Tuesday, 10 August 2010

Taking down the public sector punchbag: Part 1 - Pay

Public sector workers caused the economic crisis - it was their bloated pay, gold-plated pensions and comfortable conditions which started it all . . . or so you'd think if you read the mainstream press in the UK.

Even if you didn't believe that, you'd still be forgiven for believing that the public sector has it easy compared with the private sector. You'd be wrong again though.

The reality though is somewhat different. In the year to March 2010, ONS figures show that the average pay rise in the private sector was 3.6%, while in the public sector (excluding settlements in the 'nationalised' banks) it was 2.8%. The average pay rise in the finance sector was 5.2% over the same period.

Despite Osborne and Cameron regularly referring to private sector workers having to cope with pay freezes last year, just 20% of private sector workers faced a pay freeze in 2009 and only 10% did in 2010. This divide-and-rule strategy of public sector vs private sector is underpinned by f**k all evidence. In 2009, the average pay rise in the public and private sectors was 2%.

The Hay Remuneration Report published earlier this year shows that public sector pay is 4.3% below the private sector nationally. This differential drops to 3.6% in London, presumably because public sector unions have won 'London weighting' in many areas.

At lower paid grades, the public sector average is roughly comparable with the private sector, but private sector pay pulls away at the higher grades. There is one noticeable exception to this though - call centre workers in the public sector are paid 14.3% less than their counterparts in the private sector. Most of these will be civil servants working for the Department for Work & Pensions or HM Revenue & Customs.

Indeed, civil service pay compares particularly poorly with Administrative Officers, who make up 48% of the civil service staff, paid 21% than their colleagues doing comparable jobs in the private sector (perhaps the reason why they have better pension and redundancy schemes?).

The grade below AOs, Administrative Assistants, in the civil service (doing clerical duties like processing benefit claims, tax credits, self-assessment forms) earn £979 less per year than their private sector counterparts and £572 less than their colleagues in the rest of the public sector.

To counter these excessive pay packets in the public sector, the Blairite right-wing Social Market Foundation is urging the government to impose a three year public sector pay freeze - rather than the two year freeze imposed to date. This would mean a real terms pay cut of over 10%.

These pay differentials will get worse - 35% of public sector pay settlements in April 2010 were pay freezes. In 2011, IDS estimate the average private sector pay rise will be 4%, while in the public sector just 1%.

Of course Cameron and Osborne have another alternative - their Big Society - and volunteers will run public services: Volunteer firefighter, database engineer, or dentist anyone? No, thought not.

We should not forget, as the HM Treasury leak in June told us, cutting public sector jobs (and/or pay) will only harm the private sector. That's why the estimated 600,000 jobs cuts in the public sector will result in 700,000 lost in the private sector.

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