Public-sector pay and the economy CHRIS BLACKHURST
Pensions and power games
Next Thursday Britain is set to see widespread industrial action by public-sector workers protesting at pension cuts, with union leaders threatening a sustained campaign of strikes. Their claims underline a growing gulf between the Government, the unions and reality
screw”. He retired at 55 with, I imagine, a decent pension. Likewise, my mother taught in the public sector; she too retired early.
M
y father was a state school- teacher. He would frequently refer to someone outside pub- lic service as being on “a good
Never once in their working lives did we
children ever hear our parents express fears for their jobs, worries about changes of bosses and meeting performance standards. Of course, their schools were subject to inspec- tion, which was when did they become especially tense. But otherwise, they carried on their blissful way – immune from the sorts of pressures that haunt those who work in the private sector. Now I know things have changed these
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days, that successive governments have sworn themselves committed to league tables, that employees must undergo annual reviews and every box has to be ticked, or else. But even so, I maintain, the pressures on those working for businesses are very different. There is one key aspect of the gulf between them, however – one to which my father constantly alluded. Money. Those who follow a public career do so in the knowledge that they are trading the prospect of wealth for security. Today, however, that gap has closed to the extent that basic salaries at the senior, non-City, end are not dissimilar to public-sector pay. The difference is that in private firms, there is often a bonus attached. From next week the trade unions are prom- ising the most sustained campaign of industrial action in this country since 1926. It’s a date deliberately chosen: 1926 was the year of the general strike. But the unpalatable truth for union leaders is that back then there really was cause for protest. A train driver earned £156 a year or £7,020 in today’s money. Today, a London Underground driver receives £42,424. It’s not just a question of money. In 1926, workers regularly put in 50 or so hours a week. Today, in the public sector, the average employee works a 37-hour week. Holidays, too, are much better. In 1926, it was just five days off a year. Today, the minimum legal obligation is 28 days’ leave. Similarly, there is no comparison between
today’s pension scheme and the one available back in 1926. Public-sector pensions today
are guaranteed by the Government (in sharp contrast with the value of private-sector pen- sions, which may depend on the vagaries of the stock market). And sick pay was a figment of the imagi- nation in 1926; there was none available, whereas today’s civil servant can get six months on full pay and six months on half pay. In other words, conditions then and now do not bear one scintilla of contrast. Nevertheless, there is widespread anger on the public-servant side. Some of it is justified. Repeatedly, Chancellors of the Exchequer attack the public sector when they want to show how tough they are. They will declare a pay freeze or redundancies or, following Lord Hutton’s recent report, changes to the pension entitlement. They have no choice. The only part of the workforce over which they have direct control is their own. If they want to be seen to be stern, they must put their own house in order. They also hope that it serves as an example
to others: by curbing the public-sector wage and pension bills, they will be inviting private businesses to follow suit. But to the frustration of Ministers and the anger of the civil servants and their union representatives, that has not occurred: companies have gone on their own sweet way, setting their own pay awards and retirement and holiday provisions. Nowhere has this gap been more stark than in the City of London. So while Chancellor George Osborne has been taking an axe to the civil service, the financial-services industry has carried on regardless. To add fuel to the fire, the banks have done so against the back- drop of a Public Spending Review caused by an explosive growth in the national deficit, which, in turn, was brought about by the very credit crunch that they caused. It is hardly surprising that the unions are able to stoke the flames when bankers are still getting their bonuses and making record profits, and civil servants are being made to suffer. They, after all, did not do anything to
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