How To Lose Friends and Alienate Tax-Payers

The public sector strikers might as well be protesting against the recession, as though such a beast could be tamed by opprobrium. They seem to be confusing the dire economic circumstances facing the state and public finances, with some discretionary government policy that can be reconsidered.

Quite simply, the government has to cut back on public sector pay, and quite significantly so. According to the Department of Finance, the Irish government has suffered a €26 billion deficit in expenditure over revenue thus far in 2009. Next year, it could be worse.

Government spending rose far too much during the Celtic Tiger years, and at a faster pace than the economy was growing. This was a consequence of unprecedented tax revenue coming into the government coffers. Naturally, Fianna Fáil took advantage of the situation by buying off special interest groups and initiating exciting new ways of wasting tax-payer money. The lack of pressure on public finances resulted in less oversight and today’s bloated civil service.

Meanwhile, the government became reliant on sources of tax revenue that were not permanent. The stamp duty cash cow of the construction boom is gone, and it isn’t coming back. This permanent fall is tax revenue, coupled with increased expenditure, brings us to today’s fiscal disaster.

So now there are cut-backs in government spending across the board. We are faced with the prospect of laying off public workers, and reducing pay to levels commensurate with the private sector. Is that fair?

Absolutely. Public servants have had it too good for too long. During the boom years, there were very little complaints from the civil service – but only because they almost invariably got what they wanted.Collectively, public sector trade unions were capable of exercising sway over the political establishment because they were an organised, politically-engaged group of voters. Job security, high wages and generous defined-benefit pensions were guaranteed. The government was able to give into their demands at minimal imposition on voters who were enjoying the good times, and happy enough to spread the wealth.

But that has all changed. Today’s voters are very much turned on to the difficulties facing the government finances. They are well aware that they will have to pick up the tab unless public pay starts reflecting the reality of our desperate situation. This starkly contrasts with past industrial action by public sector trade unions, and it explains why today’s action is ultimately pointless.

The government knows that public sector workers are going to be discommoded by the public pay cuts necessary to reduce the deficit. Taking a day off work doesn’t communicate their message any more effectively. Meanwhile, tax-payers are starting to look enviously at public sector job security, guaranteed pensions, and extremely generous pay levels. If the recipients of such gifts start earnestly complaining about their awful conditions, it might be the last straw.

Public sector strikes today present the government with very different options and incentives, when compared with the past. In this sense, public sector trade unions may have miscalculated if they think the government can be blackmailed. Today, they have the support of the people.

Recent evidence from the ESRI points to the enormous pay gap between public and private sector workers. Although public servants are providing a public service, they’re certainly not doing it for the public good. In fact, they’re not even giving us a discount. Meanwhile, with unemployment over 13% last month and rising, it’s better than ever to be employed by the state. You’re more difficult to fire, even if you’re no longer productive. Private sector employees enjoy no such privileges.

More importantly, the public have become aware of this and it has become a point of contention in public debate. Since today’s public sector strike imposes costs on voters, the public is likely to lose sympathy for civil servants. Everyone else in the state is suffering pay cuts, increased job insecurity, and firms going out of business. Why shouldn’t public sector workers take some of the burden too? Private sector workers aren’t complaining because this is the reality of our economic situation, and whingeing won’t change that.

But public sector workers are responding to the recession with a complete abrogation of their responsibilities to Ireland’s citizens. But why should they be insulated from the effects of the recession? They can claim that it wasn’t their fault. But the hideous state of public finances is more due to their excessive demands than anything else. They’re at an advantage to begin with, and they government probably won’t do much more than erode it slightly.

Moreover, it’s not my fault either. Nor is it the fault of most tax-payers. Truth be told, most of the people that are suffering during these recessionary times are not guilty of much wrong-doing individually. However, saddling future generations with debt is no more just. Government expenditure needs to fall, and especially unsustainable public sector pay levels. Those workers have been doing pretty well for a while now though, which is why this commentator has least sympathy for them.

© The Free Marketeer 2009

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