We’ve had some pretty brutal debates where evidence took a back seat to unsubstantiated assertion, misleading projections and just plain fabrications: public sector pay, social protection rates and fraud, taxation, government spending, deficit reduction and on and on. I didn’t think it could get any worse but that just shows what I know. For along came the claims on staffing levels in the Irish water services.
Monday morning we woke to claims that Irish Water was employing far more staff to run water services than was necessary – over twice as many. This would end up costing €2 billion which would be imposed on households through higher charges. This was due to ‘sweetheart’ deals between trade unions and the Government. Isn’t all this typical of a ‘state monopoly’ which will pay staff for doing nothing? By Monday lunchtime there was an avalanche of commentary – all condemning the latest manifestation of a bloated public sector.
There was only one problem with this debate; it wasn’t based on any evidence. And the final twist in this sorry story is that by Monday night the person who started all this buzz, who made the claim of over-staffing and €2 billion in additional costs – Dr. John Fitzgerald – admitted he was not sticking to his own figures. Oh, my.
Let’s go through a couple of numbers to show how irresponsible this day-long debate – which was wholly dependent on manufactured numbers – was.
How Many Numbers: the 1,700 Figures
The latest estimate is that there are approximately 4,278 water service employees, of which 80 percent are called ‘front-line’. This number is expressed in whole-time equivalents and dates from 2011. It was suddenly claimed that we only need 1,700. Ergo, we have approximately 2,600 staff surplus to needs.
First question: where does this 1,700 number come from? It didn’t come from Irish Water, or a departmental report, or the detailed reports by PwC, or local authority management. According to Dr. Fitzgerald:
‘There was a story in the Sunday Business Post . . . ‘
Unfortunately, I don’t have a link to the story (it’s behind a paywall) but Dr. Fitzgerald claimed the story quoted the 1,700 figure from Irish Water. Irish Water denied this number came from them. So, the starting point for this debate was a figure which came from a newspaper article in which there was a dispute about who said how many. Geez.
Is there any guidance as to the staffing levels in our water services? Yes, from thePwC report, published in late 2011. They compared the number of workers in Irish water services with UK water companies, based on employees per thousand customers.
This chart shows a far different picture (and the UK companies are in the private sector so they must be ultra-efficient, surely). Irish staffing levels are higher than the average – but only 14.5 percent higher – and in some cases are lower than UK companies.
If the number of Irish water service workers fell to the UK average, it would mean 3,660. That’s a long ways from 1,700 – more than twice as much.
NOTE: the Pwc uses bar charts without data labels. Therefore, I have had to estimate the number from the axis scale. So the above is rounded to the closest .25. However, when you examine the number of employers per thousand water connections, the proportions are the same.
So we’re above the UK average, but not anything like the claims in the Monday debate. But there’s an important caveat: we have a much more degraded water system. PwC reports an average leakage rate throughout Ireland of 41 percent. In the UK, most companies experience a leakage of 25 percent or less (three companies – Northumbrian, Southern and Anglican – have leakages of 15 percent or less). The higher the leakage rate, the more staff you need. And that’s the issue in Ireland – the degraded state of our water infrastructure which requires more resources (I won’t even get into the issue of density – where high levels of rural dispersion necessarily adds to costs).
So, if we use UK comparisons, the 1,700 figure is nonsense. Irish staffing levels are only somewhat above the UK average – but that’s dealing with an infrastructure that is far sorrier state.
€2 Billion Cost
It was further claimed that high levels of over-staffing would end up costing Irish water users an extra €2 billion over the period up to 2025. Of course, this was premised on an optimal staffing level of 1,700 – which we saw above has no basis in evidence. But let’s work through this number and see how, on its terms, it’s flawed.
The €2 billion assumes that in 2025 we would have the same number of employees in water services as we did in 2011. The problem with this is that it ignores what is happening to employment in the water services. Every year there are fewer workers due to the public sector hiring freeze and the number of people leaving the service – through retirement, illness, etc.
We don’t know the rate of decline in the number of water workers but since 2007employment in the local authorities has fallen by 19.6 percent. That’s an annual rate of decline of 3.3 percent.
Are our water services suffering a similar employment decline? Hard to say – but the PwC report points out that over 50 percent of water service workers are over the age of 50 years. It is not likely that this 3.3 percent average decline will persist – a lot of this fall would have been due to early retirement schemes, voluntary redundancies, etc. Even now the annual shrinkage is declining – in the last year local authorities employment fell by 1.4 percent.
The point is that there is shrinkage by natural attrition (people leaving the workforce). And that this wasn’t factored into the €2 billion figure over the period to 2025.
If we apply the conservative rate of 1.4 percent decline from this year on (assuming the loss since 2011), we find that employment in the water services will fall to 3,360 by 2025. Yet, the claim of €2 billion assumes that there will be 4,278 employees every year up to 2025.
Let’s cut to the chase: to assume a cost based on employment numbers without factoring in natural attrition is highly misleading – highly misleading in the extreme. There was no excuse for this.
* * *
Where does this leave us?
- We had a claim of over-staffing using a figure that had no basis in reality. When compared to UK water companies, Irish staffing levels are somewhat above average but that’s with dealing with a degraded infrastructure and an inefficient organisational structure.
- We further had a cost calculation based on employment levels which was highly misleading because it ignored what is currently happening in employment levels.
And no one asked a fundamental question: what would happen if you slashed the workforce by over half over night (the only way you could avoid the €2 billion extra cost). Here’s a hint: the system would crash, households and business would find the supply cut off, the system would degrade even further and this would drive up the cost of bringing our infrastructure up to standard.
And what was the upshot? The person who started this debate on Monday morning declared by late Monday night on Prime Time, when questioned where he got the infamous 1,700 optimal employment level:
‘I’m not sticking to the 1,700 figure.’
You couldn’t make this stuff up. Instead of debating how we can bring our water infrastructure up to the most efficient and highest-quality standard possible, all we did was discuss numbers that no one at the end of the day could or would stand over.
All because the original claim of over-staffing was as leaky as the Irish water system.
Latest posts by Michael Taft (see all)
- Championing the Self-Employed - November 5, 2015
- Begruding the Recovery - November 3, 2015
- This Wealth is Your Wealth, This Wealth is My Wealth - October 27, 2015
- A Return to Boom-and-Bust - October 12, 2015
- Renua’s Carnival Ride Back to Boom-and-Bust - October 8, 2015