Inside the world of business
Public-private pay debate creates more heat than light
THE DEBATE about public and private sector wage levels continues apace with the publication of two new reports on pay levels in the private sector. They may not elucidate all the facts surrounding the issue of pay across the entire private sector, but the surveys do provide some interesting insights into how pay cuts are being implemented and the impossibility of comparing “like-for-like” when discussing private and public pay.
Mercer’s study – based primarily on multinational and larger corporates in Ireland – found that companies have reduced their payroll bill by 11 per cent. Crucially, however, in the vast majority of cases, this was not achieved through pay cuts but through other cost-reduction means such as hiring freezes, redundancies, reductions in overtime and bonuses, and reduced pension contributions.
Hays’ survey is even more bleak. It shows that salaries for new jobs advertised in seven industries across the private sector were down up to 30 per cent. This figure does not take account of the almost complete collapse in the number of jobs advertised across the private sector in 2009, the voluntary and compulsory redundancies implemented, and the reduction in benefits and pension entitlements awarded to private sector workers.
Aggrieved public sector workers need to realise that “pay” does not simply equate to the figures on a wage slip – it also includes job security, structured working hours and extremely generous pension entitlements.
The Government also needs to introduce a better system of measuring private sector pay.
The lack of a single database of statistics is in danger of making the debate about differences in public and private sector pay not just an emotive issue, but a flawed one too.
Rothwell ships major loss in ICG shares
AFTER MANY months of drift, there has suddenly been some major movement in the ownership of Irish Continental Group (ICG).
Firstly, the 29.3 per cent stake of property developer Liam Carroll was placed with a large number of institutional investors.
Then, late on Friday last, ICG’s long-serving chief executive Eamonn Rothwell informed the market that he had sold 7.1 per cent of his 16 per cent holding in the business.
It was a move that generated a few ripples in the markets.
Yesterday, we discovered that Rothwell had sold the shares to a vehicle he controls called Rokeby Investments Ltd. Rokeby was incorporated in May and has two directors, Rothwell and Clodagh Moreland.
The transfer of the shares was said to be a “tax planning” matter.
Rothwell sold 1.75 million shares on Friday to Rokeby. He bought the exact same number of shares in mid-June 2007 at €22 each, a deal that cost him €38 million. This transaction is believed to have been funded by bank debt.
ICG shares closed yesterday in Dublin at €13.40. This would leave Rothwell nursing a loss of €8.60 a share or just more than €15 million in total.
Of course, he has received sizeable dividend payments connected to these shares in the intervening period. Nevertheless, he is sitting on a sizeable loss in relation to the shares.
Whether this signals anything about Rothwell’s future intentions re ICG remains to be seen. He has already had a couple of offers knocked back since March 2007. His last attempt with Philip Lynch’s Moonduster consortium sank in April this year and the two sides were precluded by the Irish Takeover Panel from floating another bid until the same month next year.
Financing a bid won’t be easy but ICG still looks the most likely take-private candidate on the Irish Stock Exchange for 2010.
Nobody told us anything seems to be E&Y’s Anglo line
ERNST & YOUNG are sticking to a firm “no comment” policy on reports that their submission to the Chartered Accountants Regulatory Board investigating their audit of Anglo Irish Bank pleads ignorance on almost every substantive point.
The accountants have apparently told the inquiry, headed by former comptroller and auditor general John Purcell, that neither the bank nor the regulator told them about the rinky-dink by which former chairman Sean FitzPatrick hid the true extent of the directors’ loans. The firm’s position regarding the other Anglo controversies – the Quinn family investment and Irish Life & Permanent loans – is similar.
If this is the case it’s tempting to ask what is the point of having an auditor if rather than find things out they expect to be told about all the bad things the client is doing by the client themselves or the regulatory authority.
But this, according to those familiar with such things, would be to misunderstand the role of auditors, who are as the expression goes watchdogs rather than bloodhounds.
Maybe so, but the €1.3 million that Anglo Irish shareholders approved for Ernst & Young’s services in 2008 looks like pretty poor value on that basis.
Today
Central Bank governor Patrick Honohan will appear before the Oireachtas Joint Committee on Economic Regulatory Affairs in relation to regulation in the Irish financial services sector
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