Advisors.ie

The debate on public pay is largely focused on ‘fat cats’, a research paper by the CSO demonstrates that the biggest premium is actually not at the top but the bottom. The idea that we should ‘rescue’ certain cohorts or ‘punish’ them based on their pay is ill founded, it doesn’t take into account their productivity, their skill-set or much else other than an arduous concept that if you don’t earn a lot that you are an innocent victim because of it, and if you are highly paid you are somehow stealing from the national purse.

What may actually make a difference is if we try to align incentives, by creating massive bonuses based on savings. Croke Park takes a very top down approach, but at the coal face there are people who see realisable savings and these opportunities are missed because there is no reward in finding them.

For instance, you might have a person working in maintenance who knows that there are substitute products that cost less than the ones they use, or where changing a rota would create a savings, if they were to submit the idea for a savings due to their innate knowledge of the job they do why not give them 50% of that savings in year one if it is implemented? Peer pressure in the public sector (like in many workplaces) is significant, the need to change can be countered by this, but if there were significant earnings attached to finding such a savings we might discover that our biggest asset in public sector reform are the public sector themselves and not a third party observer.

The net effect would be to find a savings of ‘X’ and the cost of finding that savings (because you won’t need a big 5 to find them) will be ‘X/2’, give the person who finds the savings half of the amount. Imagine the positive message that it sends out? ‘My co-worker got a €200,000 bonus this year and he is a lowly paid public sector worker’; if they find a €400,000 savings that is verifiable and can be implemented then why not? It doesn’t have to be ‘win-lose’ there actually are ‘win-win’ situations, you see it in business all the time, in fact, that is really the key to running a business.

So stuff Croke Park and the debate in general, we should let the people who can figure out ways to do it better do just that, and reward them for it.