Monday, 6 July 2009

"Pain free" public spending cuts are nothing of the sort

The Chancellor of the Exchequer, Alastair Darling, has warned public sector workers that "the cold blast of recession is going to hit their pay packets," as the Independent phrased it. Civil Servants cannot be "sheltered from its effects" and "just as we have to be fair to the private sector," we have "got to be fair to people who work for the public sector" by making them pick up the tab for the government's debt. This follows on from remarks made by the chief executive of the Audit Commission, Steve Bundred, in the Observer;
Let's dismiss the notion that spending on health and education will be protected. There are good reasons why they won't and shouldn't. One is that, at a time when inflation is likely to be between 2% and 3%, a pain-free way of cutting public spending would be to freeze public sector pay, or at least impose severe pay restraint. This is especially true if real wages in the private sector are still falling. Health and education will not be immune from pay restraint, partly for reasons of fairness to others, partly because the NHS is the world's third largest employer, and also because ministers will correctly assume that as public sector workers have done well over the past decade, they will tolerate some modest real reduction in earnings.
The "correct assumption" that public sector workers "will tolerate some modest real reduction in earnings" was quickly proven incorrect. The response to the proposals by Bundred and Darling, from public service union Unison, was unequivocal;
Freezing public sector pay during the recession is not the way to steer people through it. Let's be clear, the recession was caused by bankers and speculators and the lack of regulation.

Yet, low paid public sector workers, who will be helping communities deal with the fall-out, are being asked to pay the price – it’s just not on. At the same time city bonuses are making a comeback with figures that most people can't even dream of earning in a whole lifetime. That is wrong.

We all want to see a bit of fairness injected into the system. How about cracking down on the tax evaders and making the rich pay their fair share, rather than always targeting the low paid workers?
Discussion of the basic standard of "targeting the low paid workers" is quickly evaded by the media and the dominant sectors it serves through the myth, as voiced by Bundred in his comment, that "public sector workers have done well over the past decade." To cite the most frequent cliches, civil servants are "sheltered from the real world" with "generous pay offers," "gold-plated, index-linked pensions" and "do-nothing jobs."

Daniel Hannan, in his now-famous YouTube tirade against Gordon Brown, spoke of "for ever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit." The "unproductive bit," of course, being the public sector - the nurses, doctors, teachers, refuse collectors, and firefighters who provide valuable public services to our communities, and the HM Revenue & Customs staff who collect the tax money that keeps them doing so. The PCS union has helpfully collated the facts that show exactly how "engorged" and "generous" public sector earnings are;

The facts

Civil and public servants are amongst the lowest paid in the public sector and wider economy. They have seen their pay cut in real terms with large numbers suffering pay freezes in the lead up to the recession.

The notion that civil and public servants have enjoyed and continue to enjoy bumper pay rises is false. PCS members like other low paid workers elsewhere continue to bear the brunt of the recession in terms of pay.

Facts and figures

  • Civil servants average earnings growth has lagged behind other sectors for 10 years.
  • Over 100,000, almost 20% are paid less than £15,000 a year.
  • In the culture sector the vast majority of staff earn between £12-£17,000 a year
  • Nearly half of the civil service or approximately 250,000 people earn less than £20,000 a year.
  • More than half the civil service earn less than the national average UK salary which is over £23,000.
  • Coastguard watch assistants who assist in co-ordinating search and rescue earn just above the minimum wage.
  • In the last three years pay in the civil service has increased by 6% whilst the cost of living has increased by 12.8%. Fuel and lighting rose by 35% last year, fares and travel went up by 10.2% and food costs rose by 10%.
  • Approximately 40,000 people working for the Department for Work and Pensions, which includes job centres and benefit offices received no pay rise at all.
  • Apparent differences in average earnings between public and private sector in the annual survey of hours and earnings is explained by structural changes in the public sector such as the transfer of lower paid support roles to the private sector resulting from patterns of privatisation.
These facts, of course, are inconvenient to pro-corporate right-wing dogmatism, and thus is quietly sidestepped. It is also notable that rich MPs and MEPs engorged on expenses, such as Hannan, always seem to escape being labelled as "unproductive" areas "sheltered from the real world" which actually do present a "pain-free way of cutting public spending." One could also cite the billions of pounds poured into two illegal wars of aggression or the bail-out of those who caused the recession and necessitated "pain-free spending cuts," as just two examples of genuinely "unproductive" public spending.

But, as ever, convenient myths that serve the interests of domestic elites prevail over basic facts. And, as ever, it is the poor and working class who will suffer.