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September 27, 2010


Aidan R

Spot on Michael. What fascinated me most about this mad-hatter proposal was RTE making it a serious news headline.


Not that I support Stattery's rant or anything ... but in your calculation, are you assuming that all 30,000 former public servants would just go on the dole? Surely some of them would find jobs (not necessarily displacing others) or start their own businesses?

Michael Taft

Radler - just to point out, this is not my calculation as such. I'm only working on the basis of the ESRI's estimate that a €1 billion cut in public sector employment will cause a decline in employment of 1.2 percent of the labour force. The impact is not just on the basis of lost public sector jobs. Yes, some of those losing their jobs in the public sector may find alternative employment. But don't forget, the lost consumer spending from those who don't find a job will cause private sector employment reductions (reduction in demand will impact on businesses reliant on domestic demand).

In the UK, the Treasury estimated that the scale of the Tory-Dem cuts would cause not only 600,000 public sector job losses but 600,000 private sector as well.

Back in Ireland, we can assess the extent of job losses by reference to a cut that doesn't impact on public sector numbers - namely, public sector wage cuts. Here, we find that public sector wage cuts (equivalent to a reduction of €1 billion in the Exchequer pay bill) will cause 1,900 job losses in the first year, rising to 3,800 jobs lost by the third year. Given the totality of public sector wage cuts (pension levy, the 2010 budget cut), we should expect over 9,000 job losses from this measure alone in a couple of years. All because of reduced demand.

Aidan - you shouldn't be too surprised. Taken as a whole, the debate over the economy has the character of a long-tea party with the March Hare and Doormouse also in attendance.

Alex Jones

Your assumptions and figures are completely inaccurate and Mr Slattery's proposal is anything but ill-informed.

Michael Taft

Thanks for that, Alex. Would you care to elaborate with your own 'figures'?


Michael - he's talking about a voluntary redundancy program. The people taking that likely already have other plans - whether it be a career change, parenting / family time, start a new business, find another job, emigrate or travel.

The company I work for did a huge round (relative to size of Irish workforce) of voluntary redunancies last year - I haven't heard of any regrets yet. Most people who want jobs have got them, others have started businesses (or following some other of the options ascribed above).

In certain industries there were would appear to be a shortage of knowledge workers.. I think one of the problems we have now is a skills mismatch. We're never going to retrain 100k construction workers to work as software engineers - but Dublin based software companies are recruiting overseas because they can't find enough engineers here..

FWIW, one of my friends is a union rep in the northern PS, itching for a vol. redunacy program there.

Michael Taft

Thanks for that Mack. The ESRI simulation is based on a reduction of x amount of employees on the public sector payroll. There is no assignment as to reason: retirement, early retirement, emigration, death, illness, forced redundancy, leaving for another job in the private sector, work-sharing, contract cancellation, contrat non-renewal, etc. If you have any data for the breakdown of the recent reduction in the public sector workforce, it would be helpful to construct, at least, reasons for the reduction.


No data Michael, but I imagine it's important in terms of whether the cost is x+y (benefits), or x-y (where y is the salary from a new job or business income / redundo investment or a reduction in the burden on services). And because they'd be voluntary I imagine the workers would be happier (and probably more productive in their new roles).

You'd probably also get productivity boost from the remaining workers too - as they'd probably be expected to produce the same output with less workers (which would be an argument against salary cuts).

Normally you'd get a payout to facilitate the change, so I think it's a fundamentally different event to natural attrition. If you get 60 or 70 weeks pay tax free you can afford to go back to college or take a risk starting a business if you want - potentially leading to a net gain for society.


Other potential positives that mightn't be captured in models such as the ESRI, at the individual level include the ability to pay down debt. If the voluntary redundancies are well telegraphed some workers may be able to line up alternative employment in advance and use any pay-out to reduce their jumbo mortgage.

As long as none of this is forced, I don't know that it's neccessarily a bad thing. Maybe they could trial it on a small scale first?

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