Saturday, 17 October 2009

Benchmarking pay of migrants and women

Slí Eile: There is a rising crescendo of continuing controversy about public sector pay. On the one side independent statistical and research evidence is showing a ‘premium’ to public sector workers no matter what it is measured or adjusted for various measurable things. On the other side, public sector trade unions are disputing this evidence and are pointing to the difficulties of true ‘like-with-like’ comparisons.

Moreover, there is a sense that the whole controversy is removing the focus from where it should be – the super rich, the rich and the not-so-rich self-employed and owners of various sources of income other than (measurable) wage income. The work by the ESRI (and Boyle et al in 2004) has been well documented. More recently, the ESRI paper in the Economic and Social Review generated public attention (and adverse union reaction). The analysis of the 2007 National Employment Survey (same source as used by ESRI) by the Central Statistics Office has complicated the picture, somewhat, by allowing for different variables (for example size of enterprise) and different models.

In an article in the Irish Times, Scapegoating public sector lets wealthy off the hook, Fintan O’Toole makes a very good point in saying the following:

There is one sense in which the public sector unions deserve what they’re getting. Through the secretive benchmarking process, they bought in to the idea of setting wages in the public and private sectors against each other. This was always absurd and deceitful. The deception is the idea that workers in the two sectors of the economy can be compared in some cool, scientific way. In fact, we’re dealing not with science but with politics. What is the equivalent in private firms of a garda or a primary school principal? What is the equivalent in State employment of a shop assistant or a sales rep or a mushroom picker?

To say that jobs are not strictly comparable now is one thing. To have said it 5 or 10 years ago might have pointed in a different direction. One the big issues left aside by many commentators is:
The low level of pay (by international standards) among many private sector workers – in particular women and migrants. The inequitable structure of income in both private and public sectors with those at the top earning huge salaries (and in many cases non-regular bonuses not counted in the CSO National Employment Survey used by CSO and ESRI for this analysis). I am not aware of any publicity about the ‘negative premium’ to workers from EU Accession countries (-0.207 – Table C6, page 29) as well as for women (0.176 in favour of men for both sectors combined). These figures relate to permanent full-time employees aged 25-59 and using statistical controls for size of enterprise.

Where are the headlines ‘Research shows premium to Irish-national, male public-sector workers as calls emerge for reverse benchmarking to close the gap with female migrants in the private sector!’ ?

O'Toole commented:

If we’re serious about bringing public sector wages into line with those in private firms, we need to allow more exploitation of women and of the low-paid, who benefit most from having State jobs. This may be an absurd conclusion, but it is the logic of an argument that suggests that public sector workers be penalised because so many in the private sector suffer from gender discrimination, exploitation and rotten pensions.

We need to cop on to the game that’s being played here and focus on the real divide, which is not that between public and private but that between those who can really afford to live on less and those who can’t. Wages should be cut from the top down, through taxation in the private sector and pay cuts in the public sector.


Proposition Joe said...

"we need to allow more exploitation of women and of the low-paid"

In his headlong rush to a "right on" soundbite, O'Toole fails to recognize a number of subtleties in the data.

Firstly in the public sector there's the clustering of women in highly feminized professional and para-professional occupations, particularly teaching, nursing and various therapist positions (physio/occupational/speech etc). While the above-average salaries at these grades have the effect of bringing up the female average within the public sector, the resulting gender imbalance is neither good for the individual women, the institutions nor the outcomes for users. It cannot be healthy that the only male figure that many young boys come across at school is the cold, distant, disciplinarian in the headmaster's office.

The other point to note is that outside of health (which has a long tradition of mobility), there has been a vanishingly small penetration of suitably qualified migrants into the public sector. That is not to say that the tapping into the migrant labour pool would have necessarily driven public wages south, as the normal downward pressure would be buttressed by the rigidity of pay scales. However it does mean that due to restrictive hiring practices and artificial barriers-to-entry, the Irish public sector (outside of health) did not gain from the skills/talent-dividend associated with in-migration in the same way that say the software industry benefited. Thus the lack of openness in recruiting to the public sector comes at a cost to all service users.

Slí Eile said...

@Proposition Joe Point about restricted entry and associated low intake of other nationals is very true. This is one of the areas in which the public services need to be opened much more. Of course right now immigration has collapsed - but pick up it will eventually. Many private sector works from EU12 countries are overskilled compared to their job spec.