Public sector pay anomalies
Sir, – I find Dan O’Brien’s economic comments generally thoughtful and well-informed. However I have some reservations about his piece on public-private sector pay differentials (Business, March 8th).
In the five or six years prior to 2009, the public-sector pay premium widened, in no small measure due to the rightfully discredited first benchmarking report. Since then, there have been many studies on this topic, by people in the ECB, the ESRI, the CSO and elsewhere. While there is some controversy about how and to what extent one should control for age, qualifications and (especially) firm size there are a couple of politically inconvenient truths which stand out:
1. Virtually all studies which have examined the more detailed numbers agree that the public-sector pay premium is higher for low-earnings categories and much lower or in some instances negative for the highest earners. This accords with international experience.
2. In practically all cases the earnings premium is higher for women than for men.
3. It follows therefore that any drastic reduction in this premium must involve some measure of reducing the earnings of lower-paid public servants, especially women. That is why I referred to politically inconvenient truths.
I don’t want to be misinterpreted as advocating any particular policy, but the facts indicate that the problem cannot be solved easily. The facts also seem to indicate that some of the ranting against public sector at the very top might be just a little misplaced. I would place more emphasis on ensuring that the quality of those at the top matched their pay. – Yours, etc,
Rathfarnham, Dublin 14.