Benchmarking – welcome to the race to the bottom?
19 January 2008
The report of the Benchmarking body has awarded zero per cent pay rises for the majority of public sector workers with only 15 pay grades out of 109 given any increase at all, and these almost solely to the highest paid. The latter including increases of 10 per cent for top nursing managers. The total cost amounts to just 0.3 per cent of the overall public services pay bill.
The salt in the wound is the 7.3 per cent pay rise given by the ‘Review Body on Higher Remuneration’ to the holders of the top 1,600 public sector jobs. In addition, on the very day the benchmarking report was published, it was revealed that the VHI is seeking approval to pay its Chief Executive €650,000. The new pay deal for semi-state company Chief Executives will, for example, see ESB’s Pádraig McManus’ salary go up to €500,000. When one remembers that some of these public appointments have been justified because they are ‘friends’ of Bertie Ahern, who himself got a €38,000 pay rise – more than most workers’ total wage, the hypocrisy takes on a very personal character. More generally these big pay rises for those already well off come at a time when these very people call on ordinary workers to tighten their belt: to improve the ‘competitiveness’ of the economy. Any examination of the national income statistics for the Irish State will show it has been profits and rents which have risen and the share of salaries and wages that has actually fallen!
The unions have complained that this iniquitous outcome is the result of arbitrary changes to the benchmarking body’s methodology but the latter has been subject to severe criticism before now because of its lack of transparency and it has always been clear that whatever methodology it has used has been adopted to arrive at predetermined outcomes.
The whole rationale of the benchmarking process has been to remove pay determined by relativities in the public sector to one of comparison with jobs in the private sector. The increase for the highest paid and nothing for the vast majority is therefore presented as simply a reflection of how things are in the private sector. It has now become public policy to increase inequality in the public sector in line with that in the private.
This has put an enormous hole in the trade union bureaucracy’s strategy to protect, at least to some extent, their public sector membership while accepting yellow pack terms and conditions for the majority of private sector workers and making no attempt to organise among multinationals. The concessions surrendered in the private sector are now being sought in the public sector through benchmarking and with, for example, Bord na Móna seeking to get out of their defined benefit pension scheme.
The growth of inequality across society has been a feature of the Celtic Tiger. A study by HR consultants Inbucon in 2006 showed that Directors’ pay rose on average by 18 per cent while that of the most junior staff fell by 3 per cent. This increased inequality in Ireland is the local expression of a world wide trend, with the income of Chief Executives in the US rising from 25 times that of the average worker’s wage in 1970 to 360 times in 2007. Much of the income given to top Directors is notionally based on performance but there doesn’t appear to be any very close correlation. It just keeps going up! Apologists say it is set by the market but in reality it is often set by ‘remuneration committees’ composed of other Directors looking for the same increase they award to others, whom they then claim as an example of the going rate.
It is often claimed that public sector workers have job security that their private sector colleagues don’t, but when you’re at the top of the pile even losing your job isn’t the devastating experience it is for those at the bottom. When the Chairman and Chief Executive of Citigroup ‘stepped down’ last year as a result of the fall out from the sib-prime mortgage crisis, in their case a clear example of failure in performance, they got a $40 million ‘farewell’ package.
The trends in pay, with increases for the better off and nothing for those lower down, testify that the boom is well and truly over as far as the majority of workers are concerned. The pay rises included in the last pay round of the ‘Towards 2016’ partnership deal were eaten up by inflation very quickly, the Irish State is the second most expensive in Europe after Denmark. It was reported by naive commentators that ICTU would therefore seek to re-negotiate the increase. Instead ICTU said they would seek other ways of addressing the cuts in workers living standards and claimed they had got promises of tax concessions in the budget, promises that Ahern didn’t keep.
The zero benchmarking increase also comes at the same time as the aggressive employment of the lock-out against workers in Aer Lingus and Dublin Bus. The claims from the union top brass that the pressure is on the government to deliver on the next round of pay increase due from the upcoming partnership negotiations thus look like the pathetic pleadings of an exposed leadership.
This is because this leadership has conspired to create this situation by:
· Agreeing to pay rises in the last
round which were at the time clearly not going to be enough to cover inflation.
This is most clear in the case of the nurses. Only 1,000 of the 40,000 got any increases from the benchmarking report, again those at the top. Yet last year, after their seven week industrial action just before the general election, they were assured by all and sundry that the benchmarking process was the only way to progress their pay claim. They were assured of this by, among others, the National Implementation Body on which sits not only the government and bosses but also representatives of the trade union bureaucracy.
Of course the acceptance of the benchmarking route by the nurses was in reality a face saving device that avoided admitting they had lost, but their move now to seek some sort of progress from the Labour Court shows that it is better to lose and learn some lessons than to pretend your enemies are your friends. Wasn’t it the Labour Court that said, in defiance of its obvious terms of reference, that the benchmarking process was the way forward? The nurses are going round and round in circles and if they are now to take industrial action they need a clear strategy to win.
The first lesson that should be obvious is that on their own they are very, very unlikely to win. Basing a struggle on being a special case gives no one else a reason to support them, except out of sympathy; and solidarity might start with an ‘s’ but it is really something radically different. Solidarity arises out of mutual interest.
The benchmarking report makes it clear that nurses are in the same position as the rest of the public sector workforce. It also makes clear that the public sector workforce is also in the same position as private sector workers. The nurses’ opposition to the zero results of benchmarking thus has the potential to represent the interests of every other worker in the State.
A strategy to win thus means a real campaign for solidarity and rank and file control of the action. It means a fight not just for nurses but for the health service and for everyone.
It means rejecting any reliance on the social partnership process which has kicked them from one blind alley to another. Nurses must reject the upcoming partnership negotiations and put forward an alternative that other workers can identify with and support. Some nurses might think this is to take on more challenges than they face already. In fact it is simply to recognise the challenges that are already there. On the other had it is a means to seeking out active support that they previously haven’t had.
The benchmarking report and the large pay
increases to those at the top signal that inequality is set to increase
sharply. Those at the top may find that it is one thing for inequality
to increase will in the midst of a boom and quite another when the majority
face real stagnation or cuts in their living standards.