To control extravagant Irish public sector pay, a constitutional amendment similar to Brazil's pending one and to that on judges' pay is essential

patslatt

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To control extravagant Irish public sector pay, a constitutional amendment similar to Brazil's pending one and to that on judges' pay is essential

Brazil's government is about to finalise a vote on constitutional amendment to freeze government spending as reported in The Economist, December 3rd-9th, "Trouble for Temer":

"Despite these storms, Mr Temer has kept Brazil heading in the right direction. His most important policy is a constitutional amendment to freeze federal spending in real terms for 20 years, which ought to reduce debt and interest rates and spur private investment. It passed the first of two tests in the senate on November 29th; a final vote is expected later this month."

This draconian freeze is necessary to curb public sector pensions which swallow most of the federal budget. Brazil has an unusually large number of pensioners who worked in a great many government businesses created to industrialise the economy which were privatised since the 1980s.

A similar draconian freeze is necessary in Ireland to prevent Irish public sector pay and pensions from tipping the economy into a future depression, given the vulnerability of the economy to huge indebtedness in both the public and private sectors. Irish public sector pay is about 45 percent higher than the private sector average pay, a pay premium that is extravagant in comparison to about a 14 percent premium in the UK and a negative discount of 3 percent average for Sweden, Finland and Denmark,all well managed small countries. This Irish public sector pay extravagance also results in equally extravagant pensions,not to mention jobs for life, a privilege reserved in other countries for distinguished professors. The value of public sector unfunded pension entitlements is estimated by actuaries at about €120 billion in today's money, roughly €120,000 per Irish family of four to put it in perspective.

Barring a looming threat of economic collapse in a future economic recession or depression, there is little chance that politics as usual among all political parties will restrain public sector pay. All political parties and even most independents look for political support from trade unions and are reluctant to take a strong stand against pay claims.

The constitutional amendment that cut judges' pay set an Irish precedent of controlling costs through the constitution which could be the solution to pay control. That amendment was a politically easy decision since the public could easily be persuaded that the judges were overpaid.

In contrast,it would take a lot of political courage to introduce a constitutional amendment on controlling public sector pay. The government would have to believe it could make some long term gains in public support to compensate for the loss of public sector trade union support. It should be possible to persuade the public of the pay and pensions extravagances and the threat that poses of another economic depression, although RTE and the Irish Times might be too sympathetic to the public sector.
 


Analyzer

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Can we let AIB endure capitalist consequences for capitalist failure ?
 


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