Is it just me who finds the current debate about public sector pay seriously irritating? My irritation has three sources, the division of working people into saints versus the rest, the deliberate distortion of facts and an unwillingness to face the real problem.
Why is it that we regard nurses as angels but refuse collectors as invisible? Why is a policeman a hero but the person who works on live power lines to restore our electricity after a storm not a hero? The truth is that, to coin a well-known phrase, we are all in it together. Most people do a job which is worthwhile . The lopsided view that some public servants are special people and more worthy than others in less visible roles or those in the private sector is divisive, unfair and unhelpful.
Historically those in the private sector earned more than those in the public sector. The general public still believe this is true and the special interest groups in the public sector work hard to keep us believing it – but it is not true.
The period of office of the last labour Government saw a surge in public sector pay which meant that by the time the financial crisis hit ten years ago, public sector pay had moved decisively ahead of that in the private sector. What has happened in the last ten years is that restraint in public sector pay has brought it broadly back to parity with that in the private sector. This comparison ignores the key fact that the public sector provides far more generous pension arrangements – partly funded by those in the private sector who no longer enjoy such benefits. Elements of the public sector also indulge in what they call Progression Pay. In theory, you don’t get a pay rise but in fact you do because you “progress” up a ladder which means that your pay goes up – such nice arrangements are very rare in the private sector.
These subtleties are lost in the union led PR battle to win the public over to support higher pay for “hard working” public servants – the implication being that if you are not a public servant you are somehow working less hard.
The unhelpful truth is that it has been a pretty rubbish decade in terms of real take-home pay for almost everyone across the whole economy. The big lie we are being tempted into falling for is that there is money available to fix the problem. If one group of people gain higher pay then somebody else has to suffer – efficiencies (code for job cuts) must be found, taxes raised which have to be paid by somebody or more borrowing taken on - at a time when there is far too much debt already – and paid for by our children. There is not a pot of money which can be given to public servants without causing pain to others.
The real difficulty is that economic growth and even more so productivity growth is extremely weak. For workers as a whole, the only way to get back to decent growth in real wages in through achieving greater productivity. That is the agenda which Government, business and unions should focus on rather than dividing the workforce into groups each trying to grab a slice of a rather mouldy pie.
In the meantime, if public sector workers really want to achieve a significant increase now in their pay, then they have to give up their taxpayer funded final salary pensions. If the public sector unions want to show real leadership, they need to make a hard choice.
Pinstripe is a senior member of Scotland's financial services community.
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