Vested Interest?

Comment on the Guardian's website: '[Ireland] needs to exit the euro but, especially for a small population, there is a large public sector that has a vested interest in maintaining high salaries denoted in what is primarily a German currency.'

It's a thought-provoking comment, but is it true? I would say it is, but I don't think that's the end of the story either. Yes, public-sector salaries are way out of line with the private sector average. Yes, the government is in thrall to the public sector unions, as are all the political parties represented in the Dáil, leading to a blanket-ban on parliamentary discussion of public-sector wage rates. But is this such a terrible thing?

Within living memory most of Ireland was an economic basket-case. Not just for short periods, as now, but chronically. Most people just resigned themselves to the intractability of Irish underperformance and emigrated. It was the only logical course of action for those who weren't related to big farmers or who hadn't bagged the magical jobs in the banks or the civil service.

However, in the sixties things started to change. The opening-up to the outside world brought opportunities and some jobs in its wake and this led to a growth in government spending based on these new tax revenues. For the first time, the public sector was more than simple job-security, it was now a source of well-paid employment.

Now, however, things have changed once again. The private sector is now comparable to anywhere in the world in terms of skills and growth-potential. The public sector, however, is still run on the same basis it always was, except it is now vastly inflated in size, with in-built growth drivers for wage inflation and pension entitlements, thanks to decades of populist vote-buying by craven politicians. Therein lies the dilemma. Do we bite the bullet and reduce the public sector to a size and cost commensurate with the much-reduced size of the domestic economy, or do we use the model of public-sector remuneration as the target-aspiration for the rest of the workforce?

What does seem clear in the wake of the global financial crisis and our own "bailout", is that any catching-up by private sector workers with public sector wages, increments, bonuses and pensions will take decades or may never happen. That leads to a problem for governments attempting to balance the books, of course, but it also raises the philosophical question of whether job-security and a guaranteed pension is not a valuable advantage in itself that is simply not available to those outside the government camp? And does that not suggest an appropriate benchmarking with private sector positions would allow for this advantage in terms of reduced monetary advantage vis a vis the private sector? Just a thought.