Wednesday, November 24, 2010

Main Points of Four-Year Plan

From the RTE website, below are the main points of the four year plan.

Main points:
* €15bn correction over four years
* Public expenditure down €10bn, tax up €5bn
* Corporation Tax will remain at 12.5%
* Social Welfare to be cut by €2.8bn by 2014
* VAT will rise to 23% by 2014
* Health spending to fall by €1.4bn over term of the plan
* Minimum wage to fall to €7.65 per hour
* Property tax in place by 2012
* Domestic water charges to be in place by 2014
* Plan includes 'full implementation of the Croke Park deal'
* New entrants to Public Service will face a 10% pay cut
* Public Service pensions to be cut by an average of 4%
* A new government could renegotiate plan - Enda Kenny

8 comments:

Rob Gillanders said...

Does BE have anything to say about what happens when 2 folks are doing the same job but at different levels of pay? (New entrants to Public Service will face a 10% pay cut)

Liam Delaney said...

I think it is not so bad Rob to be honest. Any new entrant to the public sector in the next five years will be mostly happy to have a gotten a secure job. I don't think they will feel it as a cut. The basic behavioural effect is the endowment effect or loss aversion. I accept your issue that there might be reference effects and it is possible that these could become tangled up in negotiations. But I would find it difficult to believe that a new-entrant would feel "deep down" really unhappy with the relative deprivation.

Kevin Denny said...

What if some awkward sod took a case and said "I am doing exactly the same job as the other guy why should I be paid 10% less?"
What would m'lud say?

Rob Gillanders said...

What about in a few months when he's not a new entrant and a guy with a few months seniority gets paid 10% more?

Liam Delaney said...

M'lud would be fine with it Kevin - such things have existed in many forms in the public sector particularly with respect to pension entitlements. In general, I think new entrants should take a longer view and recognise that its up to them whether they want to take the job at the pay offered or not. Its not really their business what incumbents happen to be paid.

Kevin Denny said...

Liam, I don't think either of us are remotely qualified to say what a judge or a tribunal would decide. This particular distinction hasn't existed before and the "comparable work" argument is well established.

Peter Carney said...

Rob, I doubt you need to be concerned here. There will be no new entrants to the public service for the foreseeable future. This 10% flag is just a red-herring.

Liam Delaney said...

If someone takes a legal challenge I hope they defend it. It is up to employers to set out what they are willing to pay and job market candidates to decide whether they are willing to work at the rate. "Comparable work" in general refers to gender, race etc., and I am certainly happy with the idea that people should take legal challenges if discriminated against on those grounds. But if the pay has changed then people should just not apply if it is below what they are willing to work for. There is a broader reason to want further reductions in public pay but this is really not a legitimate reason. As Peter points out, the level of hiring in the public sector is not likely to be high anyway.