If we want a lean and more efficient public sector, why are the jobs pages littered with civil service positions?
Have you noticed the language used by employment agencies these days? Every dream job is exciting, attractive and offers a ‘‘once in a lifetime’’ opportunity to change your life. Every ideal candidate needs to be bright, creative and energetic.
Sometimes, you’d be forgiven for thinking you’re reading a lonely hearts column. Effusiveness aside, the jobs’ pages do offer a snapshot of the economy.
As this column is based on the most rigorous and up-to-date economic measurement techniques, let’s look at one of the country’s most prominent jobs’ supplements this week, to read a few economic tea leaves. Every Friday, the Irish Times jobs’ section purports to host the best jobs in the land, and as it claims to be read by nine out of ten senior business people, this section offers us a glimpse of what is available at the top of the tree.
If the Economic and Social Research Institute’s (ESRI) latest prognosis is to be believed, and Ireland is set to become a lean, fit machine with a pared down, stream-lined public sector and a dynamic service exporting sector, we would hope to see some indication of this in the jobs’ pages. An economy that is on the cusp of an exporting boom, in the creative services sector, must surely be looking for senior managers to execute this.
So, I counted all the big headline ads in the jobs section on Friday, expecting to see evidence of dynamism. The good news is that there were plenty of jobs – twelve pages in all. The bad news is that 85 per cent of them were for public sector positions. Admittedly, I only counted the larger, expensive looking ads, as they are obviously designed to catch the eye.
In all, there were a respectable 77 ads for senior positions. Astonishingly, 66 of these were in the public sector. Apart from an isolated Ryanair ad, one for Pfizer and a couple from financial institutions, practically every position was either for the civil service, one of the universities, public bodies or a variety of different state ‘agencies’ that have been set up in the past few years.
Who is going to pay for these people? Think about the figure again – 85 per cent of the jobs advertised this week are in the very sector that we are supposed to be cutting back on. In fact, in the first eight pages of the jobs’ supplement, there were only five private sector jobs. This is a joke.
For an economy that is trying to avoid being completely dragged down by the most wasteful property boom the western world has seen in years, the last thing we need is for the public sector to be expanding.
This article is not a rant against the public sector; countries need strong public sectors, staffed by talented people. The issue at stake here, is to understand what is happening in our country – and our labour market.
‘The Irish Times Job Ratio’ — to give my ramblings a grandiose title – suggests that there are eight times more senior jobs being sought by the public sector than the private sector. So, we are having a recession in one part of the economy – the part that earns money – and a boom in the other part of the economy – the part that spends money.
This is a recipe for bankruptcy. To achieve the economy which the ESRI wrote about the other day, it seems logical to suggest that the Irish Times Jobs Ratio (‘ITJR’) should be going the other way.
If this continues, Ireland will be faced with a serious twin deficit, as the current account deficit balloons further and the budget deficit explodes. Just a word of warning from the past: in the early 1990s, when Finland experienced a property market collapse, its budget deficit went from a surplus of 2 per cent of GDP (the value of all final goods and services produced in a nation in a given year) during its boom, to a deficit of 11 per cent of GDP when the economy slowed.
The reason for this was that the entire budget strategy was geared to the property market, and the resulting surge in consumer spending, which itself was driven by enormous personal borrowing.
A figure published by the Central Statistics Office this week reveals that we are in a very similar position. According to the statisticians, total personal indebtedness in Ireland is now running at â‚¬194 billion.
About â‚¬140 billion of this is in mortgages, leaving an outstanding â‚¬50 billion odd in debts built up to buy cars, holidays and Jimmy Choos. If we add the indebtedness of Irish firms to this figure, we get a total private sector debt figure, at the end of March, of â‚¬384 billion (published by the Central Bank).This is well over twice our GDP figure.
When people are borrowing so much money, it is easy to run a budget surplus, simply because so much of this borrowed cash finds its way back into the government’s coffers in taxation. The corollary is also true. When the borrowing stops, tax dries up and the budget plummets into deficit.
Therefore, the Irish government’s budget – the figure so many commentators get worked up about – is only a residual in the equation. When the people are borrowing, the surplus is huge; and when people are not borrowing, the deficit is huge. So, we should expect the mother of all deficits in the years ahead, as the main engines for revenue, house price taxation and consumer spending, fall away.
Last week, we saw further evidence from both of these crucial areas. Retail sales fell by 2 per cent in March, while the first-time buyers market has ground to a halt. This situation is likely to get worse. Who would buy a house now?
Another interesting figure that came out recently, is equally worrying. In the first quarter, the buy-to-let mortgage market grew by â‚¬1.1 billion. Now, who is taking out these mortgages? In the past, the buy-to-let market was driven by small-time, amateur investors, who bought on the expectation of ever-increasing house prices. As this chimera evaporated, so too has this type of investor – who, during the boom, accounted for over 27 per cent of the total mortgage market. So, who is buying now?
Worryingly, the only buyers in town are those who have to buy. It is, therefore, not inconceivable that the people who are buying to let are the very people who own these apartments in the first place – the developers. This is a hunch, but if it turns out to be true, we are in for an awful ride in the next two years, because this is not borrowing from Peter to pay Paul, it is borrowing from Paul to pay Paul.
All the while, the ITJR points to recession and a bloated apparatchik class who spend, rather than earn. If you want a quick snapshot of the economy and to see beyond all the blather, all you have to do is scan the ITJR every Friday. At the moment, the ratio is 8:1 for the public sector.
No economy ever got rich by expanding the government’s payroll, so now, the ITJR is saying that we will fall off a cliff. Let’s watch the ITJR every week from here on, to see where the economy is actually headed, rather than where some people would like to see it go.