Professor Alan Barrett:

I will make a very focused point on it again. The ESRI has made a submission to the Department of Public Expenditure and Reform in advance of the setting up of the commission. The point we have always made about this is methodological, but I will try to make it as interesting as possible. I cannot even remember what year it was but before the original benchmarking exercise all those years ago, people seemed to go into it with the assumption that public servants were paid less than private sector people. It turned out that nobody had actually measured if that was the case. Our starting point in this is that one has to have a very serious analysis of wage levels. Again, people will be familiar with the notion that because public servants generally have higher levels of education and experience, they earn more. Nevertheless, one can account for all those sort of things and try to get a sense of whether there is, genuinely, a public service pay premium or, indeed, a public service disadvantage. That exercise, bizarrely, was not actually conducted at the first stage.

After the benchmarking exercise had occurred and there were increases of the order of 12% or 15% or so, Jim O'Leary, who was then in Maynooth, did the analysis and showed that actually public servants were much better paid than those in the private sector. That did not even include the benefits of the public sector pension which was relatively generous. Our core point on this is that the analysis should be done and that any decision should be made on the basis of it. I can tell the committee that the most recent analysis is going to present something of a dilemma here. The most recent analysis showed that it is no longer a simple question of whether there is a public pay premium or a public pay gap. We have now seen that at the upper end of the wage distribution, that is higher paid people, one is better off in the private sector. However, lower waged people are better off in the public sector. The very harsh conclusion is that one should be reducing the wages of public servants on the lower end of the spectrum and increasing them at the higher end. I am looking across at a group of politicians and it strikes me that this would not be the most popular and maybe not the most appropriate thing to do.