of 80k on public sector pay), it only makes a net saving of €188m. That is the fact. That is the information in the PQ.

This thread is about how you "fix a problem like the PS wage bill". The PQ shows that one common approach - "only cut the higher-paid" - advanced on boards will not save very much. That is also a fact.

You have any arguments you like after that but those are the facts.

woodoo

loggedoff wrote: »

So, would anyone like to answer the question?
How does not reaching the top of your pay scale in the 10 years you thought you would because of recessionary times count as a 15% pay cut?
Anyone?

I made it perfectly clear in my post how it works in principle go back and read it again.