Public sector strikes: Unaffordable and unfair

Unions at least used to make a show of supporting ‘fairness’. They are now simply trying to protect the privileges of a public sector labour aristocracy supported by the galley slaves in the private sector

They're healthy enough as it is, aren't they?
John Phelan
On 30 November 2011 08:40

And so the world keeps turning. An estimated two million public sector workers have gone on strike and the nation has kept ticking along.

The false argument about public sector pensions is put rather well by this which is going round on Facebook

“Remember when teachers, nurses, doctors, lollipop ladies and disabled people crashed the stock market, wiped out banks, took billions in bonuses and paid no tax? No, me neither. Please copy and paste to your status for 24 hours to show your support for the strikes against the government pensions”

It is hugely dishonest to try and make out that these reforms to public sector pensions are simply a result of the financial crisis. They aren’t. There were threats of strikes over the issue in 2004, 2005 and an actual strike in 2006. Yes, the dire state of Britain’s finances has made dealing with public sector pensions more pressing, but the simple fact is that the current arrangements aren’t affordable after the credit crunch and weren’t affordable before it.

The issue of pensions is about the worst one public sector workers could choose to strike on. According to figures from the Office of National Statistics, reported in the Telegraph

“The calculations show that a mid-ranking teacher on £32,000 a year will receive a final salary pension that is the equivalent of having built up a £500,000 pension pot.

This is 20 times higher than the average private sector scheme, according to figures from the Office for National Statistics. Private sector workers would have to save more than 20 percent of their salaries for 40 years – more than £500 a month for a similarly paid person — to amass the same amount in a defined contribution pension”

This state of affairs was, just about, sustainable when it could be passed off as the reward for lower wages in the public sector. But the last Labour government richly rewarded its loyal clients in the public sector and, as a comprehensive report by Policy Exchange found

“On an hourly basis, the typical public sector worker is now 30 percent better paid than the typical worker in the private sector. On top of this, public sector employees have better pensions. The difference is worth an extra 15 percent of their salary. Over their lifetimes, people in the private sector work 23 percent more hours (equivalent to 9.2 years of a public sector employee’s working life) – where their public sector counterpart will either be on sick leave, holiday, strike or in retirement”

Union leaders like Mark Serwotka have derided George Osborne’s claim that “we’re all in this together”. As well they might, another Policy Exchange report found that

“Since the start of the recession, the hourly pay premium for the typical public sector worker has increased. After taking into account differences like age, experience and qualifications, the hourly pay premium for a public sector worker was 8.8 percent as of December 2010. This almost doubled from 4.3 percent two years earlier”

The public sector hasn’t been in anything at all yet.

The strikers have argued that the terms and conditions of their employment are being changed. So they are. But consider what happens to a private sector company which can no longer fund its pension commitments; it defaults and its members don’t get a penny. Renegotiation is a pretty good deal by comparison.

Of course, the private sector company defaults because it has run out of money. Governments, it is believed despite mounting evidence from the eurozone, don’t.

But this reveals the central fallacy and the central issue which lies behind this strike. There is no such thing as ‘government money’. There is only taxpayer’s money. When public sector unions say the government should pay more they mean the taxpayer should pay more.

The unions at least used to make a show of supporting things like ‘fairness’ and ‘social justice’. They are now, quite brazenly, simply trying to protect the privileges of a public sector labour aristocracy supported by the galley slaves in the private sector. They are worked until they drop to pay for these generous pensions and then thrown overboard.

This is not only unaffordable, it is unfair. That is what today’s strike is about.

John Phelan is a Contributing Editor for The Commentator and a Fellow at the Cobden Centre. He has also written for City AM and Conservative Home and he blogs at The Boy Phelan. Follow him on Twitter at @TheBoyPhelan  

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