ECF - the Minister responds

At the outset I have to declare an interest here. As a member of Dublin South East Labour for many years, I know Ruairi Quinn personally. I have campaigned on his behalf on many issues and argued with him on all sorts of topics at constituency meetings. We have shared more than one pint over the years but you would never call us best friends or anything like that.

So when the Employment Control Framework was announced I sent him an email pointing out my concerns, a few links to blog posts from Stephen Kinsella, Ferdinand Von Prondzynski and Eoin O'Dell and suggested to him that it might be an issue to get on top of sooner rather than later. Now obviously he had only been appointed Minister for Education and Skills a few days before so I was not expecting a reply in any great hurry so I was pleasantly surprised to receive a letter from him on the issue.

Stretching to three pages, the letter is far too long to reproduce here, but it is fair to say that Minister Quinn is aware of the problems that the newly drawn up ECF may cause in the sector. He acknowledges that the sector delivered the required savings under the original ECF despite increasing student numbers and that there are now additional requirements on employing non-core staff. This he attributes to the rules set down by the EU/IMF deal. He finished off by saying that he is open to constructive suggestions as to how the ECF can be improved while staying within the financial constraints imposed upon the sector by the current financial situation.

So what's next for the ECF? The HEA released a "clarification" document last week that not only contradicted the new ECF document but contradicted itself in places. If the brains trust of the 3rd level sector can get its act together there is an opportunity to make changes to the ECF that benefit both the state and higher education in Ireland. But we have to act quick - damage is already being done to our international reputation and the longer this drags on the further our status will diminish.

One issue that I would like to see resolved it the issue of contract staff, especially in research. The ECF states that these staff are subject to it because they create a potential deferred pension cost to the state. But it is hard to see how this is the case - they already make a pension contribution, pay PRSI A1 stamp and pay the pension levy as well as the employer paying additional PRSI and pension contributions. This totals to at least 20% if not closer to 25% of their pensionable salary to get a pension of maybe 4/80ths of their salary less the state pension they would get due to their PRSI anyway. That means the net reward from their non-PRSI contributions is zero. Hardly seems like a fair system but then again, is any pension scheme really fair or are they all just Ponzis?

Retirement date blues

Yesterday the Government announced plans to move the state pension age from 65 to 68 over the next 18 years or so. From 2014 you will need to be 66, in 2021 the age will be 67 and only those over 68 will get the state pension form 2028 onwards. The logic behind this is that with increased life expectancy, it is unreasonable for the state to be paying out from age 65. Of course this is not likely to be the last change. There will more than likely be further increases to 69 and 70 any possibly beyond as life expectancy increases.

My main objection to this proposal is that it exacerbates the problem of youth unemployment. People at the top of the system tend to be on the highest wages due to experience, promotion etc. Companies benefit from these people retiring by reducing the wage bill. You replace someone on 100k with a two graduates on 30k and still save money. If senior staff are now required to keep working, fewer places will be available for young people to get a foot on the employment ladder.

From a personal perspective I'm not sure how this affects me. My contract forces my retirement date to be the 30th September following my 65th birthday. Until last year, the university had a private funded pension scheme into which all employees were paying. As part of the finance bills, all such schemes in the public service were closed and the assets transferred to NTMA, with a promise that the state would underwrite the liabilities of the scheme. This makes my occupational pension a state one, coordinated with the social welfare one, which I may not be allowed to draw until I reach 68. So where does that leave me from 30th September 2041 until 25th September 2044? Unemployed, but not drawing a pension?

I assume that issues like this will be resolved in the fullness of time but I am sure that there are going to be hundreds if not thousands of similar problems that will crop up. Issues relating to medical cards, bus passes, TV licenses, heating allowances will all have to be resolved.