September 28th Lunchtime: The Recession Diaries

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a1_pullinghair.JPGI was pulling my hair out when a friend rang me pulling her hair out.  A lot of hair being grabbed.  Let’s start with my hair.  Noel Whelan has given us the benefit of his deep and comprehensive research into the crisis in Exchequer financing:  he has read the reply to a Parliamentary Question.  And what he read shocked him:  in the last eight years the number of pubic sector employees increased by 30 percent.  The bold Noel found this ‘astonishing’.  He is now putting on his war paint and practicing his war cry:  cut public sector numbers.Where does the bold Noel suggest we cut numbers?  Teachers?  A&E staff?  Gardai?  Home helps?  Here he gets a bit vague.  Indeed, so deep and so comprehensive is his research that he states with a certitude that would shame a mathematician:

‘There must be room to reduce those numbers without impacting on services . . . ‘

Not that there is, not that our bold Noel has examined the sectors and identified who and what, or set up an Excel sheet and typed in the numbers to show how many –  just a plaintive ‘there must be’.  Wow, this is what passes for informed commentary in the Irish Times op-ed page.  And all from reading a Parliamentary Question.  A nation is grateful.

Let’s help Noel a little.  Let’s point him in the direction of the OECD report on the Irish public sector.  Anyone familiar with the OECD knows this is no statist body.  Imbued with the faith of ‘free’ market economics as a solution to everything from unemployment to the common cold, what did the OECD say about our ‘bloated’ public sector numbers – numbers which Noel believes are ‘unsustainable’ even in wealthy times?

The number of Public Service employees has increased significantly by 30% between 1995 and 2007, but from a low base relative to other OECD countries. A policy since the mid-1990s has meant that public sector spending and employment growth have not kept up with population and GDP growth. Government policy therefore has actually decreased the total number of public sector employees as a percentage of the labour force and decreased the overall public sector wage bill as a percentage of GDP. As compared with other OECD countries general government employment in Ireland represents around 14.6% of the total labour force, which is relatively low among OECD countries and is significantly less than the level of public employment in Norway, Sweden, France, Finland and Belgium.

Wow – low level of public sector employment which hasn’t kept pace with population and GDP growth.  Maybe our bold Noel could have a quick read of the OECD report and explain in his next column how he squares the reality of public sector employment with his own ‘look-into-the-heart’ conclusions that pass for informed commentary.

Let’s leave the bold Noel burrowing away in actual facts, and address the concerns my hair-pulling friend has about the seeming contradictory responses to the survey questions in last week’s Sunday Business Post:

  • 62% said they would be prepared to pay more taxes rather than see cuts in the health and education budgets.
  • Yet, 61% believe that government should cut public spending, rather than increase taxes.

A contradiction?  The Sunday Business Post tried to explain it this way:

‘Overall, the similar support for both questions on tax and spend appears to suggest the public want spending on the core services of health and education protected, but aren’t prepared to pay more for other services.’

The ‘appears to suggest’ indicates that the Post is not quite sure what to make of this. Let’s have a bash of squaring this circle – knowing full well that we are entering into that wholly tentative world of conjecture.

First, we have to recognise that such attitudes do not develop in isolation but are part of a larger discourse.  And that discourse has been one of relentless hostility, from the mild (‘public sector pay is a burden on the budget’) to the downright hysterical (‘public sector workers are a burden on all of us’).  In that respect, it would not be surprising that there is a strong public sector-sceptical constituency out there – especially as there is little of an alternative perspective being promoted in a sustained way.

Second, it is well known in the science of polling that the very questions themselves can influence the answer.  For instance, people are being invited to make a distinction in the two questions:  between public spending (not good) and public services (good).  This distinction is based on a number of things, among them the dubious differentiation between ‘front-line’ staff and ‘back-room’ staff.  The former are the providers of public services; the latter, of course, just sit around clocking up the time until they can get big fat pensions.

It is clear that people are supportive of better public services – even to the point of paying extra taxation.  It remains for us to point out the realities and cut through the anti-public sector mantras of the Right.  For instance, education and health make up 44 percent of all current spending.  So, any cutbacks would come out of the remainder.

But follow-up questions might even be more revealing.  Do you want to cut the Garda budget? Social welfare rates, including pensions and Child Benefit? If the answer to that is no (and there’s a good chance of that) then what we would have is people saying they don’t want all these areas cut but want the remainder to be cut, to avoid taxation.  However, all those services make up 80 percent of the entire current budget.  There’s not a whole lot more to cut (grand-aiding to indigenous businesses? disability services?  the fire service?).

Put that way, people’s view might be read in a more consistent way.  But there’s another response that did surprise me.  When asked whether there should be a public sector freeze, 42 percent said no (when excluding the undecided).  That’s a big constituency.  It’s even bigger given the stream (river? tsunami?) of propaganda against public sector pay.

All in all, we have a large constituency that supports public services and opposes public sector pay freezes.  This certainly goes against the prevailing conservative consensus. This constituency could be mobilised, along with others, to create a strong platform for the Left.  But unfortunately the Left seems unable to connect.  Labour is flat-lining at 9%.  Over the seven months of the Post’s tracking poll they have come in at 10 percent every time (with one exception when they bumped up to eleven percent).  This is all the more depressing given the last two months of unremitting bad economic news.  Without doing or saying anything, one would have thought the Government’s misfortune would be worth a couple of points for Labour.  But no, nothing, nada, zilch.

If Labour and the Left want to start getting traction they could start in worse places than that thrown up by the Post survey – a campaign for public services, opposition to pay cuts, whether in the public or private sector, and the honest exposition of an economy that, eventually, will need higher taxes.

What has Labour and the Left got to lose? And if on the way they have to take on the proto-analysis produced by the Noel Whelans of the world – well, it will be like swatting flies.

NOTE:  if anyone is talking to Noel, tell him he can find the OECD Report on the Irish public sector here.

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