Another public sector reform thread: the negative impact on private sector

[Question R24U]

The Civil Service/Public Service debate has gone on for years, the OECD report debunked some of the crazier notions which exist (eg bloated public service) but there must be room for reform, savings (cuts) and removal of barriers.

As I see it, public sector reform can be split into 3 categories:
- those involving waste (eg contuining to spend money retaining the E voting machines, budget over-runs, P-pars, and other matters addressed by C&A general.
- structural pay and pay-roll issues (incremental payments, pensions, performace bonuses, promotion payments, stepping up payments, numbers of staff, holiday timings and benchmarking). Some of which can be justified; but should the benchmarking committee be rolled out to review the gains made under the scheme to see if they still apply?
- those which affect the private sector in an adverse way eg limitation of access, bureuocracy, barriers to entry or red tape.

The first two of these get a lot of attention, but perhaps the most important is the third.

1) What reforms can be introduced here?
2) Can there be any give on reducing red tape?
3) Is it possible or desirable to reduce employers' exposure to unfair dismissal cases?
4) Why are there so still many fora for employment law cases; rights commissioner, EAT, Labour Court, Equality Tribunal, High Court?
5) Should Data Commissioner, Social Welfare, FOI obligations be rowed back?
6) Should it be made easier to sack employees in the job over 12 months on the grounds of competacy?

The Small Firms Associations view:
From a SFA survey: RTÉ Business: Red tape becoming bigger concern - SFA
The survey showed that legislation and red tape have increased as significant problems for small businesses in the survey, with 10.5% and 8.8% of companies respectively citing them as their biggest problem.

“One of the major features of the Irish economy in recent years has been a significant deterioration in competitiveness with costs in Ireland rising more rapidly than in competitor countries”, commented Callan. “The tight skilled labour market, strong wage growth, high inflation, adverse exchange rate movements, fuel & energy prices, increased congestion and increases in the cost of state services are all causes for concern. The move to a high cost, high wage economy must be matched by higher productivity and reductions in input costs for the sheltered sectors of the economy.”

Callan further outlined that small business is being constricted in its growth plans by the global credit crunch, which has reduced the amount of cash available to banks, which in turn has imposed severe restrictions on the working capital of many businesses. This has meant that many businesses are now passing on their liquidity issues to other businesses in delayed payment, which is causing severe difficulties for small businesses operating in all aspects of the economy. “There is a need for government to strengthen “Late Payment Regulations” to ensure that there is a requirement on businesses to be paid on time”, commented Callan.

https://www.sfa.ie/Sectors/SFA/SFA.nsf/vPages/Press_Centre~small-business-on-red-alert-24-06-2008?OpenDocument

[patslatt]

The Civil Service/Public Service debate has gone on for years, the OECD report debunked some of the crazier notions which exist (eg bloated public service) but there must be room for reform, savings (cuts) and removal of barriers.

As I see it, public sector reform can be split into 3 categories:
- those involving waste (eg contuining to spend money retaining the E voting machines, budget over-runs, P-pars, and other matters addressed by C&A general.
- structural pay and pay-roll issues (incremental payments, pensions, performace bonuses, promotion payments, stepping up payments, numbers of staff, holiday timings and benchmarking). Some of which can be justified; but should the benchmarking committee be rolled out to review the gains made under the scheme to see if they still apply?
- those which affect the private sector in an adverse way eg limitation of access, bureuocracy, barriers to entry or red tape.

The first two of these get a lot of attention, but perhaps the most important is the third.

1) What reforms can be introduced here?
2) Can there be any give on reducing red tape?
3) Is it possible or desirable to reduce employers' exposure to unfair dismissal cases?
4) Why are there so still many fora for employment law cases; rights commissioner, EAT, Labour Court, Equality Tribunal, High Court?
5) Should Data Commissioner, Social Welfare, FOI obligations be rowed back?
6) Should it be made easier to sack employees in the job over 12 months on the grounds of competacy?

The Small Firms Associations view:
From a SFA survey: RTÉ Business: Red tape becoming bigger concern - SFA
The survey showed that legislation and red tape have increased as significant problems for small businesses in the survey, with 10.5% and 8.8% of companies respectively citing them as their biggest problem.





https://www.sfa.ie/Sectors/SFA/SFA.n...8?OpenDocument

Pay levels for the public sector need to be cut. The Benchmarking programme was a farce designed to buy union votes. It increases pay when private sector pay is increasing but wants nothing to do with private sector pay decreases and loss of bonuses.

If the public sector insists on jobs for life and gold plated pensions for the extremely high percentage of the sector (relative to the private sector) on $50,000 to 100,000 a year,then the value of those privileges need to be costed in pay comparisons with the private sector.

The rocketing Irish unemployment figures underlines the value of jobs for life, which could be worth 12% to 15% of pay. When middle aged business people lose their jobs,they often have to start their next job with a big drop in pay.

The gold plated pensions allow many highly paid public sector workers to make more money on their pensions than they made while working,while taxes are imposed on private sector workers with poor pension provision to pay for it. How much are those pensions worth as a percentage of annual pay? Compared to a private sector salary,I'd guess 15% of salary.

So the twin privileges of jobs for life and gold plated pensions could be worth up to 30% of annual pay compared to private sector pay.

The Benchmarking exercise was supposed to achieve equal pay with comparable private sector jobs,but despite this advantage of 30%,public sector basic pay is about 25% higher than the private sector's average pay,and 55% higher including the 30%.

This contrasts with the UK where private sector basic pay is higher than the public sector's. Is the UK public sector less efficient for that? Are the services of hospitals,schools and police less efficient there?

Why does Irish public sector pay have to be so much higher? Do the jobs require more education and training? Or are the standards set artificially high by vested interests in order to manipulate pay?

A good example of pay manipulation by trade unions was the Brussels creation of a four year nursing degree for a EU wide nursing qualification. The UK did not join in on this in order to keep nursing pay from rising excessively. Why should nursing training which was done largely through apprenticeship a generation ago now require four years of college? Wouldn't two years be enough?

[ibis]

I wouldn't consider the red tape issue particularly important. It's a pain, but it's been reducing for years. Credit difficulties are way more important:

Callan further outlined that small business is being constricted in its growth plans by the global credit crunch, which has reduced the amount of cash available to banks, which in turn has imposed severe restrictions on the working capital of many businesses. This has meant that many businesses are now passing on their liquidity issues to other businesses in delayed payment, which is causing severe difficulties for small businesses operating in all aspects of the economy. “There is a need for government to strengthen “Late Payment Regulations” to ensure that there is a requirement on businesses to be paid on time”, commented Callan.

The Late Payment Regulations are a joke. I don't know any small business or sole trader who has ever even seriously tried to apply them to a client. If your invoice is overdue payment, the client is supposed to add the late payment to it. Do they heck. By the time a late payer is actually paying the invoice, you're simply not in a position to say "well, this is short the late payment, so I have to refuse it".

It tempts me to put up a website dedicated to late payments, where small businesses can give big businesses a "credit rating".

[Ronanr]

I am confused.

Small business say they want less red tape in general, but then call for more red tape in the particular with the next breath (“There is a need for government to strengthen “Late Payment Regulations”).

Would it not be better for the government to let business to use the civil courts system (that already exists) to sort out their late paying clients, rather than bringing in a whole lot of red tape with late payments regulations and the like?

[hopi watcher]

Pay levels for the public sector need to be cut. The Benchmarking programme was a farce designed to buy union votes. It increases pay when private sector pay is increasing but wants nothing to do with private sector pay decreases and loss of bonuses.

If the public sector insists on jobs for life and gold plated pensions for the extremely high percentage of the sector (relative to the private sector) on $50,000 to 100,000 a year,then the value of those privileges need to be costed in pay comparisons with the private sector.

The rocketing Irish unemployment figures underlines the value of jobs for life, which could be worth 12% to 15% of pay. When middle aged business people lose their jobs,they often have to start their next job with a big drop in pay.

The gold plated pensions allow many highly paid public sector workers to make more money on their pensions than they made while working,while taxes are imposed on private sector workers with poor pension provision to pay for it. How much are those pensions worth as a percentage of annual pay? Compared to a private sector salary,I'd guess 15% of salary.

So the twin privileges of jobs for life and gold plated pensions could be worth up to 30% of annual pay compared to private sector pay.

The Benchmarking exercise was supposed to achieve equal pay with comparable private sector jobs,but despite this advantage of 30%,public sector basic pay is about 25% higher than the private sector's average pay,and 55% higher including the 30%.

This contrasts with the UK where private sector basic pay is higher than the public sector's. Is the UK public sector less efficient for that? Are the services of hospitals,schools and police less efficient there?

Why does Irish public sector pay have to be so much higher? Do the jobs require more education and training? Or are the standards set artificially high by vested interests in order to manipulate pay?

A good example of pay manipulation by trade unions was the Brussels creation of a four year nursing degree for a EU wide nursing qualification. The UK did not join in on this in order to keep nursing pay from rising excessively. Why should nursing training which was done largely through apprenticeship a generation ago now require four years of college? Wouldn't two years be enough?

How often do we have to read this nonsensical rubbish? The suggestion that public wages should be cut by 30% is utterly rediculous. The OECD shows that we have one of the leanest public sevices in Europe and now you want public servants to work for a pittance. Is PatS the last remaining PD?

[ibis]

I am confused.

Small business say they want less red tape in general, but then call for more red tape in the particular with the next breath (“There is a need for government to strengthen “Late Payment Regulations”).

The confusion results from the fact that red tape isn't a major concern for most small businesses:

"The fifth annual SFA national business survey shows that energy and fuel prices are a major concern for 77% of small companies and an increase in legislation is an escalating concern for 66% of small firms, with insurance costs cited by 56% as a worry."

As opposed to:

"The survey showed that legislation and red tape have increased as significant problems for small businesses in the survey, with 10.5% and 8.8% of companies respectively citing them as their biggest problem."

Those numbers (10.5% and 8.8%) are very much smaller than the numbers who are worried about other concerns - and I would be willing to bet that they also reflect the concerns of particular sectors.

Would it not be better for the government to let business to use the civil courts system (that already exists) to sort out their late paying clients, rather than bringing in a whole lot of red tape with late payments regulations and the like?

No, it would not, because suing your clients is one of the last things a small business wants to do.

A major difference between large and small businesses is that the latter are usually reliant on a much smaller number of regular clients. That means that suing a client for late payment can involve effectively taking an appreciable proportion of one's customer base to court. It takes time, it takes money, and you can kiss any goodwill you had goodbye

[HarshBuzz]

How often do we have to read this nonsensical rubbish? The suggestion that public wages should be cut by 30% is utterly rediculous. The OECD shows that we have one of the leanest public sevices in Europe and now you want public servants to work for a pittance. Is PatS the last remaining PD?

if you can show me a link that proves that Irish public servants are underpaid compared to their OECD counterparts, I will gladly eat a lot of hats

simple facts (as I see them):

We pay our public servants too much (on a like for like basis with other OECD countries).
Their pensions are too generous.
They are neither much better nor much worse than public servants (on an individual basis) in other OECD countries however actual delivery of services appears to be worse than the average.
We have chronic understaffing in some areas (think speech therapists), we have armies of pen pushers doing nothing in other areas (think HSE admin).

We can't squeeze much more out of the tax base (and if we do, it will further depress the economy), the spending side of the budget needs to cut back drastically. Public sector wages need to be cut.

these are problems that the government needs to address urgently. Not doing so in the face of union or other pressure will lead to further deterioration in the public finances and eventual implosion of the economy.

Does the Government have the balls to do this? Apparently not...

[libertarian-right]

if you can show me a link that proves that Irish public servants are underpaid compared to their OECD counterparts, I will gladly eat a lot of hats

simple facts (as I see them):

i think these are the facts he is looking for....

Pay day bonanza for civil servants - Times Online

Servants that could push the state over a cliff - Times Online

Public sector must be made to march for their money - Analysis - Independent.ie

Irish Economy: Political disarray, panic, incompetence, a credibility gap and five-star "cradle to grave" socialism

Full gravity of situation has yet to sink in - National News, Frontpage - Independent.ie

[patslatt]

I wouldn't consider the red tape issue particularly important. It's a pain, but it's been reducing for years. Credit difficulties are way more important:



The Late Payment Regulations are a joke. I don't know any small business or sole trader who has ever even seriously tried to apply them to a client. If your invoice is overdue payment, the client is supposed to add the late payment to it. Do they heck. By the time a late payer is actually paying the invoice, you're simply not in a position to say "well, this is short the late payment, so I have to refuse it".

It tempts me to put up a website dedicated to late payments, where small businesses can give big businesses a "credit rating".

That's a great website idea but beware of libel laws. Possibly,you could charge for admission as the information would be hard to acquire commercially. You would need to have a minimum number of complaints before allowing complaints to be aired or else all complainers would have to supply their contact details and names,though with security for their emails against spam.

The UK has tough laws on late payments. It also has a law that says if goods were acquired without intent to pay,criminal charges apply.

[patslatt]

How often do we have to read this nonsensical rubbish? The suggestion that public wages should be cut by 30% is utterly rediculous. The OECD shows that we have one of the leanest public sevices in Europe and now you want public servants to work for a pittance. Is PatS the last remaining PD?

It is lean in the sense that we don't want the state to run all aspects of our lives and baby us as in the Continental EU welfare states. There are welfare state models that are leaner,such as those in the English speaking world,Canada,Australia,New Zealand,Britain and even the USA's botched welfare state.

But if the Irish public sector is lean in that sense,its workers who are vastly overpaid in many areas are content to ride on the backs of the private sector even its unemployment rate is soaring. But that was always the case in Ireland as the emigrant ship relieved the political pressure for pay reform.