Public sector workers are being asked to pay the price for the Government’s own admitted failures. This is nothing new, however. Since the beginning of the crisis workers in the private and public sectors have paid the price of poor Government policy combined with the negligence of senior management in the financial sector.
This latest merry-go-round of ‘make the workers pay’ can be seen from the Government’s launch of, yet again, another Action Plan for Jobs. We’ve had the Jobs Initiative, two ‘job-creation’ budgets, the first Action Plan for Jobs , the 10-point Jobs Plan launched last December; and now we have the latest Action Plan. Still, the Government’s jobs strategy is not working.
- In Budget 2012 (introduced in December 2011), the Government estimated that employment would grow by 63,000 by 2015
- In the last Budget – Budget 2013 – the Government is now estimating that employment would only grow by 31,000.
The Government now expects there will be 32,000 fewer people at work in two years’ time. This has enormous financial implications for the Government. It is difficult to estimate the cost of unemployment but a round figure often used is that each unemployed person ‘costs’ €20,000 in terms of unemployment costs and lost tax revenue.
The cost is undoubtedly higher because if there 32,000 fewer people at work, there is less consumer spending, less VAT revenue and profits tax, less wages, less economic activity. But let’s stick with this crude €20,000 yardstick.
Because the deficit had to revise downward the number of people at work by 2015, they had to factor in a rise of €640 million in the deficit. And that’s at a minimum. The figure is probably higher when you factor in the impact on the economy.
So within the last year, the Government discovered that there was a €640 million hole in the budget because their employment policies are not working. What do they do? Do they reassess their policies? Do they try to find out what’s going wrong with their approach and fix it? No.
Instead, they go after workers’ income and living standards with more pay cuts. How much will the Government’s proposals save? We saw in the previous post that the proposals on Sunday premium and cuts in basic pay will save less than 50 percent of the headline cut. If this holds, the Government’s proposed cuts will deliver less than €500 million in savings.
That’s why the Government claim they need more cuts in the public sector in order to reach their fiscal targets. €640 million lost due to their failure on jobs policy. So grab €500 million from public sector workers.
And here’s the real insult to injury – the cuts in the public sector will mean even fewer jobs in the economy; particularly in the private sector.
This just proves the old saying: when management makes a mistake, the staff suffer a pay cut. Same ol’, same ol’ no matter what sector you work in.