Public sector pay increase

jank

ardmacha wrote: »

Presumably it will be the reverse of what happened with the pay cuts.

That just means following a failed model which to begin with does not make sense. One should be asking if the money is better off spent elsewhere. Just because gave out pay rises in the past with no concept of infrastructure investment or any thought about footing a bill does not mean we should continue on a false road.

ardmacha wrote: »

Funding all of these things is the responsibility of all citizens, not just the PS.

Through taxation, yes which the government then gets to redistribute to various departments. Indeed we should be having a mature talk now about how to fund government services and what is best for the country rather then engage in vote buying and pandering to union types. Other countries do this yet we seem to struggle. Then ironicly people are quick to give out about things like education and health services and teachers and Gardai will complain about class sizes and their banged up Garda cars. Well why not give up pay rises for 3-5 years and instead accept smaller class sizes and better Garda cars and modern IT systems for crime prevention.

There are choices to be had here, yet PS workers are ultimately self entitled and will almost always put % wage increase in front of captial expenditures. The government should frame it this way. Wage increase vs captial spending and new jobs.

ardmacha wrote: »

But this would spoil the rants on Boards.ie.

Maybe but it would also spoil the lobbying efforts from union members too though which is much more important and destructive to Ireland than AH on boards.ie

Jawgap

jcon1913 wrote: »

Jog on my friend. You dont know what your talking about. You never factored in the foreign excgange loss over the last few months.

Still you have enough contributions to fund 2/3rds of final salary? Do the maths - in Ireland

I'll jog wherever you want, but when I tried to extract my credits from my public pension 'pot' the Euro was trading at over 90p - if I'd been able to stuff my sterling pension pot then, I'd be doing even better as the returns on that fund have always exceeded what I'm due from my public pension.

Unfortunately, as I rapidly found out - there is no mechanism for withdrawing notional credits from a PS pension.

Also, as I'm no longer in the PS my final pension will have nothing to do with my salary.

bobbysands81

barneystinson wrote: »

It exists, but that doesn't mean it's a tax. That's just silly. A tax is a tax, and it's not a tax. Saying a thing doesn't make it true Robert.

It appears as a deduction from your gross pay, because the first FEMPI Act 2009 says so. Show me where the statute says it's a tax and you win the internet.

The FEMPI Act did also make changes to Income Tax, but this wasn't one of them.

It's a compulsory deduction from gross pay which effects only PS workers. The money collected goes into the general taxation pot.

If it looks like a duck...

jcon1913

KomradeBishop wrote: »

If the quality of your last post was:

Why did you think I would bother with your further posts?

If you can't even get the interest rate on our public debt right, and then just come up with above-quoted garbage when that is pointed out to you, then that's a pretty heavy signifier that you're a waste of time to try and debate with - as it just gives the impression you're trying to fling shít rather than debate.

Our interest rate on government debt is presently 0.65% - I was actually wrong earlier, this isn't the lowest of the last 30 years, seems it is the lowest public debt interest rate ever for Ireland.

At an interest rate that low, your claims about unsustainability of funding through increased debt, are just unsubstantiated nonsense.

If I were you I moderate my lanuguage.

If you could write posts in English instead of spouting jargon like GDP and GNP from first year Economics then perhaps you'd be taken more seriously.

Talking about the interest rate on money we cant afford to pay back is like talking about the deck chairs on the Titanic. Now do you get it? Why cant we have savings like the German model, where we produce stuff and services the rest of the world wants to pay us for?

No amount of GDP, GNP, and all that can take that away.

This is not a classroom its a debate, so if you know something more please share - I'm all ears. But I wont hold my breath based on your previous posts.

jcon1913

Jawgap wrote: »

I'll jog wherever you want, but when I tried to extract my credits from my public pension 'pot' the Euro was trading at over 90p - if I'd been able to stuff my sterling pension pot then, I'd be doing even better as the returns on that fund have always exceeded what I'm due from my public pension.

Unfortunately, as I rapidly found out - there is no mechanism for withdrawing notional credits from a PS pension.

Also, as I'm no longer in the PS my final pension will have nothing to do with my salary.

Fair enough - nothing as galling as losing money like that.

KomradeBishop

jcon1913 wrote: »

If I were you I moderate my lanuguage.

If you could write posts in English instead of spouting jargon like GDP and GNP from first year Economics then perhaps you'd be taken more seriously.

If you don't understand and are unwilling to Google basic economic terms - and indeed take the anti-intellectual route of bashing someone for using 'big words'/jargon - then it really isn't possible to have a meaningful debate on economics with you.

If you want to discuss a topic like economics, you need to use economic terms...that should seem really obvious.
If you don't know what those terms mean, you need to Google them, to learn about them first - and as you do you'll learn more about economics and be able to debate it better - it's not going to take you long to look up and read a quick definition of those terms either, so there's no excuse for not doing it.

jcon1913

KomradeBishop wrote: »

If you don't understand and are unwilling to Google basic economic terms - and indeed take the anti-intellectual route of bashing someone for using 'big words'/jargon - then it really isn't possible to have a meaningful debate on economics with you.

If you want to discuss a topic like economics, you need to use economic terms...that should seem really obvious.
If you don't know what those terms mean, you need to Google them, to learn about them first - and as you do you'll learn more about economics and be able to debate it better - it's not going to take you long to look up and read a quick definition of those terms either, so there's no excuse for not doing it.

I wont take a lecture or abusive language from you - nor should anyone else.

Please read my earlier posts - you will need to explain in laymans terms, which I have attempted to do, trying to interpret what you mean, what your logic is.

You consistently refuse to set out what it is you are driving at, but come on here asking me to learn more about Economics. I know about Economics but I am not going to take the lazy way out and exhort people to study it.

Instead I have attempted in my hamfisted way to explain why a government might decide to spend in a recession and what that would mean for society. Maybe I'm wrong, maybe you'd explain in simple language what you are getting at?

By the way, this is not the Economics forum, its the Social & Fun > After Hours part of Boards. You'll find the Economics part of Boards at Science Health and Environment.

Jawgap

jcon1913 wrote: »

Fair enough - nothing as galling as losing money like that.

I think it would be better (but I would say this wouldn't I) if PS workers could port their pensions around, but they can't.

......anyway, it's swings and roundabouts - when I returned from the UK I was advise to 'repatriate' my pension pots - damn glad I didn't take that advice......

.......likewise when I left the PS I took up employment with a UK firm but am based here - the choice was get paid in sterling or Euros - I chose Euros because it seemed like a good idea at the time

On the plus side, when your touting for business across the water our rates are a lot more competitive so a lot of work is getting channeled through the Irish end of the firm's operation

joe swanson

ItS not a pay rise - its restoration of pay.

All emergency services unions should strike on the same day if full restoration is not granted.They have given enough.

Jawgap

joe swanson wrote: »

ItS not a pay rise - its restoration of pay.

All emergency services unions should strike on the same day if full restoration is not granted.They have given enough.

Absolutely not - and I doubt even among the most militant members of those unions would you find support for a unilateral and complete withdrawal of labour for any period.

They may have over forms of action planned, and I'd be confident they'd be more interested in focusing on the employers rather than putting the public at risk.

Geuze

strobe wrote: »

What's the median wage in the public sector?

Mean earnings are published, but I can't see median data?

http://www.cso.ie/en/releasesandpublications/er/elcq/earningsandlabourcostsq32014finalq42014preliminaryestimates/#.VUCtvSFViko

KomradeBishop

jcon1913 wrote: »

I wont take a lecture or abusive language from you - nor should anyone else.

Please read my earlier posts - you will need to explain in laymans terms, which I have attempted to do, trying to interpret what you mean, what your logic is.

You consistently refuse to set out what it is you are driving at, but come on here asking me to learn more about Economics. I know about Economics but I am not going to take the lazy way out and exhort people to study it.

Instead I have attempted in my hamfisted way to explain why a government might decide to spend in a recession and what that would mean for society. Maybe I'm wrong, maybe you'd explain in simple language what you are getting at?

By the way, this is not the Economics forum, its the Social & Fun > After Hours part of Boards. You'll find the Economics part of Boards at Science Health and Environment.

You didn't explain anything in layman terms, you created an imaginary scenario where the interest rate is far higher than in reality, and then when this was pointed out to you - how you got your facts wrong, got the interest rate wrong - you just started then bleating on about other people being too 'wordy'/intellectual and such.

Your idea of 'laymans' is 'making crap up' - literally making up figures that aren't true in reality.

If you want to dumb-down discussion, to the point where you can just make anything up to suit your argument, and then whinge when people use words you don't like, then no I'll not be dumbing down discussion to your level.

I think I can credit most posters, with being able to take 5 seconds to Google a word/term they might not understand - or to just say to me they don't understand something, and ask me - at which point I'd be happy to explain more (so long as the request looks genuine - and not like a tactic for needling at me, while opposing me in debate).

Geuze

New CSO analysis of earnings data.

http://www.cso.ie/en/media/csoie/releasespublications/documents/earnings/2010/publicprivatepay.pdf

When account is taken of the PRD pension levy, the PS pay premium is -1.2% to 1% by 2010

NB: comm semi-states incl in private sector here.

See table 2.2 on page 18.

So the pay premium across all earnings percentiles is now 0% approx.

Note that lower paid PS tend to still earn a premium over private sector equivalents, but higher paid PS are paid less than private equivalents.

Note that this analysis is before the 3rd pay cut - Haddington road agreement,

jmayo

BoatMad wrote: »

Actually I would agree with KB. our issue is that expansion should be limited to non recurring items the difficulty is reigning in current spending when the next downturn occurs.

KB actually talked about funding job schemes and only when challenged on that has talked about funding infrastructure projects.
The thing is that some infrastructure projects will not employ that many people, unless of course you do them 19th century style.
Of course they can bring other benefits that can help the economy and/or society.

BoatMad wrote: »

full employment is predicted within 2 years. again one cannot fault Kbs logic , however the issue is how long you can sustain an economy at full employment.

Predicted is the word.
How accurate has economic predictions been in Ireland over the last 10/15 years.
Hell the government were yesterday waffling on about how things will be by 2020, but all of it is based on current levels of growth continuing.

I will keep asking how many years throughout this states history have we had full employment and low emigration or even immigration.

The only time I can ever recall that is when we had most of the unskilled and low skilled workers either working in our huge construction bubble or in our cheap credit funded retail bubble.

We can't return to the consumer spending we had during that time because guess what, we already have one of the highest levels of personal debt in the world.

That is reality although some see as a scenario that doesn't match their version of reality.

It is easy to say borrow more when it looks cheap to do so.
Actually it reminds me of our bubble years, but what happens when you hit a rocky patch.
Oh wait you get a bailout.:rolleyes:

BoatMad wrote: »

debt sustainabilty is more about investor confidence then actual ability to repay.

And investor confidence can be fickle.

jcon1913

KomradeBishop wrote: »

You didn't explain anything in layman terms, you created an imaginary scenario where the interest rate is far higher than in reality, and then when this was pointed out to you - how you got your facts wrong, got the interest rate wrong - you just started then bleating on about other people being too 'wordy'/intellectual and such.

Your idea of 'laymans' is 'making crap up' - literally making up figures that aren't true in reality.

If you want to dumb-down discussion, to the point where you can just make anything up to suit your argument, and then whinge when people use words you don't like, then no I'll not be dumbing down discussion to your level.

I think I can credit most posters, with being able to take 5 seconds to Google a word/term they might not understand - or to just say to me they don't understand something, and ask me - at which point I'd be happy to explain more (so long as the request looks genuine - and not like a tactic for needling at me, while opposing me in debate).

I have no problem with the interest rates - 1%, 2%, 0.65%. Fair play I'm not even going to check if you are right. Why would you borrow when you can avoid that by reining in spending?

I am not dumbing down the discussion.

I am telling you now I don't understand what justification you have for your your point of view, so I am asking you to explain why a country would borrow more money when they are deep in debt already, when the obvious solution it to stop overspending.

There is no question of needling you, I have been patient in explaining to you what I perceive as the central points, over to you now.

Wood

I am currently a systems administrator, in the civil service for 11 years.

My take home is 440 per week, or 32K ish per year.

Average wage in the private sector is 55-60K per year.

Yep i'm totally overpaid.

Oh, and mortgage auto approval? I got approval for 75K last year, and they wouldn't budge on that figure.

osarusan

jcon1913 wrote: »

I am telling you now I don't understand what justification you have for your your point of view, so I am asking you to explain why a country would borrow more money when they are deep in debt already, when the obvious solution it to stop overspending.
.

That is one obvious solution. That doesn't mean it is the only solution, or the best solution.

KB's suggestion is to borrow sensibly, invest shrewdly, and the positive impact the increased investment will have on the economy will lead to greater tax revenue in the future - to the extent that it is more advantageous and profitable to do this than just to stop overspending.

I don't think it is so difficult to understand what he is saying (whether you agree with it or not).

kippy

jcon1913 wrote: »

I have no problem with the interest rates - 1%, 2%, 0.65%. Fair play I'm not even going to check if you are right. Why would you borrow when you can avoid that by reining in spending?

I am not dumbing down the discussion.

I am telling you now I don't understand what justification you have for your your point of view, so I am asking you to explain why a country would borrow more money when they are deep in debt already, when the obvious solution it to stop overspending.

There is no question of needling you, I have been patient in explaining to you what I perceive as the central points, over to you now.

I think myself it is too soon to start reversing some of the cuts, especially in relation to wages and taxes however the political reality is that tax cuts and wages increases will happen with the blessing of the state and, by the looks of it, it's overlords.

jcon1913

osarusan wrote: »

That is one obvious solution. That doesn't mean it is the only solution, or the best solution.

KB's suggestion is to borrow sensibly, invest shrewdly, and the positive impact the increased investment will have on the economy will lead to greater tax revenue in the future - to the extent that it is more advantageous and profitable to do this than just to stop overspending.

I don't think it is so difficult to understand what he is saying (whether you agree with it or not).

Yes that makes some sense. What does 'invest shrewdly' mean though? If it means new roads, schools and hospitals then I think most people would agree. You can say that the country will benefit in the long run from things that will last in to the future, and by extension you could justify asking future generations of workers to shoulder some of that burden.

If it means failure to curb spending on day-to-day expenses then no it doesn't make sense.

Quin_Dub

I'm trying to understand the borrowing argument being put forward by KB..

Not getting at it, just trying to walk myself through it here..

So.. Very rough figures here...Let's say the Government borrows €100M for an Employment program to take people off the live register.

At current rates that will cost 650k in Interest in Year 1 (@0.65%), let's also assume that they lock in that rate for the duration of the loan - maybe 10 years..so probably ~€4M in interest over the lifetime of the loan

Assuming an average salary of 30k/pa then that takes about 3,300 people off the dole for a year - If they are directly employed by the state - Less is we have to initially fund Employer tax contributions as well.

The net cost is less than €100M as we no longer have to pay SW - Assume €150/w on average , saving ~€25M/pa in SW bills.

We also get back the taxes - At 30k/pa lets assume a net tax rate of 15% so that's another ~€15M or so back..

So - We borrow €100M , give 3.3K jobs out at a direct net cost of ~€60M - Which we have to spend every year..

So over the 10 years in repaying the initial €100M we spend a total of ~€704M rather than spending ~€250M on SW payments.

What are we actually getting for the additional €450M spend?

I get that in theory those 3.3k people now have increased purchasing power which potentially leads to more revenue/employment in other areas. But in the context of current GDP and Debt levels is that really the best use of nearly a half a billion euro?

Maybe I'm missing something and I'm genuinely interested in hearing the pros/cons of this in more detail..

But from what I can see , I don't get the logic of an employment program for employments sake..

Totally get spending on Infrastructure - For example would totally support the government borrowing to fund a nationwide Telecoms upgrade to provide fibre level broadband speeds everywhere or upgrades to transport infrastructure as that both provides employment during the construction phases and creates a platform for new employment opportunities to be created..

jcon1913

Quin_Dub wrote: »

I'm trying to understand the borrowing argument being put forward by KB..

Not getting at it, just trying to walk myself through it here..

So.. Very rough figures here...Let's say the Government borrows €100M for an Employment program to take people off the live register.

At current rates that will cost 650k in Interest in Year 1 (@0.65%), let's also assume that they lock in that rate for the duration of the loan - maybe 10 years..so probably ~€4M in interest over the lifetime of the loan

Assuming an average salary of 30k/pa then that takes about 3,300 people off the dole for a year - If they are directly employed by the state - Less is we have to initially fund Employer tax contributions as well.

The net cost is less than €100M as we no longer have to pay SW - Assume €150/w on average , saving ~€25M/pa in SW bills.

We also get back the taxes - At 30k/pa lets assume a net tax rate of 15% so that's another ~€15M or so back..

So - We borrow €100M , give 3.3K jobs out at a direct net cost of ~€60M - Which we have to spend every year..

So over the 10 years in repaying the initial €100M we spend a total of ~€704M rather than spending ~€250M on SW payments.

What are we actually getting for the additional €450M spend?

I get that in theory those 3.3k people now have increased purchasing power which potentially leads to more revenue/employment in other areas. But in the context of current GDP and Debt levels is that really the best use of nearly a half a billion euro?

Maybe I'm missing something and I'm genuinely interested in hearing the pros/cons of this in more detail..

But from what I can see , I don't get the logic of an employment program for employments sake..

Totally get spending on Infrastructure - For example would totally support the government borrowing to fund a nationwide Telecoms upgrade to provide fibre level broadband speeds everywhere or upgrades to transport infrastructure as that both provides employment during the construction phases and creates a platform for new employment opportunities to be created..

Now thats a post that makes sense. Take a bow my friend, you have clarified why borrowing is not always bad.

KomradeBishop

jmayo wrote: »

KB actually talked about funding job schemes and only when challenged on that has talked about funding infrastructure projects.
The thing is that some infrastructure projects will not employ that many people, unless of course you do them 19th century style.
Of course they can bring other benefits that can help the economy and/or society.

Actually, I've tried to avoid discussing the 'how to [not] spend' portion of government spending altogether, and focus on showing that even when government spends at the most optimally inefficient way, this still puts money into private sector hands (boosting aggregate demand), and that at current debt interest rates this can still boost GDP/economic growth, in a way that makes our debts more sustainable and brings gradual economic recovery.

The cost of public debt is so low at the moment, that it would actually be hard to find any way of spending through debt, that doesn't actually make the debts more sustainable through GDP growth.
I think the window of opportunity here is going to be relatively short as well (as the low interest is mainly down to QE), so we should be making the most of it.

People keep trying to wrench this back to the 'how to [not] spend' minutiae to rebut this, even though the precise point I'm making shows that even when you pick the worst ways to spend, it's still going to help.

osarusan

jcon1913 wrote: »

What does 'invest shrewdly' mean though?

I am sure that different people will have different positions on that.

jcon1913

osarusan wrote: »

I am sure that different people will have different positions on that.

One man's bet at Cheltenham is another mans gamble? Indeed.

swimming in a sea

Jawgap wrote: »

It's not a pay increase, it's pay restoration.

That's the same thing you'd hear from a compulsive gambler, I'm only trying to win my money back.

Their wage now is their wage, what they got paid 5-7 years ago doesn't count for sh*t

KomradeBishop

jcon1913 wrote: »

I have no problem with the interest rates - 1%, 2%, 0.65%. Fair play I'm not even going to check if you are right. Why would you borrow when you can avoid that by reining in spending?

I am not dumbing down the discussion.

I am telling you now I don't understand what justification you have for your your point of view, so I am asking you to explain why a country would borrow more money when they are deep in debt already, when the obvious solution it to stop overspending.

There is no question of needling you, I have been patient in explaining to you what I perceive as the central points, over to you now.

I explained this in earlier posts:

Whether or not you can sustainably borrow more, does not depend upon the overall level of debt, it depends on the interest you pay on that debt - forget the overall debt, and look at the interest payments.

When debt has extremely low interest rates - as it does now (the lowest interest rates for 30+ years, if not way longer [ever]) - you can expand debt sustainably.

The real question of how sustainable debts are, is: How much interest are we paying on all of our public debt, as a percentage of GDP?

The important point here, is that government finances do not work like business/personal finances:
For a business/person, cutting spending helps pay down debts faster, so is the prudent/sustainable course of action.

For a government/country, maximizing economic growth (GDP) and employment (while keeping public debt interest rates sustainable, i.e. keeping interest-payments-vs-GDP low) contributes to tax intake and improves public-debt-vs-GDP and interest-payments-vs-GDP, helping to pay down debts faster.

However, a government/country cutting public spending pushes economic-growth/GDP downwards, and thus employment and tax intake, which can make public-debt-vs-GDP and interest-payments-vs-GDP more unsustainable.


TLDR - the overall public debt doesn't matter, the interest payments on it are what matters - you want maximum employment/economic-growth, even if that means using public-debt/government-spending to fund it - but only so long as the boost to economic growth, makes the overall interest payments on public debt more sustainable (and the interest rate on new debt, is largely what determines this - which is at the lowest level ever right now).

missierex

Iwasfrozen wrote: »

The perks taken off you during the boom were normalization, public sector workers should never have been paid so lavishly in the first place.

Those who believe they can get better pay in the private sector are of course welcome to leave but few ever do.


For the level of education the job requires, the hours put in, the stress of the job and the working conditions, 45k is being generous.

Lavishly? Seriously? You call net pay of €23,000 lavish? Out of that comes bills, mortgage and all that goes with that, car maintenance etc. And that is after nearly 8 years in the job, with zilch promotion opportunities.

I am sick to death of certain people tarring us all with the same brush. We are not all on large salaries.

Oh and FYI I have a degree and MSc.

Iwasfrozen

missierex wrote: »

Lavishly? Seriously? You call net pay of €23,000 lavish? Out of that comes bills, mortgage and all that goes with that, car maintenance etc. And that is after nearly 8 years in the job, with zilch promotion opportunities.

I am sick to death of certain people tarring us all with the same brush. We are not all on large salaries.

Oh and FYI I have a degree and MSc.

When the crisis hit public sector unions choose to throw future entrants under the bus to protect their members. We don't need to spend more money on the ps. We need to make it more efficient and redistribute funds from senior members.

Iwasfrozen

Iwasfrozen wrote: »

When the crisis hit public sector unions choose to throw future entrants under the bus to protect their members. We don't need to spend more money on the ps. We need to make it more efficient and redistribute funds from senior members.

In what planet is is it fair reducing experienced workers salary who have years of experience and years of hard work to get up to something reassembling a decent wage.

Absolute and utter nonsense, this opinion that public servants shouldn't be well paid needs to be cast aside by the few people beating that drum. We should strive to have an even more skilled and better paid public service not reduce pay and end up with no one decent wanting to work for it.

KomradeBishop

Quin_Dub wrote: »

I'm trying to understand the borrowing argument being put forward by KB..

Not getting at it, just trying to walk myself through it here..

So.. Very rough figures here...Let's say the Government borrows €100M for an Employment program to take people off the live register.

At current rates that will cost 650k in Interest in Year 1 (@0.65%), let's also assume that they lock in that rate for the duration of the loan - maybe 10 years..so probably ~€4M in interest over the lifetime of the loan

Assuming an average salary of 30k/pa then that takes about 3,300 people off the dole for a year - If they are directly employed by the state - Less is we have to initially fund Employer tax contributions as well.

The net cost is less than €100M as we no longer have to pay SW - Assume €150/w on average , saving ~€25M/pa in SW bills.

We also get back the taxes - At 30k/pa lets assume a net tax rate of 15% so that's another ~€15M or so back..

So - We borrow €100M , give 3.3K jobs out at a direct net cost of ~€60M - Which we have to spend every year..

So over the 10 years in repaying the initial €100M we spend a total of ~€704M rather than spending ~€250M on SW payments.

What are we actually getting for the additional €450M spend?

I get that in theory those 3.3k people now have increased purchasing power which potentially leads to more revenue/employment in other areas. But in the context of current GDP and Debt levels is that really the best use of nearly a half a billion euro?

Maybe I'm missing something and I'm genuinely interested in hearing the pros/cons of this in more detail..

But from what I can see , I don't get the logic of an employment program for employments sake..

Totally get spending on Infrastructure - For example would totally support the government borrowing to fund a nationwide Telecoms upgrade to provide fibre level broadband speeds everywhere or upgrades to transport infrastructure as that both provides employment during the construction phases and creates a platform for new employment opportunities to be created..

While I think the previous post I just made, explains it in more detail than I have in other posts, there is a problem with the way you are looking at this here:
You are looking at this from an isolated view, where the only people affected by this policy are the government (through spending/taxes/finances), and the employed workers - but it affects the whole economy instead (you do mention this as a footnote, but then afterwards you still assume current GDP levels).

Increased government spending, puts more money in workers hands, who then go out and spend that money in the economy - which can increase employment in the private economy, causing even further increases in GDP and tax intake through the economic activity generated etc., and quantifying the effect of that is hard.

The problem with the private sector right now, is that there is not enough money in the private sector to boost economic-activity/employment - and government spending is one of the last ways to boost the amount of money flowing into the private sector, which is not yet already completely tapped out.

Also, you are looking at the overall amount of debt still, when what is important instead is the interest rate, and 'interest-payments-vs-GDP' - as this is what determines how sustainable the debt is.
The overall debt level is a very misleading statistic really, and people always seem to forget the 'GDP' side of 'debt vs GDP' - many policies for cutting the 'debt' portion of that equation, actually reduce GDP by even more - focusing on sustainably maximizing GDP first is more sensible.

KomradeBishop

Iwasfrozen wrote: »

When the crisis hit public sector unions choose to throw future entrants under the bus to protect their members. We don't need to spend more money on the ps. We need to make it more efficient and redistribute funds from senior members.

"Should more money be spent on government/public-sector?" and "How should money be spent within the government/public-sector?" are two completely different and unrelated questions.

Ignoring the 'how [not] to spend' set of questions for now (so please don't try to drag me into those questions), the other debate I've been in here, shows that we definitely should be increasing government/public-sector spending - and that economically it's a very prudent thing to do right now.

The 'how to spend' is a different matter though, but which doesn't affect the fact that there should be more spending.

crusier

I always find it amazing that so many of these lazy overpaid public servants get snapped up by the private sector when they retire and walk into these jobs, why would employers do that and ignore other private sector workers?

osarusan

crusier wrote: »

I always find it amazing that so many of these lazy overpaid public servants get snapped up by the private sector when they retire and walk into these jobs, why would employers do that and ignore other private sector workers?

Charity. None of them could survive in the 'real world' otherwise you see.

Just the usual private sector charity helping out the needy.

Quin_Dub

KomradeBishop wrote: »

While I think the previous post I just made, explains it in more detail than I have in other posts, there is a problem with the way you are looking at this here:
You are looking at this from an isolated view, where the only people affected by this policy are the government (through spending/taxes/finances), and the employed workers - but it affects the whole economy instead (you do mention this as a footnote, but then afterwards you still assume current GDP levels).

Increased government spending, puts more money in workers hands, who then go out and spend that money in the economy - which can increase employment in the private economy, causing even further increases in GDP and tax intake through the economic activity generated etc., and quantifying the effect of that is hard.

The problem with the private sector right now, is that there is not enough money in the private sector to boost economic-activity/employment - and government spending is one of the last ways to boost the amount of money flowing into the private sector, which is not yet already completely tapped out.

Also, you are looking at the overall amount of debt still, when what is important instead is the interest rate, and 'interest-payments-vs-GDP' - as this is what determines how sustainable the debt is.
The overall debt level is a very misleading statistic really, and people always seem to forget the 'GDP' side of 'debt vs GDP' - many policies for cutting the 'debt' portion of that equation, actually reduce GDP by even more - focusing on sustainably maximizing GDP first is more sensible.

Thanks for the reply..

I understand the point about Interest Payments vs. GDP what I'm unsure on is whether the impact that the increased debt would have on GDP would be worth the effort.

If we borrow 100M and put it into the economy , then GDP grows by 100M (plus a bit more due to some kind of halo effect , but how much more? ), but equally debt increases , so the GDP:Debt ratio probably remains largely unchanged.

On the Interest Payment :GDP side - Would the ratio really improve substantively here ?.

I totally agree that the government should be working to convert existing debt to new loans at the lower rates as much as they can , the impact there is obvious and clear.

But I'm less clear on the impact to the interest payment : GDP ratio from additional incremental borrowing just because the rates are low..

I can draw a line between using government debt to fund large scale infrastructure programs and a long term positive impact to the economy. I can also link using government debt to fund the SME sector , whether that's through funding tax incentives (Employer PAYE contribution reductions for new hires or something) or perhaps a Government lending scheme at near zero interest to help businesses grow given that bank lending is still fairly stagnant.

What I can't join the dots on though is how any Government borrowing can be automatically considered a positive to the economy, just because the cost of borrowing is at historic lows..

Perhaps the what/how is really a bit more important than you feel..?

kippy

Quin_Dub wrote: »

I'm trying to understand the borrowing argument being put forward by KB..

Not getting at it, just trying to walk myself through it here..

So.. Very rough figures here...Let's say the Government borrows €100M for an Employment program to take people off the live register.

At current rates that will cost 650k in Interest in Year 1 (@0.65%), let's also assume that they lock in that rate for the duration of the loan - maybe 10 years..so probably ~€4M in interest over the lifetime of the loan

Assuming an average salary of 30k/pa then that takes about 3,300 people off the dole for a year - If they are directly employed by the state - Less is we have to initially fund Employer tax contributions as well.

The net cost is less than €100M as we no longer have to pay SW - Assume €150/w on average , saving ~€25M/pa in SW bills.

We also get back the taxes - At 30k/pa lets assume a net tax rate of 15% so that's another ~€15M or so back..

So - We borrow €100M , give 3.3K jobs out at a direct net cost of ~€60M - Which we have to spend every year..

So over the 10 years in repaying the initial €100M we spend a total of ~€704M rather than spending ~€250M on SW payments.

What are we actually getting for the additional €450M spend?

I get that in theory those 3.3k people now have increased purchasing power which potentially leads to more revenue/employment in other areas. But in the context of current GDP and Debt levels is that really the best use of nearly a half a billion euro?

Maybe I'm missing something and I'm genuinely interested in hearing the pros/cons of this in more detail..

But from what I can see , I don't get the logic of an employment program for employments sake..

Totally get spending on Infrastructure - For example would totally support the government borrowing to fund a nationwide Telecoms upgrade to provide fibre level broadband speeds everywhere or upgrades to transport infrastructure as that both provides employment during the construction phases and creates a platform for new employment opportunities to be created..

I wouldn't agree with the figures used there but of course it would depend on the profile of each individual.
You use an average figure of €150 per week to support an unemployed person.
I would suggest this figure is most likely greater as there are any number of benefits that be given to to people on top of the basic allowances, including medical card, travel, rent, FIS and any number of other supports.
Granted, it would be difficult to find an average figure for 3300 people out of the 400K or so that are unemployed. But I would suggest our social welfare spend wouldn't be anywhere near 20Billion if the average spent on 400K people were just 150 euro. (I appreciate the social welfare spend also takes into account pensions and child allowance etc)

Also, you use the figure of a 15% "return" for the state on 30K salary when in reality it is much higher than that - almost exactly twice that actually, when you plug in the figures here for a public sector worker. I've not made any assumptions about kids, houses etc.
http://taxcalc.ie/budget-2015/
Even if you were to disregard the pensions contribution (in case you want to argue that will come back to them anyway) the figure is still 17.5% but I would make the arguement that the state gets the pension contribution for current spending.

And all of that, of course, doesn't take into account any spin off jobs that may be created, which I appreciate is very difficult to measure, and you've stated as such.

I'd add, I'd generally agree with the idea that borrowing to create public sector jobs primarily is not a good idea.

Tiger Mcilroy

Yara Old Backyard wrote: »

In what planet is is it fair reducing experienced workers salary who have years of experience and years of hard work to get up to something reassembling a decent wage.

Absolute and utter nonsense, this opinion that public servants shouldn't be well paid needs to be cast aside by the few people beating that drum. We should strive to have an even more skilled and better paid public service not reduce pay and end up with no one decent wanting to work for it.

The same planet were performance indicators are ignored in favour of blanket increases when its openly admitted that the review process used to award increments is not fit for purpose and there is no desire to resolve the issue.

Iwasfrozen

Yara Old Backyard wrote: »

In what planet is is it fair reducing experienced workers salary who have years of experience and years of hard work to get up to something reassembling a decent wage.

Absolute and utter nonsense, this opinion that public servants shouldn't be well paid needs to be cast aside by the few people beating that drum. We should strive to have an even more skilled and better paid public service not reduce pay and end up with no one decent wanting to work for it.

Why isn't it fair? Their wages should never have been that high in the first place.

They were bloated in the good times by a spend happy government and protected during the bad by betraying future entrants.

We shouldn't even be talking about a pay increase while in deficit. It would be comical if it wasn't serious.

KomradeBishop

Quin_Dub wrote: »

Thanks for the reply..

I understand the point about Interest Payments vs. GDP what I'm unsure on is whether the impact that the increased debt would have on GDP would be worth the effort.

If we borrow 100M and put it into the economy , then GDP grows by 100M (plus a bit more due to some kind of halo effect , but how much more? ), but equally debt increases , so the GDP:Debt ratio probably remains largely unchanged.

On the Interest Payment :GDP side - Would the ratio really improve substantively here ?.

I totally agree that the government should be working to convert existing debt to new loans at the lower rates as much as they can , the impact there is obvious and clear.

But I'm less clear on the impact to the interest payment : GDP ratio from additional incremental borrowing just because the rates are low..

I can draw a line between using government debt to fund large scale infrastructure programs and a long term positive impact to the economy. I can also link using government debt to fund the SME sector , whether that's through funding tax incentives (Employer PAYE contribution reductions for new hires or something) or perhaps a Government lending scheme at near zero interest to help businesses grow given that bank lending is still fairly stagnant.

What I can't join the dots on though is how any Government borrowing can be automatically considered a positive to the economy, just because the cost of borrowing is at historic lows..

Perhaps the what/how is really a bit more important than you feel..?

You can't really quantify the increase in GDP, from what happens to government-spent money, when it is circulated through the private sector.
What we do know though, is that the reason the private sector is in a massive downturn, is because of the relative lack of money flowing through it - and government spending is one of the last methods of flowing more money through the private sector, that is not yet tapped out completely.

When we are flowing more money through the private sector, this will slowly resolve a huge host of problems, that hold back aggregate demand, and which will slowly bring the economy back to recovery - things that will be resolved:
- Private debts will be paid down, and the more they are paid down, the more discretionary income will become available for people to spend (adding to aggregate demand, boosting the private sector and tax intake)
- The private economy will recover, and workers temporarily employed by government programs, will move back to private sector employment, until there is full private sector employment (reducing the strain on government finances)
- Our industry in general will recover, allowing us to increase our economic efficiency, particularly through infrastructural projects (lessening required imports), and allowing us to become more competitive (increasing exports)
- More that I can't think of offhand.

A sustained bout of large-scale government spending in the short/medium-term, resolves a ton of economic problems, and allows increased government spending to wind-down later on (when the economy is at maximum potential GDP, and full private sector employment), at which point, our interest-payments-vs-GDP will be much more sustainable, and debt-vs-GDP will be reducing over time.

So, while you are looking at short-term effects of this increased spending, it is the long run benefits to GDP and government finances - and of getting money flowing into the private sector again, so the problems there can be resolved - that we'd be after here.

KomradeBishop

Iwasfrozen wrote: »

Why isn't it fair? Their wages should never have been that high in the first place.

They were bloated in the good times by a spend happy government and protected during the bad by betraying future entrants.

We shouldn't even be talking about a pay increase while in deficit. It would be comical if it wasn't serious.

The idea that a government deficit is a bad thing, is what is comical - yet it is an extremely prevalent myth.

You can have a government deficit permanently, given low enough interest rates, while still having low interest-payments-to-GDP and in the long term, low debt-to-GDP - because GDP is a factor in those equations (and government deficits can actually help resolve all of the problems holding GDP back...).

'Deficits = bad' is just an oversimplified/moralistic view of economics, which just confuses how personal/business finances work, with how government finances work - government finances are a completely different thing altogether.

Iwasfrozen

KomradeBishop wrote: »

The idea that a government deficit is a bad thing, is what is comical - yet it is an extremely prevalent myth.

You can have a government deficit permanently, given low enough interest rates, while still having low interest-payments-to-GDP and in the long term, low debt-to-GDP - because GDP is a factor in those equations (and government deficits can actually help resolve all of the problems holding GDP back...).

'Deficits = bad' is just an oversimplified/moralistic view of economics, which just confuses how personal/business finances work, with how government finances work - government finances are a completely different thing altogether.

Given low interest rates. The problem with your logic is the greater the government's debt to gdp the greater their risk to interest rate fluctuations.

Celticfire

Iwasfrozen wrote: »

When the crisis hit public sector unions choose to throw future entrants under the bus to protect their members. We don't need to spend more money on the ps. We need to make it more efficient and redistribute funds from senior members.

Iwasfrozen wrote: »

They were bloated in the good times by a spend happy government and protected during the bad by betraying future entrants.

Can you explain how they were betrayed and what you think the unions and workers should have done? Not forgetting that it was The Government that cut the new entrant wages as part of the budget.

KomradeBishop

Iwasfrozen wrote: »

Given low interest rates. The problem with your logic is the greater the government's debt to gdp the greater their risk to interest rate fluctuations.

Not really - markets are concerned with sustainability of debt, which is down to interest-payments-to-GDP, not just public-debt-to-GDP.

Iwasfrozen

Celticfire wrote: »

Can you explain how they were betrayed and what you think the unions and workers should have done? Not forgetting that it was The Government that cut the new entrant wages as part of the budget.

They should have cut wages all round in proportion rather than shouldering the burden on new entrants.

Iwasfrozen

KomradeBishop wrote: »

Not really - markets are concerned with sustainability of debt, which is down to interest-payments-to-GDP, not just public-debt-to-GDP.

And what happens when the government has to refinance the debt and finds interest rates have risen?

Celticfire

Iwasfrozen wrote: »

They should have cut wages all round in proportion rather than shouldering the burden on new entrants.

I gotcha ... they should have volunteered for a third pay cut just to keep you happy.

I guess if your boss was looking to hire some you'd be the first to volunteer a pay cut to help him out or are you just generous with other peoples money?

Iwasfrozen

Iwasfrozen wrote: »

Why isn't it fair? Their wages should never have been that high in the first place.

They were bloated in the good times by a spend happy government and protected during the bad by betraying future entrants.

We shouldn't even be talking about a pay increase while in deficit. It would be comical if it wasn't serious.

Of course there wages should be that high, a large portion of public sector workers were underpaid before the cuts of recent years never mind after them. Just because yourself and one or two more think otherwise doesn't change the fact. Some of your statements on it have been crazy, capping teacher pay at 45k? For some of the most important workers in the county responsible for educating our youth. Do you want highly qualified and skilled people doing these jobs or do you want the people left over after the best won't work for the wages?

I can even give you a personal example. Who do you want teaching your children? Do you want someone with pass science degree or someone with a phd in science? I have a science based phd and I would seriously consider teaching if the starting salary (with the extra benefits for higher qualifications) was still around 40k like it used to be for someone with my qualifications, but no chance at the current starting salary with very slow progression never mind if it was capped at 45k. You are also getting a fair bit less into your hand every month working in public sector due to the theft that is the pension levy.

Iwasfrozen

Celticfire wrote: »

I gotcha ... they should have volunteered for a third pay cut just to keep you happy.

I guess if your boss was looking to hire some you'd be the first to volunteer a pay cut to help him out or are you just generous with other peoples money?

I'm not looking for volunteers, I'm looking for public ssector deunionization so the government can have the flexibility to make these decisions.

Celticfire

Iwasfrozen wrote: »

I'm not looking for volunteers, I'm looking for public ssector deunionization so the government can have the flexibility to make these decisions.

Don't hold your breath then, unions aren't going anywhere.

You didn't explain how they were betrayed. The Government made it decision with no union input ( in fact unions expressed the fact that they didn't agree with lower pay for new entrants and have gotten a reversal on this)

So you in fact got what you were looking for, the government to make a decision but it was a betrayal by unions and workers, strange logic

Iwasfrozen

Yara Old Backyard wrote: »

Of course there wages should be that high, a large portion of public sector workers were underpaid before the cuts of recent years never mind after them. Just because yourself and one or two more think otherwise doesn't change the fact. Some of your statements on it have been crazy, capping teacher pay at 45k? For some of the most important workers in the county responsible for educating our youth. Do you want highly qualified and skilled people doing these jobs or do you want the people left over after the best won't work for the wages?

I can even give you a personal example. Who do you want teaching your children? Do you want someone with pass science degree or someone with a phd in science? I have a science based phd and I would seriously consider teaching if the starting salary (with the extra benefits for higher qualifications) was still around 40k like it used to be for someone with my qualifications, but no chance at the current starting salary with very slow progression never mind if it was capped at 45k. You are also getting a fair bit less into your hand every month working in public sector due to the theft that is the pension levy.

An msc and a phd are not needed to teach leaving cert. Why would we pay someone extra for being over qualified?

Iwasfrozen

Iwasfrozen wrote: »

An msc and a phd are not needed to teach leaving cert. Why would we pay someone extra for being over qualified?

No such thing as over qualified when it comes to teaching and inspiring young people in a subject. Also it give the teacher a far wider perspective on the subject and where students can go with it etc along with having a better and more in depth knowledge of the subject.

The extra incentives should be immediately reintroduced to get highly qualified people back into teaching.