Madam, – Stephen Collins, asserts (October 2nd) that “The National Workplace Survey confirmed during the week that average pay in the public service last year was almost 20 per cent higher than in the private sector.
“In most European countries the position is exactly the reverse.”
This statement presents great risk if considered to be accepted wisdom through publication in your newspaper.
The European Commission Klems database – which measures labour costs and productivity in European economies – shows that in the euro zone as a whole, labour costs are 35 per cent higher in public administration and education than in the largely private sector segment of the economy that includes hotels, restaurants and retail. The gap in Ireland is much lower between the two at less than 24 per cent.
Irish public administration labour costs were over 7 per cent below the EU-15 average in the most recent published figures, while Irish education labour costs were 3 per cent below the EU-15 average. This data precedes the substantial reductions in pay and costs arising from the combined pension levy and budget 2010 pay cuts which suggests the gap between the Irish and EU-15 labour costs will have widened.
It is critical that supposedly informed analysis is grounded in facts. If this does not happen, you run the risk of supporting policies based on a flawed understanding of economic reality.
Proposing further public sector pay cuts on the basis Mr Collins has suggested would reduce tax revenue and domestic demand resulting in more businesses going to the wall, increased unemployment costs and failure in the goal of deficit reduction. – Yours, etc,