To freeze or not to freeze?

Chris lancashire

I do not believe it is morally right to renege on deals already done. That said inroads have to be made quickly into a ballooning public sector bill.
A pay freeze, outside of existing deals, should be implemented immediately. Secondly, the scandal of public sector final salary pensions has to be tackled right away. Thirdly, senior salaries have to be reduced. Only today, The Times reported Norfolk Police Authority justifying overpaying their Chief Constable because Chief Executives (Town Clerks) of local authorities are on £120k.

Tiberius

These are opening skirmishes over an issue which has ceased primarily to be political matter, but one of economic necessity.

I assume, Pete, that the wage tabulation does not include accrued pension rights. If it did, the scandal that is the difference between private and public would be fully highlighted.

C

Surely these figures can't be right - aren't there something like 30 million + adults of employment age in the UK?

HJ

Mean salary is not a very good measure as it tends to be hugely distorted by top salaries. Mean, discounting the top 2%, would perhaps give a better picture. The median measure also has merits.

What your figures also don't show is 'per hour worked' figures. As we know, public sector workers work shorter hours and have longer holidays, so this would relatively increase public sector pay. Employer pension costs are also
much higher.

Also remember that many of the highest paid workers, although not officially in the public sector, are paid for by the public sector. Invariably, these don't have to compete in a marketplace for their salaries, so the salaries tend to be inflated. The most obvious example is GPs. If you subtracted their hugely above-average pay from your private sector figures and added them to the public sector figures, it would reduce the private sector average by around £2 per week and increase that of the public sector by around £4/week, thus increasing the differential by £6/week. Similarly, many lawyers (e.g. Cherie Blair) receive most of their income from public funds.

What is also interesting from your figures is that, despite the claims of public sector unions, even at the end of the last Tory government, public sector workers were paid more than private sector workers.

Hawkeye

One point - the tables are labelled "Mean wage" but the ONS uses "Median wage".

Both are averages, but there is a big difference. The meidan is considered to be more representative as it is not skewed by very large salaries at the top of the statistical range.

Draughtsman

C - I wonder if the army of self employed, like my wife and myself, are included in the private sector figures, and no, neither of us does any contract work to the public sector.

Denis Cooper

There should be a public sector pay freeze, insofar as it's compatible with existing contractual arrangements. Even though Parliament has the legal authority to do it, it would be wrong to impose retrospective changes in employment contracts unless there was absolutely no alternative, and we're not yet at that point.

However it wouldn't make a huge difference, would it?

According to the FT article, the public sector wage bill is £158 billion, so shaving say 3% off that would be £5 billion saved, and the projected gap in the public finances is more like £175 billion.

On the other tack, apparently a 1p increase in income tax would only raise about £4 billion, so a 5p increase would only cut £20 billion off the deficit even if it had no depressing effect on the economy - which it would, as indeed would a public sector pay freeze.

I'd really like an answer to the question I've been asking myself for over eight years, as government tax revenues and expenditure have gone up and up - where the bloody hell is all this money going?

Sure, the legendary lesbian outreach workers, diversity officers and five-a-day co-ordinators are a waste of taxpayers' money, but not on that huge scale.

Pete Hoskin

Hawkeye + HJ: I've added the median table above.

HJ: You're right - these tables don't give the whole picture, and I've said as much above! But I still think they're worth noting.

Tiberius: yes, these don't include accrued pension rights. I've never come across any figures which do. If any other CoffeeHousers have, do raise a shout.

C: apologies, I should have said that these are for full-time employees, which cuts a fair few people (including part-time and self-employed folk) out. I've now made that clearer above.

Gil Hedley

Lower spending power by public sector work force equals less money spent by them in the private sector.

McSweeney

So 'the scandal of public sector pensions' raises it head again.
a. the convenient short hand disguises the fact that many public sector workers are not getting fat pensions. Outside of the upper layers of management and especially regarding teachers etc the pensions are simply decent. Not excessive.
B. Interesting how the debate is focused on making the public sector pension as useless and crap as many private sector ones. Rather than working out how to make sure that private sector employees have the chance to retire on a livable pension as well.

From listening to some of the debate you'd think the public sector were all looking forward to their 'Fred Goodwin years'...

The Welsh Jacobite

There is widespread resentment in the public sector of those in management. They are seen as overpromoted, overpaid and incompetent - people who have risen by slavishly following the New Labour line and by imposing PC rubbish and fashionable management nonsense (which have just made it harder for people to do their jobs).

There would be widespread support from within the sector for measures that slashed seniors' pay and reduced their numbers.

This would be a useful trick to bring off too because it's the lower echelons who actually know where the waste and inefficiency are. Get them on side and you can drastically reduce costs.

HJ

Back on the subject of public sector pay freezes - yes there should perhaps be some, especially at the higher level of unaccountable organisations.

However, the bigger longer term priority, in my opinion is to introduce local pay and conditions. In much of the country, where private salaries are lower than average, it is far more lucrative to work for the public sector due to national pay scales. In others, such as London, this is usually not so. This cripples the economy in low cost areas as it negates what should be their cost advantage - people won't work for the private sector because the public sector pays far more.

The ultimate solution, of course, is to move many jobs (medical, education, etc.) out of the private sector and for a real competitive market to exist

James

The company I work for (won't mention there name - but large US multi-national) has an interesting philosophy.

When times get bad - if you stop pay increases and hold the same number of staff you are not addressing the problem. Instead you should cut staff and incentivise those that remain with an annual inflationary increase.
This is based There is always inefficiency and waste that can be cut and the annual savings are potentially higher after the one-off hit of redundancy.

I am full of admiration for those private companies where staff and managers agree to forgo wages in return for reduced redundancies to ensure the company survives and is able to compete.

However in the public sector we need to cut back severely as their isn't the competitive pressures that keep the sector honest with regard to resources. Pay freezes are therefore not the answer - unfortunately large-scale redundancies are.

James

Apologies for managing to use "their" and "there" wrong twice in my previous comment and screwing up a sentence. Was unfortunately distracted whilst typing.

lola

YOu should not freeze pay as it constrains an employers ability to reward good employees. Better to release all those not gainfully employed to find more productive wealth creating work in private business and close all the the State final salary pensions and replace them with money purchase schemes. Plus cancel all state employees 'bonus' (aka commission) schemes.

Timpkins

It was disheartening to look at civil service vacancies for an ex colleague and see at the top of the list in my own department was a job with an annual salary of £110,000; there was barely anything in our region for those of us merely earning sensible sums... as I write this there's also a job advertised on the civil service portal with a salary of £680,000 per annum. I do hope freezes hit the earners on those sort of figures and not those of us earning somewhat below either the median or mean income in the UK. From where we sit the belt feels about as tight as it does for our private sector friends.

TGF UKIP

First Dave says for three and a half years that he is going to match, and even surpass, Labour spending and now he promises not to freeze public sector pay (which is how his statement will be taken by the unions.)

So, Tiberius, if, despite all the evidence to the contrary, your young hero really is a conservative, he is certainly not going to have much if any of a mandate to conduct his government as such, given all the hostages to fortune he is presenting.

And BTW, Tiberius, I note you have so far chosen to ignore my invitation to comment on the Osborne policy announced last week to disallow interest as a cost against corporation tax.

Not that I blame you as I note none of the fanzine hacks chose to mention it either. Not embarrassing their Precious Pair clearly comes high up agenda.

TGF UKIP

Some Coffee Housers may enjoy over at Guido (order-order.com) the video of one of the other Old Etonian contemporaries of Dave, Bill Wiggin, being "beaten up" by his constituents for his theft from taxpayers. (Remember another "phantom" mortgage and 23 consecutive monthly "mistakes.")

Who said there isn't a party within the Party?

Mark Robinson

651,000 new public sector workers since Labour came to power - all likely to vote Labour to preserve their jobs. What do they all do apart from making life more complicated for the rest of us?
That amounts to £17.67 billion in salaries. Add the cost of offices, stationery, telephones, travel expenses, perks and pensions and you can double that. Subtract redundancy costs, unemployment benefits and a pay rise for the remainder and you would still have a substantial saving

Tiberius

TGF: I never saw you ask for a response to the set of proposals attributed to Osborne, one of which was disallowing debt interest, the others all being proposals which the tax cutters would relish (and you don't mention them, I notice).

Unsurprisingly, I have no hot line to him so don't know the context, and I don't even know whether these unattributed comments are actually his, but I'm happy to offer my two-penneth on the proposals as I saw them as set out in the DT.

Firstly, he's looking for ways to pay for the abolition of the 50% rate.

Secondly, he's looking to cut the rate of corporation tax, funded by disallowing debt interest (whether all types of debt fall under this is not stated). With debt (personal, corporate and government) being the big problem facing the economy, companies would look to reduce debt under this regime. Those that did would reduce their tax bill because of the lower rate.

Thirdly, he is looking to improve the regulatory system from the dog's breakfast Balls has created.

So, my friend, you will always focus on the bits that fit your arguments, but without considering the full picture, you're points are incomplete.

The Tories are filling things in as time goes on, much to the approval of the civil service and the BoE, which is in tune with Osborne over the regulatory way forward.