Work longer, pay more, get less…
Who could refuse such a tempting offer?
Up to two million public sector workers across the country have taken industrial action today in protest over proposed cuts to pension schemes. Locally, schools across Kingston have closed as teachers unions have joined the one day walk out.
The Government has spent a considerable amount of effort in recent days moving ministers from microphone to microphone loudly declaring the strikers to be everything from greedy, misled by miltant union leaders to irresponsible wreckers who needlessly risk damage to the economy. Meanwhile, the opposition (didn’t they used to be the “Labour” party?) meekly suggests that strikes should not be going ahead as they will “inconvenience parents and children”.
Are the public sector workers being greedy?
Well, the average private sector occupational pension in the UK is reportedly £8,740, whilst about half of all public sector pensions are below £5,600. The Government’s own Hutton report stated that they were far from the ‘gold-plated’ myth peddled in the media. Further, the local government pension schme was reformed only three years ago to ensure its long term viability. That was before the Government unilaterally wiped 15% off final benefits by changing the indexation for public sector pensions from RPI to CPI without any consultation. Even with no further contribution increases, unions point out that the local government pension scheme could pay all of its liabilities until 2031. The NHS pension scheme currently has income far exceeding its outgoings to the tune of £2 billion. Additional contributions in many cases will go directly to the Treasury rather than to pay for anyone’s pension.
According to estimates, union members will sacrifice up to £100 million in pay by striking on 30 November.
Is it the politics of greed or the politics of envy that is really at play here?
Putting aside the economically illiterate attempts to confuse some contributory pension schemes which currently contribute more than they pay out to the level of public sector borrowing (the cost of pensions making up 1.7% of GDP and falling), the clear line coming from the Government is that private sector pensions have been so devalued by employers that the public sector should follow suit. “Why should they keep what you haven’t got any more?” is the spin, the line people are supposed to take away from the repeated soundbites on the news.
But it’s simply not true. There are still some excellent private sector pensions out there, at least there are if you’re on the board of directors (FTSE 100 directors increased their total earnings, including pension perks, by 49% last year). MPs, finally shamed into reducing some of the excesses of their own pension scheme after kicking reforms into the long grass for well over a year, don’t do badly either (even without their outside jobs). However in the private sector, the closure of final salary schemes has seen only 35% of workers now sign up for a pension. The 14m people not currently saving for retirement is the real problem and encouraging public sector workers to do likewise will not make this better.
Politicians should be careful when attempting to play the ‘them and us’ card. Nobody wants to look at their older years with uncertainty and few would wish it onto others. There is always the danger that the public, when faced with a stark choice, will decide that they have a different definition of who “us” includes…
The full list of Unions taking part are as follows: The Association of Educational Psychologists, Aspect, Association of Teachers and Lecturers, the Chartered Society of Physiotherapy, the Educational Institute of Scotland, the First Division Association, GMB, National Association of Head Teachers, Napo (family court and probation staff), the teachers’ union NASUWT, Northern Ireland Public Service Association, National Union of Teachers, Public and Commercial Services Union, Prospect, the Society of Chiropodists and Podiatrists, the Scottish Secondary Teachers’ Association, the Society of Radiographers, UCAC (one of the Welsh teachers’ unions), Union of Construction, Allied Trades and Technicians, University and College Union, Unison and Unite.
Kingston 2010 