When the centre cannot hold

The government has won praise, nationally and internationally, for taking unpopular but necessary decisions to right the country's finances. Fiscal austerity--French for cutbacks in services and increases in taxation--was the phrase of 2009.

Late on December 23rd, the Department of Finance announced it will not cut senior civil servants' pay by as much as expected: on budget day, we were told civil servants earning between 165,000 and 200,000 Euros would take pay cuts of 12%, while those earning over 200,000 Euros would take pay cuts of 15%. These pay cuts will not take effect in January. The justification for the decision by the Department of Finance is baffling: senior civil servants will not be awarded their `productivity' (or performance-related) bonuses this year. The proposed cuts, on top of the loss of these bonuses, would have created an overlap between civil servants on different grades. That isn't fair, so the cuts are not to go ahead, and much smaller cuts--on the order of 3-4%--are mooted instead. Much discussion on the announcement has been had over at Irisheconomy.

The Department's justification is nonsense, and the decision needs to be reversed in the national interest immediately.

The nation has bought the narrative that fiscal austerity is the way to heal the government's finances. Every citizen, so the story goes, would be asked to endure some pain for the greater good. Those who could afford to pay more, would, but it was understood that lower paid workers would see their incomes reduced and the services they enjoy curtailed. Expectations were to be reduced by every household in the nation in short order to help the country recover. At the end of January, every worker in Ireland will open their pay packet, and understand exactly the price of believing the fiscal austerity story. A very real, very understandable, and very dangerous level of public anger will exist as a result of these cuts. This anger may be ignited by decisions taken in the mouth of Christmas to protect some of the
wealthiest and most secure members of Irish society from the pain being inflicted on households all over Ireland. To contain this anger, the fiscal austerity story has to hold for all members of Irish society. Ireland's top civil servants represent the centre of government. The story must hold for them, and for them most of all.

Carers, widows, and the blind will not understand why senior civil servants earning more than 3 times the average wage, and who help to decide what cuts need to be taken, have exempted themselves from sharing in the pain. Jobseekers will be enraged that those in secure positions are not contributing to the nation's recovery. Lower paid civil servants, who have been asked to bear the brunt of the cost reduction through the budget, will ask exactly why their bosses are exempt. The money involved is not substantial, but the principle is invaluable: those who can afford to bear the brunt of cuts, should. To do otherwise is morally indefensible at a time of national crisis.

Recall the public anger expressed at the ill-fated '12 day' pre-budget deal between the Government and the unions. That anger came from a public that had set its jaw against a budget filled with inevitable and well-leaked cuts in pay and services, only to see government's resolve seemingly falter at the last moment. That anger will multiply many times over once it becomes clear that the government intends to spare its best paid senior civil servants in the new year.

Senior civil servants are at the centre of government. They help make, and implement, the decisions of government during a time of crisis. This centre needs to hold, or things will fall apart. If it cannot, the government must take the decision for them. After all, that is what governments do.

Update, thanks to Eoin on the IrishEconomy blog for sharpening this little rant up.

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