Thursday, October 07, 2010

Public sector pensions

This post has been revised and expanded here.


meditations71 said...

I think you're trying to push the party political line too hard Thom. In terms of the public v private sector debate, there are several important facts to keep in mind. Average pay in the public sector is now higher than in the private sector; over the last decade or so productivity has increased significantly in the private sector while it has actually decreased in the public sector; with inceasingly hard times and the recession following the global economic crisis that hit in 2007 the private sector has adjusted accordingly and has had to shed hundreds of thousands of jobs while during the same time the public sector saw a substantial increase in jobs.

These are not obscure facts but have been widely reported in UK media. They are clearly relevant facts when considering public sector pensions and what to do about them.

They are also relevant because of a fundamental distinction between the public and private sectors, namely that the former is utterly dependent on the latter. Without a healthy private sector generating growth and tax receipts you cannot pay for the public sector (including its by comparison very generous pensions). If you keep squeezing the private sector to expand the public sector you will, in the words of Liam Byrne, end up with "no money left".

The point is not that it is only the public sector that should bear the brunt of cuts or that somehow public sector work is inherently less valuable (although in practical terms it is, in that when it comes to creating the monies with which we are paid it is dependent on the private sector), but that we cannot simply equate the two sectors as your comment that if there is "high pay" in the private sector then what is the problem with (similarly?) high pay and compensation in the public sector seems to suggest.

Private sector salaries are set by market conditions, as opposed to public sector compensation which is at least partly determined by political decisions (which cannot ignore the greater context of existing market conditions).

The Brooks Blog said...

Good to find you pushing your own party line...

In any event, of course, "public sector" pay in the UK only fares so well (and only on average) with private sector pay because of who is included in the UK's "public sector". If we were to remove the BBC, then everything changes. Furthermore, I would be surprised if it were untrue that the majority of public sector employees earn less than the public sector average.

No one (and certainly not me) is arguing that a strong private sector isn't highly important. One view of the public sector is that the two sectors benefit from the strengths of each other in a symbiotic relationship.

I'm also not arguing for any kind of "squeeze" (I see you're taken in by the coalition's language) of the private sector. This isn't about squeezing anybody.

The only squeeze we're about to see is a squeeze on you and me -- sold to us in the national interest -- that will likely benefit the most wealthy rather than the more unfortunate.

Already it has also been widely reported that proposed cuts will harm the poor far more than the rich. I fear we can expect more of the same.