HEADTOHEAD: As the private sector experiences a dramatic downturn, the tax take is diminishing and we can no longer afford a public sector that has grown by 150 per cent in a decade, says
MARK FIELDING
We must stop pretending that we can make deep cuts to a public service workforce, which is small by international standards, without harming badly-needed services, says
PETER McLOONE
YES - MARK FIELDING
IN RECESSIONARY times even the most efficient and productive elements of a business are under threat from "downsizing", not to mention the inefficient and unproductive parts.
The reason is not so much related to profitability as to cash-flow and ability to pay.
While the public sector is different in many respects from the private sector, similar rules apply in an economic downturn and as our national income reduces, our ability to pay for public services diminishes also. Therefore the answer to the question above is "Yes".
Otherwise we must increase taxes to pay for the public sector, which will reduce economic activity and reduce further the national income.
While defenders of the public sector quote favourable comparisons to other OECD countries and our ratio of spend to GNP and GDP, the fact of the matter is that the public sector has not delivered in terms of efficiencies, quality, performance and value for money, relative to its increased size.
From education to local government, years of ignoring accountability, efficiency and value for money in the public sector have led to a culture of waste and crisis management, which has led to a "statutory entitlement" attitude to taxpayers' money among civil servants and public sector workers.
The private sector cannot be expected to pay for public-sector pay growth through the loss of private sector jobs and businesses. As the public sector employee prospers through increased earnings, with little responsibility or accountability, other parts of the economy have to bear the brunt in the form of higher costs and reduced competitiveness.
This situation is completely unsatisfactory, with many small business owners now looking incredulously at the pay and conditions of those in the sheltered sector of the economy.
A long-overdue pay and recruitment freeze, and a redundancy scheme, together with an efficiency drive, is urgently required to reduce the burden of a sector that threatens to strangle the rest of the economy.
The Government no longer has the luxury of pretending to set about reforming the public sector to gain efficiencies - an opportunity lost at benchmarking time. The reality is that numbers must be curtailed and efficiencies gained to cut the cost of running our public sector.
Our Government's resolve to tackle the economic crisis will be measured, to a large extent, by how it introduces reform and addresses employment levels in the public sector, the most powerful vested-interest group in the country. Its decision may be dictated by political imperative rather than economic rationale. While this Government is loath to take on the unions, it would be unfair to state that in the past other governments have not attempted to curtail public sector spending and numbers. The operative word in the last sentence is "attempted".
It should be noted that as part of the government's efforts to curb public expenditure in 1987, a public sector voluntary early retirement scheme was initiated.
The scheme was successful, if costly, in that it reduced the number of public servants by 20,000, at a cost of £130 million. Employment in the public sector fell from 215,135 in 1987 to 195,386 in 1990.
However, once more the civil service mandarins pulled a fast one, as by 1996, the numbers rose back to 215,833, costing €7.03 billion.
The increase in numbers of public servants in the 11 years from 1996 to 2007 is 149,767 or a massive 69.4 per cent, standing at 365,600. The corresponding increase in costs in the same period rose from €7.03 billion to €17.54 billion, a staggering 150 per cent. Each euro has been extracted from the unsheltered sector in taxes. As the private sector experiences a dramatic downturn, the resultant tax take is diminishing and we can no longer afford a public sector of this size. Cuts must be made.
These cuts cannot and should not be imposed as a blanket percentage head cull but must be targeted in areas where the fat has been deposited over the years. Senior civil servants themselves have identified a minimum of 5,000 superfluous jobs in their unpublished report to the OECD. Implementing cuts will take strong management and the full backing of Government.
The wielding of the scalpel will need to be selective and concentrate on the analysis of the roles and outputs of each person, allowing for the flexibility to transfer people between departments and the introduction of early retirement schemes. A two-year recruitment embargo across the public sector would also reduce numbers through natural attrition.
In the future the public sector can operate with a smaller, more efficient workforce augmented by private sector help on an ad hoc basis. A properly managed redundancy programme as part of an overall efficiency drive for the public sector is the only game in town.
Mark Fielding is chief executive of ISME, the Irish Small Medium Enterprises Association
NO - PETER McLOONE
IT'S DISHONEST and reckless to suggest that massive cuts in public service staffing are possible without harming badly-needed services. What's more, calls for deep cuts are doubly damaging because they are preventing a genuine debate about real reforms that would improve service quality and value for money.
The catch-all phrase "public servants" really refers to the doctors, nurses, teachers, gardaí, speech therapists, physiotherapists, child protection staff, psychologists and others that we all depend on. And I have yet to see anyone put forward real evidence of widespread over-staffing or say specifically which services should be taken away from our families and communities.
Our critics point to staffing increases in health and education in recent years. But they can't simply ignore a recent independent and comprehensive OECD review of Ireland's public service, which put these increases down to our "playing catch up" (their words, not mine) from historically low levels of spending and staffing. In the first years of this millennium, we finally began to recruit more of the nurses, therapists and support staff that we'd badly needed for years.
Education is another good example, which links investment in public services with our economic future. The 2007 National Skills Strategy said that we need to keep increasing participation in upper secondary and third-level education to create and sustain a high-skills knowledge economy.
Thankfully, as our population has become much bigger and more diverse, more and more of our young people are responding by entering and succeeding in higher education. That's why we've hired more teachers and lecturers and the support staff they rely on.
At another level, the 6,000-plus special needs assistants, who help kids with disabilities get the best out of their education, simply didn't exist a decade ago. Are we really saying that they shouldn't have been hired? There are areas where efficiency and value for money could be improved, or where staff could be redeployed to meet new priorities or improve existing services. But let's stop pretending that you can simply make deep cuts to a public service workforce, which is already small by international standards, without damaging services.
The OECD report found that Ireland spends proportionately less on its public services and employs proportionately fewer staff than other OECD countries. This doesn't make it any easier to balance the books now that we've entered a recession and the public finances are depleted. But it does prove that there is very little "fat" to be cut - and that means redundancies would hurt services.
We know this because where staffing cuts are happening - for example in parts of the HSE - it has meant ward closures, longer waiting lists and the withdrawal of services. In areas where they are planned - for example increased teacher-pupil ratios - it is causing uproar because parents know their kids will suffer.
Just as they have failed to show how you can cut staffing without harming services, no one who advocates large-scale redundancies has been able to demonstrate how or when such a programme would start to deliver savings. Another ill-considered redundancy programme like the one we had in the 1980s would most likely mean huge expenditure on severance payments at a time when money is tight, with nothing but the promise of possible savings sometime in the future.
In these circumstances, I certainly wouldn't fancy trying to explain to a parent that their child's therapy is being curtailed to pay for a severance package.
It's time for some honesty in this debate. First of all, let's recognise that the vast majority of public servants are dedicated and hardworking and want their services to be the very best. If the reality of Government finances means cuts are unavoidable, let's be honest about the cause of the problem, engage with the staff concerned and concentrate on prioritising resources to protect those most in need.
Serious policymakers should also recognise that most public servants share their desire to provide the highest possible standard of services to citizens and communities. Given the chance, they would love to engage in genuine reforms aimed at developing a wider range of high-quality services in efficient ways that deliver value for money to the taxpayer.
Public servants need have no fear of change that puts the citizen at the centre of everything we do and responds to the real needs and experiences of the people who depend on public services. But this is a very different proposition to the so-called "root and branch reform" that is really about cutting services, axing jobs, attacking working conditions and introducing private provision.
The real challenge for political leaders and managers is to demonstrate that the changes they propose are necessary, achievable, and of real value to the people we serve. Large-scale redundancies certainly don't meet these criteria.
Peter McLoone is general secretary of Impact, the largest public sector union