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 Post subject: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 2:32 pm 
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Some more updated analysis on public service costs. This shows that Public Service costs are just not being addressed.

Chart 1 shows the increase in the population, number of public servants and the cost each person pays for the public service over the years 1990 – 20011.

Image

Chart2 shows the cumulative rate of increase of population, relative size of public service, cost per individual public servant, CPI and total cost of public service. The dashed line shows the “expected” rate of increase base on the combined rate of increase of CPI and population. Again expected here assumes there are no savings due to efficiencies, economies or other factors such as technology.

Image

The row “"Expected" Increase in Public Service Costs” shows a view of the expected increase in public service costs based on the increase in population and CPI. For example, if you are providing a service to a population of 100 people at a cost of €10 per person, your total costs are €1,000. If the number of people increases by 20% to 120 and the cost of the service increases by 40% to €14, your total costs are €1,680 or a total increase of 68%, that 20% plus 40% plus 20% or 40% (or 40% of 20%, it is the same). This assumes that there are no savings to be achieved through efficiencies, economies of scale, loading or scope or by the introduction of new technology that offset the pure expected increase.


In summary, over the interval 1990 to 2011:

Code:
Total Population Increase         27.91%

Number of Public Servants Increase      44.13%

Average Public Servant Weekly Salary Increase   134.90%

Public Service Salary Bill Increase      227.81%

Public Service Cost Per Person Increase      156.28%

Consumer Price Index Increase         68.93%


So when CPI increased by 68.93%, public service wages increased by 134.90%.

While the propulation increased by 27.91%, the number of public servants increased by 44.13%, so average weekly salary increased by 1.96 times CPI.

The cost per public servant for each person increased by 156.28% while CPI increased by 68.93%, so the cost per public servant increased by 2.27 times CPI.

The combination of these two increases means public service salary costs increased by 3.30 times CPI in the interval 1990 to 2011.

Does the public service deliver 3.3 times the value for money it did now than in 1990? Also, this 3.3 assumes no improvements in productivity.

Chart 3 shows private and public sector employment by quarter from 2008Q1 to 2011Q3. While private sector employment has dropped by 16.79%, public sector employment dropped by 5.78%.

Image

Chart 4 shows public and private sector average weekly earnings. Public sector earnings are consistently nearky 50% greater than those of the private sector.

Image

Chart 5 shows public and private sector average hourly earnings.

Image

The detail of the data sources is:

Total Population (Thousands)

Various sources including:

http://www.cso.ie/en/media/csoie/releas ... 202011.pdf


Number of Public Servants (Thousands)

Taken from two sources:

PSQ01: Employment and Earnings in Public Sector - runs up to 2009Q3 (http://www.cso.ie/px/pxeirestat/Statire ... language=0) and then replaced by EHQ08 (http://www.cso.ie/px/pxeirestat/Statire ... language=0)

For earlier parts of this time series, values are shown for Q4 of the year. While later years (2002 - 2009) show data for all quarters, I have taken the value for Q4 for consistency.

In the case on 2011, data is only available up to 2011Q3.

The differences between PSQ01 and EHQ08 include PSQ01 did not include substitute teachers and parttime employees were counted differently.

For 2008Q4, the PSQ01 number was 373,300 and the EHQ08 number was 427,300, 14.5% increase.


Public Service Salary Bill (Billions)

As before taken from two sources:

EHQ08 Employment, Hours and Earnings by Quarter, Private or Public Sector and Statistic - 2008Q1-2011Q3

PSQ01 Employment and Earnings in Public Sector by Type of Public Sector Employment, Quarter and Statistic - 1988Q1-2009Q3

Public Service Salary Bill = Earnings per Week multiplied by Number of Public Servants


Consumer Prices Index

Taken from:

http://www.cso.ie/en/statistics/prices/ ... riceindex/

CPI value taken for All Items


The failure to maintain a consistent time series for Employment and Earnings in Public Sector is a bit annoying, While the old measure underestimated the size of the public service, the lack of a consistent measure makes analysis difficult.


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 2:34 pm 
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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 3:21 pm 
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Table 2 Cumulative growth of public and private sector wages per employee (1999 – 2008)
Public sector Private sector
Euro area 34.9 24.2
Belgium 36.6 31.7
Germany 13.1 13.7
ireland 110.8 60.3
Greece 108.7 62.0
Spain 53.1 29.9
France 31.3 32.9
Italy 42.5 24.8
Netherlands 38.5 40.0
Austria 29.3 26.2
Portugal 58.0 35.3
Finland 41.7 38.8
Source: OECD.

As you can see from above Irish public servents nominal pay grew far faster between 1999 and 20008 compared with the Euorzone average resulting in a loss of competitiveness. 111% increase in Ireland compared with 35% as a Eurozone average, that is a shocking difference.

It is interesting too that Greeces public servants pay also shot up in this period (109%) while Germanys public servants did not even keep with inflation (13% ). Should we really be surprised in Ireland and Greece that are public finances are in bits after seeing such increase above the average? Mean while we go around using the word austerity because we find out that we have to cut are pay in line to what they would have been if we gave an increase inline with others in Eurozone.... thats not austerity , thats fixing what incompetent governments gave in unsustainable increase.

If I was German and I was aware of this, I would say do not lend Ireland and Greece one cent till there public servants pay are 13% nominally above what they were in 1999, thats fair because thats all that Germen public servants got in that time, why should they pay for other countries wanting to keep increase that they never got or could have afforded, this would result in far more cuts to public servants pay in Ireland.

Croke Park agreement has to be ripped up


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 3:27 pm 
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That data looks deeply suspect to me. Am I to believe that PS employment jumped by 60,000-80,000 people between 2007 and 2008? Also, how do you figure 400,000 in the PS in 2011?


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 3:35 pm 
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Taking the lead from Fingers post I set a challenge to all sides who wish to come to this subject becasue I think we are really at a point where we need to honestly appraise as a whole as a group with all agendas left at the door.

So why not amass the best set of figures that all can agree on before prescribing any solutions.

Gather the information in as much totality as you all can without descending into the usual tit for tat and I will allow the debate take place here on this forum built on the satisfactory results but you have to all come together to get the best datasets you can or the PS vs PS will be involved becasue a thread like this has the ability to chain react and thats is boring.

As I said before the property bubble was to pop and then the next was the next stage woudl be Governments going pop it what comes after this that is really why we are all here.

Play not Fight. Create not destroy. Its your choice.

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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 3:56 pm 
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Fingers wrote:
That data looks deeply suspect to me. Am I to believe that PS employment jumped by 60,000-80,000 people between 2007 and 2008? Also, how do you figure 400,000 in the PS in 2011?


At least read the information provided before making such statements.

Quote:
The differences between PSQ01 and EHQ08 include PSQ01 did not include substitute teachers and parttime employees were counted differently.

For 2008Q4, the PSQ01 number was 373,300 and the EHQ08 number was 427,300, 14.5% increase.

PSQ01: Employment and Earnings in Public Sector - runs up to 2009Q3 (http://www.cso.ie/px/pxeirestat/Statire ... language=0) and then replaced by EHQ08 (http://www.cso.ie/px/pxeirestat/Statire ... language=0)

The failure to maintain a consistent time series for Employment and Earnings in Public Sector is a bit annoying, While the old measure underestimated the size of the public service, the lack of a consistent measure makes analysis difficult.


The original data sources are listed for you to review.

Before 2008, public service numbers were underestimated because of factors such as:

    Substitute teachers were not counted.

    The numbers were counted for just one week of the quarter rather than averaging numbers every week of the quarter.

    Parttime employees were counted at .5 of an employee rather than 1.

The increase in 2008 was caused by these changes.

The public service employee numbers from series EHQ08 for 2011 are:

2011Q1 404,200

2011Q2 404,300

2011Q3 392,900


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 3:59 pm 
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Here's a snippet of information.

Figures show drop in public sector employment. -RTE, 15th November 2011
Quote:
Figures to be published this week will show that the number of people employed in the public sector has gone below 300,000 for the first time since 2006.


Is there a discrepancy in these figures? .


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:10 pm 
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Why would you count a part-time employee as 1 rather than as a fraction of one?

And there's no way there are 400,000 in the PS in 2011. What are you counting that Howlin is not? Semi-states?


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:19 pm 
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Fingers wrote:
Why would you count a part-time employee as 1 rather than as a fraction of one?

And there's no way there are 400,000 in the PS in 2011. What are you counting that Howlin is not? Semi-states?


EHQ08: Employment, Hours and Earnings by Private or Public Sector, Quarter and Statistic

Code:
Quarter         2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3
Public sector               
All Employees (Number) 417,000 421,400 416,900 427,300 421,000 417,600 410,500 406,900 403,700 402,100 401,100 402,100 404,200 404,300 392,900
Earnings per Week (Euro) 904.80 930.51 930.14 956.71 934.00 946.09 945.50 965.84 881.80 908.08 911.70 910.80 872.85 894.56 906.81
Average Hourly earnings (Euro) 28.64 29.16 29.10 29.92 29.97 30.07 29.64 29.90 28.77 28.72 28.24 28.58 28.69 28.82 28.54


HQ10: Public Sector Employment by Sub Sector and Quarter

Code:
Quarter         2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3
Civil service 41,700 42,700 43,000 42,700 42,200 42,100 41,600 40,800 40,100 40,000 39,900 39,600 44,700 44,900 39,900
Defence 11,200 11,200 11,000 11,200 11,000 10,900 10,800 10,600 10,500 10,400 10,500 10,400 10,300 10,400 10,300
Garda Siochana 14,900 15,100 14,200 15,300 14,600 14,700 14,700 14,600 14,600 14,600 14,600 14,400 14,300 14,200 14,100
Education 116,100 117,400 113,200 120,500 120,200 118,300 113,300 114,100 113,600 113,600 111,500 117,000 116,700 117,100 112,300
Regional bodies 38,900 40,100 40,700 40,200 38,400 38,400 37,900 37,300 36,200 36,100 37,600 35,200 34,500 34,700 34,200
Health 137,800 138,000 137,800 139,600 137,700 137,100 136,400 135,000 135,500 134,700 134,200 132,300 131,100 130,000 129,100
Semi-State 56,400 56,900 57,000 57,800 56,900 56,100 55,800 54,500 53,200 52,700 52,800 53,200 52,600 53,000 53,000
Total Public Sector including Semi State bodies 417,000 421,400 416,900 427,300 421,000 417,600 410,500 406,900 403,700 402,100 401,100 402,100 404,200 404,300 392,900
Total Public Sector excluding Semi State bodies 360,600 364,500 359,900 369,500 364,100 361,500 354,700 352,400 350,500 349,400 348,300 348,900 351,600 351,300 339,900


Even excluding semi-state bodies, the total number of public servants in 2011Q3 is 339,900.


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:21 pm 
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How do you explain the discrepancy?


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:22 pm 
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Fingers wrote:
Why would you count a part-time employee as 1 rather than as a fraction of one?

And there's no way there are 400,000 in the PS in 2011. What are you counting that Howlin is not? Semi-states?

The figures will be difficult to unravel because they were massaged every which way for political optics. For instance here's an article from 2002 showing that Health Service employees were not included (god knows why).

Public sector wages increase by 9%
Quote:
Average weekly earnings in the public sector, excluding health employees, rose by 9% to €702 last year, according to new figures published by the Central Statistics Office.
The figures also show that the total numbers employed in the public sector, excluding those in the health sector, rose by 10,000 to 230,000.
These employment increases include 4,000 extra people in the education sector; 2,300 in semi-state companies; 2,100 in the civil service; and 1,800 in regional bodies.
This means that the public sector pay bill outside of health rose by 14%, or more than €1bn in 2001.

Back then it was presented as good news to have wage increases running at a multiple of inflation.


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:24 pm 
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Coles2 wrote:
Here's a snippet of information.

Figures show drop in public sector employment. -RTE, 15th November 2011
Quote:
Figures to be published this week will show that the number of people employed in the public sector has gone below 300,000 for the first time since 2006.


Is there a discrepancy in these figures? .


If you do count all the local authorities and semi-states and the army/navy/air corps, you get 295,400.

However, that is just a manipulation and a distortion of reality. These all have a cost.


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:36 pm 
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@jxbr - compliments on a very well structured post, compelling source data, adding veracity.

I know a few people holding senior positions within CS who were retired over the past year or two with lucrative packages, only to find some of these people are now rehired back into senior roles within the CS, being paid significant salaries. Others have had the 5 year sabbatical rule waived and they are being rehired outside of the elapsed 5 year sabbatical rule.

All of this against a backdrop of bloated public sector costs. These cosy arrangements should have been stopped long ago.

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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 4:44 pm 
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jxbr wrote:
If you do count all the local authorities and semi-states and the army/navy/air corps, you get 295,400.


Huh?


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 Post subject: Re: Public Service Costs - The Elephant in the Room
PostPosted: Sun Jan 29, 2012 6:26 pm 
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Fingers wrote:
jxbr wrote:
If you do count all the local authorities and semi-states and the army/navy/air corps, you get 295,400.


Huh?

I presume "not" is the missing word - "if you do not count".

Is the HSE considered a semi-state in that figure?

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