The State of us .......... a Nation Dividing

Ireland Inc is in trouble ...... very, very big trouble. No-one doubts that very difficult and unpalatable decisions have to be made in the very near future but I believe some serious questions need asking. And answering.

Our present Government is hell bent on a particular route to get us back on track and I have serious doubts about the route that they've chosen. The decisions they are making and the information they are drip feeding us are pitting different sectors of our nation against each other in these very difficult times. An ulterior motive is definitely at play here and they are in danger of creating a multi-layered society.

They should be careful what they wish for.

We are a nation dividing ..... bit by bit every week.

Let us take a look at this.

There's the Public vs Private Sector divide, the biggest divide in my opinion. I've no doubt that what I'm going to say next will alienate me but say it I must. This divide was created by and is being nurtured by this Government. Today's strike by the nation's Public Servants will unfortunately serve to deepen the divide but as the Government won't even engage in discussion we have no choice. Earlier this year they railroaded in the Pension Levy with no discussion. A further decrease in wages is simply a step too far. Most people on the Picket Line this morning earn €30,000p.a. or less.


I first discussed this issue, among others in my post on the Mc Carthy Report. I find all my points raised still relevant and I completely stand over them.

We can talk until the cows come home about wages and conditions in both sectors and get nowhere because sometimes the situations aren't really that comparable. The recently released CSO figures detailing how well the Public Sector are paid and how we got a 3% pay increase in the 12 month period to June 2009 are grossly incorrect, as even our Taoiseach Mr Brian Cowen acknowledged here. We got no such increase. A pay increase of 2.5% was due to us but was reneged upon. The total reduction in our case was 15.4% ........ this includes Pension Levy of 8.3%, income levy increased PRSI contributions and pay agreements not honoured. The Pension Levy is a Pay Cut and NOT a pension contribution as it applies on all income (incl overtime etc). The Income Levy and increased PRSI contributions were, of course, inflicted upon all workers.

On the other hand a lot of Private Sector workers have lost their jobs and a lot of others have taken huge reductions in their wages ...25% or 30% in some cases and that is shocking. Irish workers are the hardest hit with 61% of employers laying off staff. But remember, like I've previously said, not everyone in the Private Sector has taken a cut, as of my last Post on this issue (see link above) only 9% have taken a reduction .......

As has been pointed out to me recently by two business friends ( both Directors of their companies) Ireland Inc has a budgeting problem and has to cut it's cloth to suit it's measure, just like they have to do.  That is very true and I know we have to consider the huge borrowing costs in order to pay our Public Servants. Now, I didn't engage in this discussion with these two friends. I didn't ask how borrowing to pay Public Servants was any different from the suggestion recently made that the Government should pay employers to keep people in their jobs. For example. There was no point really because in one breath they were discussing how my Husband's wages should be further reduced and in the next breath talking about an upcoming family holiday to Florida in  one case and a shopping trip in the other! We are on two different planets methinks!!

The borrowing costs of this nation of ours is, of course, a very big problem that needs addressing. We also have to consider the fact that 35% of the Governments spending is on Public Sector pay.

As unpopular as this will sound the biggest difference between Public and Private jobs , in my opinion, is supply and demand. In a Recession some services will no longer be sought after as people have less and less money in their pockets. We go out to restaurants less, we use public transport/drive as opposed to using taxis, more nights in, less mini- breaks etc etc.


But, we ALWAYS need Public Services. Health services, Emergency Services, Police Services and Teachers are necessary. Taxes have to and must be collected, Social Welfare payments need assessing and paying etc; etc. You see the "good secure job" is "secure" because it's always in demand. We must be careful about why people are demanding reduced Public Sector pay. If it's because we are deemed to be too highly paid then that's one thing, and that issue can be discussed and debated.

Also, Public Service Departments are not, by their very nature, profit-making enterprises. They're not even self-financing. Another reason you can't really make a proper comparison.

It's not all doom and gloom though. There are actually a few companies making a top-line profit this year: Ryanair, Aer Lingus (yes..Aer Lingus!) Tesco and  Vodafone for example. In fact Vodafone employees received an early Christmas bonus this year..... they each got a new phone! And fair play ..... I'm happy for them.

We must be very careful here, if we cap salaries and reduce wages too much in specific sectors how can we be competitive when things improve globally?? Pay peanuts..... you get monkeys.

We do, of course need to make reforms in  the Public Service as I also discussed in my Mc Carthy Report post. But if the reduction of employees is a factor in these reforms we need to consider what quality we want in how our Public Services are delivered. Less employees means backlogs and huge delays..... (remember, it's the employees that are being reduced and NOT the demand for the services.) Just like in the 1980's and 1990's when we, in Revenue, had hundreds and hundreds of unworked items for months on end. Overtime couldn't even put a dent in it, it was that bad. As we speak there are delays...in Education and HSE....that you will have noticed in receiving payments of Home Tuition etc, etc. Recently I experienced HUGE delays in getting a human to answer the phone in Child Benefit Section. There has to be a better way to do things. Reform is necessary but a blanket reduction of numbers will only make things worse. And so will the brain drain that's presently occurring in all Departments as early Retirement and Income Tax decisions kick in. For example, at present 40% of Gardai have less than 5 years service which just shows how much experienced staff have been encouraged to leave. There's also a huge Brain Drain in Revenue Commissioners Department. This will have a massive negative effect on the delivery of Public Services, probably for years to come.


Be careful what you wish for......


There is even a divide within the Public Service ........ between Frontline Staff and Administrative staff. As a result of Government rumblings and threats the emergency services have banded together and formed their own group to highlight their issues, which are specific to them. Now, I don't blame them for this but they are specifically separating themselves from their "colleagues in the administrative side". These Emergency staff are highly trained, they do an incredible and difficult job and work very unsociable hours. But, for every job anyone of them do there are administrative staff required to document and collate reports /files etc. This was very evident on our recent trip to Tallaght Hospital to get WiiBoy his Swine Flu vaccination. It was very well set up, I thought. There were 2 staff greeting and handing out the forms. Another Staff member ushering people to the correct seating areas. There were 4 or 5 nurses and at about 8/10 administrative staff set up on laptops to process the forms and issue patient numbers. This set up ensured a prompt and smooth delivery of this particular service although these staff members had to come from somewhere so no doubt a backlog of work has been created elsewhere in the hospital. However, this scenario does highlight how essential the administrative staff were to the Emergency nursing staff in assisting them in the smooth delivery of their service.

Those of us who are currently in employment, be it Private or Public Sector are considered lucky. And we are. But further reducing salaries reduces our spending power. Consumers are considered to be the engine of our economy. If we don't spend then more jobs will be lost.

Here's the science bit.........

As of June 2009 there are 370,000 Public Servants in employment which makes the State a very large employer. A very large proportion of these employees, 45%, earn less than €40,000 pa. If you reduce their spending power by a further 7%, as is being proposed, then spending habits will be restricted to basic requirements and more Private Sector jobs will be lost. Also, by further reducing salaries in both sectors this Government is in serious danger of creating a new phenomena....... The Working Poor. Although, maybe this is not so new ....... it will, however become more prominent. There is nothing to be gained by reducing salaries to the extent that people are on the breadline.

This brings me to the next divide in our society ......... The Employed vs The Unemployed divide. Like I said in my Mc Carthy Report post, I am very uncomfortable discussing this. The points I raised are still very valid though. How long before there's not much difference between working or being on the dole?? Remember that report I mentioned where a man on full benefits had the equivalent of a €55,000 salary?? Link that to that salary of a large percentage of Public and Private Sector employees. Why bother going out to work??? (This comment must be considered in conjunction with all that I've written in that previous post)

Should Social Welfare be reduced? Probably, as wages have reduced. There needs to be an equilibrium between wages and Social Welfare and we do have to take into consideration that 36% of Government Spending is on Social Welfare. But we must be very careful not to make the most vulnerable in our society bear the brunt of this mess.Cuts are also being considered across the board in Social Welfare. I am seriously concerned with how the Government intend to impose these cuts. If they tier them, as they intend doing with Child Benefit, then they will only create further divisions in our society.


Nurturing this divide will not encourage people going back to the workforce when the economy turns around. It will only encourage employment in the Black Market. Did you know that, as reported in last weeks Sunday Tribune the Black Market currently costs the economy €461million per week??? This will get worse and must be addressed. I also refer to my point about Family Income Supplement raised in my previous post on this.

I addressed this whole area in that McCarthy post so I re-iterate ..... please consider that post in conjunction with what I'm saying here!!

Then there's the Rich vs the The Rest of us.......... what worries me the most here is the definition of "Rich" when it comes to the Government deciding how they implement an extra "Rich" tax or means test an allowance. Rich usually means middle Income, as that catches the majority of us and raises the most taxes etc. That, in turn can feed into Employed vs Unemployed divide.

Another divide that is now in danger of deepening is the Working Outside the Home vs Stay-at-Home- Mum. Of course it's not always the mum that's the Stay at Home parent but I'll generalise for the purpose of this post. In 1999 this Government introduced Individualisation into our Tax system in order to address the concerns of families where both parents were working, They didn't feel that it was worth their while working, which is understandable as one spouse (usually the husband) got most of the Tax Free Allowances. It also helped with the big problem facing the Government at the time ......... a glut of jobs on the market. And no-one to fill them. More CSO figures released recently states that 300,000 women entered the workforce between 1998 and 2007. The reason for this, in a word, is INDIVIDUALISATION! I've ALWAYS said that and now this report backs me up.

Individualisation may have appeased double income families but it was only cosmetic really....Tax Free Allowances can be divided equally you know! (Of course they've since been replaced with Tax Credits) However, it was the tinkering with the Taxation Bands that really penalised the Stay-at-Home-Mum/Parent. In the ten years since this system was introduced they only increased the Homemaker Tax Credit ONCE, whilst other Credits got regular makeovers.

The reason I say that this Government is widening this divide is because a large proportion of those extra 300,000 women in the workforce are probably losing, or in danger of losing their jobs. And, while their income is dramatically reduced, if they're on Social Welfare they can still avail of Individualisation. Having spoken to some, whilst naturally shocked and worried about the loss of their jobs they realised another benefit ....being at home with their children. Especially during the summer months.

We need to have a Tax system that's fair to all and considers the contribution made to the economy, to family life, to local communities and to the very fabric of our society by all parents whether they work inside or outside the home. And every parent deserves the right to choose whether or not they work (solely) inside or outside the home.... but that choice must be based on viable options.

Individualisation can also skew the definition of "Rich" as mentioned above ........... a salary of say, €100,000 to a Single Income family  is sooo not the same as it is to a Double Income family! It is NOT comparing like with like..... because of Individualisation, two salaries of €50,000 does NOT EQUAL one salary of €100,000.

The final divide I'll mention (I'm sure there are more!) is Bankers/Developers vs Homeowners. This is such a huge divide I'm not going to get caught up in it. Suffice it to say ; Where the Hell is the NAMA for the rest of us???

Where's the NAMA for those people soon to lose their homes because they can't pay their mortgages???
Where's the NAMA for those who have lost their jobs and are struggling???
Where's the NAMA for those who have suffered reductions in salaries???
Where's the NAMA to get the engine of our economy (i.e. the consumers) spending again??? They've another name for this in the USA and Australia....... I believe it's called a Stimulis Package!! Doubt if we'll ever see one here though!

The biggest concern of course is that they'll squander the Taxpayers money and that they'll release all properties for sale at once. Also, as it has now been legally signed up by President Mc Aleese, any incoming Government will have to adhere to it. There is now no going back. We're stuck with it.

There's no doubt that there are more tough times ahead. These decisions have to be carefully made and considerations given to how they affect everyone whilst trying to avoid causing, or deepening divisions in our society. We all need to contribute to help us get out of this mess but it must be done fairly and equitably across all sectors. And it needs to be done in a way that gives people spending power and protects and creates employment.

And, this Government needs to be ...............

careful what they wish for, 'cos they just might get ......... more than they bargained for.

Take care.............. Jazzy xx

2 comments:

  1. Hi Jazzy, I can't really comment on your economy over there..but I can say this about the states..yes, we do have a stimulis plan-I don't see the benefits of it..We are robbing peter to pay paul..We put a whole lot of money into rebuilding roads, in order to create jobs..and yet, services for schools and children like ours have been cut to the bare bones-One of my daughters qualified for speech and o.t. last year-but now the standards have been changed..they have tightened the requirements-so much so that if you are not severly disabled-or do not have a label, you are pretty much out of luck. I know, a little off topic..we are living in stressful times aren't we? :)

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  2. Thanks Kathleen.....I guess nothing is ever as it seems, or as it's portrayed. What any Government give with one hand they have to take with the other. But our Government is doing NOTHING to stimulate our economy. And it's just so typical to promote building roads when they could just as easy build schools isn't it?? Same over here. In the Celtic Tiger, as we called it over here, the builders/ Developers were busy building roads, houses hotels carparks etc . There waay more profitable than building schools etc! They built hotels and fabulous carparks where they should never have been built. They got greedy you see. And not only that, they then decided they weren't making enough money in developing so they decided to run the hotels themselves!! Greedy feckers! And now, because of them (and the banks and planning officials) the Hotel Industry is in real danger of imploding.

    Your comment re: services for our children is definitely not off topic. I really wanted to include that too. the same is happening here. They are tightening all the rules and pushing us out of qualifying for various services and allowances whilst at the same time cutting our salaries so we can't afford to pay privately.

    it really is a mess isn't it Kathleen Stressful times indeed.

    Thanks a mil for your comment:)) xx Jazzy

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