Thursday, January 29, 2009

Maintaining demand in the ecomony

A representative of the CPSU was on the 6.1 News two weeks ago saying that we should have no pay cuts in the public service because above all we must "maintain demand in the economy!". Not a bad idea but is paying public servants the best way to do that? I mean following his logic we could get out of this if we were to pay them all 20% sure that would help us no end by increasing demand by 20% or at least that's what he seems to think.

Only 1/6 of the workforce are in the public service which is roughly 17%, so a 10% cut in those salaries would only amount to a 1.6% reduction in demand while saving 2 Billion for the budget. This potential 1.6% drop in demand is as nothing compared to the actual drop due to people losing their jobs in the private sector. But hey let's all focus on making sure that we don't have that killer 1.6% drop.

In contrast to the above I tend to agree that lying off loads of low paid public servants wouldn't save that much money when you consider that we take back about 1/3 of their pay in taxes and PRSI and it would lead to greater reductions in services. Yet would cutting pay by the same amount have the same effect? If one in ten jobs went it is reasonable to think that even with the remaining 90% taking up some slack that there would be less people around to do the same work so that same work wouldn't happen. However, if you cut salaries by 10% across the board would the people affected really work 10% less? Would members of An Garda Siochana guard us 10% less, would teachers teach 10% less well? There is no requirement that a 10% pay cut should lead to any substantive cut in services while a cut in numbers employed almost automatically means a reduction in services. And haven't many of of those providing public services been telling us that their jobs are vocations? like teachers and doctors and nurses?

1 comment:

Bock the Robber said...

The vocations line doesn't come from teachers. doctors and nurses.

They've been saying for years that their jobs are not vocations and that they should be treated like any other professional.

The vocation argument has for generations been used by governments to shame nurses into covering for medical staff shortages in the health service, while the same organisation is buried under an excess of administrators.