As shown in the latest edition of the Quarterly Economic Facts, the public sector in the Republic of Ireland accounts for 18.4 per cent of total employment—not far from the average level across OECD countries. The public sector employees make up 20 per cent of the total number of people working in the Untied Kingdom; however, public sector workers in Northern Ireland represent 31 per cent of total employment (ONS, 2014).
Numbers Employed in the Wide Public Sector
Source: OECD Government at a Glance 2013
Impending budget cuts in Northern Ireland are likely to lead to a reduction in the public sector employment over the coming years. There is a strong gender element to this issue; the number of females working in the public sector is 18 per cent higher than males, with the median wage for females 4.6 per cent greater. Drawing on this evidence, a recent NERI inBrief by Paul MacFlynn argued that a shift from public sector employment to private sector jobs—precipitated by the voluntary redundancy scheme agreed under the Stormont House Agreement—could widen the gender pay gap in the region.
In the South, government departments have been subject to a moratorium on recruitment since 2009 and incentives were put in place to encourage senior staff to retire from the service. The recent Annual Progress Report on Public Service Reform indicates public service numbers have been reduced by approximately 10 per cent and the public service pay bill has been reduced by over 20 per cent since 2009.
Pay cuts took the form of a pension levy on gross earnings ranging from 5 per cent on income between €15,000 - €20,000 to 10.5 per cent on earnings above €60,000. The implementation of the Croke Park agreement in 2010 saw wages fall by 5 per cent on the first €43,000 earned and 10 per cent on earnings above €70,000. The most recent round of pay cuts impacted on those earning above €65,000, with reductions ranging from 5.5 per cent on amounts up to €80,000 to 10 per cent on every euro earned over €185,000.
Reductions in staff numbers were the another major component in driving down the public service pay bill. Health and education services employ by far the highest number of people in the public sector. The chart below shows the healthcare sector saw the most substantial fall in public sector employment, both in absolute terms and as a proportion of the workforce employed in the sector.
Overview of number working in the public sector employment, by sub sector and quarter
As a proportion of the total number of workers in the public sector
In a recent blog Tom Healy proposed that the state look at ways of reforming the public sector to allow it better contribute to the expansion of an enterprise economy, as opposed to draining it of resources. To this end, it is appropriate that this year's Donal Nevin lecture will be given by Mariana Mazzucato . Professor Mazzucato has convincingly argued—in The Entrepreneurial State, for instance—that a coherent public enterprise strategy combined with an appropriate funding mechanism can drive innovation and productivity gains across the economy.