Friday, December 18, 2009

Economics 18/12/2009: Public Sector Earnings & Employment

Per CSO release today: is the Government is losing the fight to keep this economy afloat?

"Average weekly earnings in the Public Sector (ex Health) rose by 2.5% in the year to September 2009 from €945.18 to €969.11 per week. This compares to a rise of 3.2% in the year to June 2009."

Weekly earnings for
  • the Regional Bodies rose by 4.6% (from €815.58 to €852.71)
  • the Education Sector by 3.0%, from €944.49 to €973.10.
  • An Garda Síochána, inclusive of overtime, fell by 0.8% from €1,196.19 to €1,186.37 per week. Their weekly earnings excluding overtime decreased slightly by 0.1% from €1,077.55 to €1,076.22 for the same period.
Over the four year period from September 2005 to September 2009, average weekly earnings in the Public Sector (excluding Health) rose by 14.2% from €848.94 to €969.11:
  • Regional Bodies’ earnings rose by 15.3% (from €739.27 to €852.71),
  • Semi State by 17.2% (from €902.95 to €1,058.46),
  • An Garda Síochána, inclusive of overtime, rose by 8.8%,
  • Education Sector rose by 11.5% in this period,
  • Civil Service and the Defence Sector rose by approximately 18% (from €797.37 to €933.03 and €691.28 to €815.58 per week respectively).
Natural attrition with recruitment bans has produced a decline in PS employment from 369,100 in September 2008 to 360,900 in September 2009 - a decline of 8,200 or 2.22% - way too small compared to the declines in private sector employment and labor force. But the natural reduction rate is accelerating - there was a decrease of just 2,700 in a year to June 2009.

Nonetheless at this rate, it will take Ireland about 20 years before we reach the reasonable levels of public sector employment, comparable to other countries, which stands, given our size of labor force and lack of functional military sector, at around 250,000.

In the year to September 2009 employment in Regional Bodies fell from 40,400 to 37,000, a decrease of 3,400. In the same period there were 1,200 fewer people employed in the Civil Service where numbers dropped to 38,100 in September 2009. Employment in the Health Sector fell to 110,200 in the year to September 2009, a drop of 600. Employment in An Garda Síochána rose by 500 from 14,200 in September 2008 to 14,700 in September 2009.

In the four years to September 2009, employment in the Public Sector rose by 17,300 to 360,900
  • Education Sector from 84,700 to 97,200, an increase of 12,500
  • An Garda Síochána rose by 2,400 from 12,300 to 14,700,
  • Health Sector from 101,500 to 110,200, an increase of 8,700,
  • Regional Bodies employment decreased from 38,200 to 37,000, a drop of 1,200.
Updated charts as always (note, data goes back to Q1 2005, unlike CSO's latest release).

Employment numbers first.

Earnings last:
With two details: earnings by category within and outside 1 standard deviation of the mean:showing the lack of overall volatility in the public sector earnings, which shows that the argument offered by the unions that some occupations in PS earn less than others is simply statistically not true. They all earn pretty much the same:
Not a single sub-sector of the PS falls outside 2 standard deviations from the PS mean. Of course, homogeneity is the sign of the lack of proper pricing relative productivity. Then again, it is public sector we are talking about.

1 comment:

Anonymous said...

..''homogeneity is the sign of the lack of proper pricing relative productivity.''

What can be defined as productivity in the PS?

In the private sector productivity is easily quantified.

But in the PS,For example if two patients ,same age,same medical condition etc are treated and one patient requires more treatment to cure them than the other then presumably using all known inputs one is treated more productvely than the other .

However we all know its not as simple as that because everyones underlying physiology is different.

Similarly when legal requirements require each citizen be treated equally with everyone else by the PS there again there is a distortion. This means there will be great variations in apparent output,or in other words there may be many outputs several deviations from the mean output,or a flattening of the bell curve.

Pay would be expected to be in line with productivity in the private sector but in the PS it would be reasonable to see wages homogenous as there is no differentiation in pricing outputs(as required by law and in line with the Irish Constitution).

Perhaps if a comparison of standard deviations from the mean of PS salaries in a number of other countries with well developed legal structures (such as UK,USA,Australia) would give a better picture of whether the Irish PS is truly dysfunctional.

I would also suggest study should concentrate on the distribution of salaries within sub sectors of the PS to identify unwanted baggage and distribution of salaries within each PS profession or job title and distribution of outputs to find out who is doing the burden of work.

The above are just observations and I am willing to be proven wrong but unfortunately as far as I can see the PS/private sector comparisons are akin to comparing racehorses to Clysdales.