Facing Down The Unions

Impartial BBC journos off-duty

It's just like old times. The teachers are going on strike, the Post Office workers are going on strike, and even those most essential of essential workers, the BBC journalists are going on strike. The common theme? They're all employed by the public sector.

As you know, the public sector is the last bastion of British trade unionism: 60% of today's union members are employed in the sector, even though it contains only one-fifth of the workforce. And these unions will strike at the drop of a hat - even while Blair's government was busy ramping up their members' pay. 

Here's the latest version of a chart we've posted before. It shows the number of days lost to industrial action annually in the public and private sectors (the figures are rolling three year averages):

In the private sector, the number of days lost annually has fallen to around 100,000 pa, or roughly 0.004 days per employee. However, in the public sector it's running at 20 times that rate. Moreover, while private sector employees have stoically swallowed pay freezes and tougher working conditions since the Crash, public sector unions seem to think their members are entitled to same rewards as during the time of plenty. There is no acceptance that the world has changed, and hence this fresh wave of strikes.

Of course, the Coalition did impose that two year pay freeze, but as we blogged here, in reality that turned out to be a freeze in name only. Depending on how you measure it, pay increased by between 5 and 10% over the two years, and it's still increasing. Moreover, public employees are already paid getting on for 10% more than their private sector equivalents, on top of which they get those famous index-linked pensions that are simply not available elsewhere. As we estimated in the BOM book, the total reward gap could be as much as 30 to 40%. Even after recent pension reforms kick-in, it will still be well North of 20%. 

But credit where credit's due: the Coalition are certainly having a go at addressing the issue. They have reformed the public sector pension schemes to make them less generous, and although there's more to do, over time their reforms will save taxpayers some serious cash. 

And they are now tackling the issue of progression pay - the automatic annual pay increments received by a substantial proportion of public employees. Virtually unknown in the private sector, incremental scales deliver year-on-year pay rises irrespective of freezes or indeed individual performance. George says:

"We will seek substantial savings from what is called progression pay. These are the annual increases in the pay of some parts of the public sector. I think they are difficult to justify when others in the public sector, and millions more in the private sector, have seen pay frozen or even cut."

Quite right George (and yes, we do realise Chancellors have never enjoyed such increments, and you haven't had a pay rise for three years).

But it's going to be a helluva battle, with the teaching unions already launching an all-out assault on the Gove Line. The Association of Teachers and Lecturers passed a vote of no confidence in him and his Chief Inspector earlier this week, and the NUT is following suit. A protracted series of strikes looks well on the cards.

The Coalition must stay strong on this. Closing the public sector pay and pensions gap will ultimately save taxpayers at least £25bn pa. And although it will obviously be painful for public sector employees, they should understand it's a lot less painful than the Irish solution. There, public employees had to accept pay cuts averaging 15%.

PS Did anyone miss the BBC journos who went on strike last week? It should have encouraged more people to try out Sky News, and I suspect a good proportion will not return. A few more outages like that and even Mr Cam might start thinking about break-up and sale. Let's hope so. 

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay, unions

The Freeze That Never Was

We need a new freezer

Back in his first budget in 2010, George Osborne imposed a two-year public sector pay freeze. It supposedly applied to all staff except the low paid, who were to get a flat £250 annual increase.

Unfortunately the freeze failed, as can be seen from the path of average public sector earnings since then:

Moreover, while the official ONS earnings stats show a 5% increase, calculations based on dividing the total pay bill by the number of employees suggest the true pay increase may well have been closer to 10%.

The pay freeze was a key element in George's attempt to curtail spending, so this is a serious failure. With a starting pay bill of around £170bn, a 5% overshoot is getting on for £10bn pa, and a 10% overshoot closer to £20bn. Annually.

So what went wrong?

Well, some of it - maybe one percent - is explained by the decision to exempt lower paid employees. Some may be explained by changes in the composition of the workforce. But most of the overshoot almost certainly reflects the operation of our old friend the incremental scale.

Virtually unknown in the private sector, this is the long-established practice of giving public employees guaranteed annual pay increases simply for serving another year. So for example, a newly qualified teacher generally starts on a salary of £21,588 (outside London). But she is starting at the foot of an incremental scale which then carries her up to £31,552 within 5 years - an almost 50% increase which is awarded irrespective of fiscal restraint or a Chancellor's freeze.

Yes, of course, experience does generally make employees more valuable, and over time we'd expect to see that reflected in pay. But in most of the private sector, increases are never automatic, and in tough times for the business a pay freeze generally means just that - a freeze for everyone, irrespective of their additional experience and overall merit. The viability of the business must come first, with the understanding that individual injustices can always be righted once the crisis is past.

And remember that this non-freeze comes on top of public sector pay that is already excessive against private sector equivalents. According to the ONS, on a like-for-like basis public sector pay rates currently exceed private sector by around 7%. The Institute for Fiscal Studies comes up with a similar 8% figure.

And on top of that, 80% of public sector employees still enjoy index-linked final salary pensions that are simply not available to most private sector employees: indeed, only around 10% of private sector workers now have any final salary pension.

How much is that worth? A lot: previous estimates suggest that higher average employer pension contributions in the public sector boost total rewards by about 10%. And in addition - even after recent reforms - public sector pension contributions are insufficient to fund the projected final cost of the pensions themselves. The difference will have to be made up by taxpayers, which adds further to overall rewards in the public sector.

In the BOM book (chapter 2) we present estimates suggesting the overall overpayment - taking account of both the pay premium and the pensions benefit - is of the order of 30-40%. In money terms that's somewhere in excess of £50bn pa, a sum that would go a long way towards cutting the deficit.

With such a big annual overpayment, the failure of George's freeze is worrying. In fairness, he clearly recognises the problem, and has at least attempted to tackle it - both through pay and action to reform pensions. But he hasn't done enough. And replacing his freeze with a 1% future cap was most unwise.

We will return to this.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay

A Christmas Riddle

BOM is closing down for Christmas. But before we go let's leave you with a riddle to ponder over the mince pies.

Tyler has been doing some more work on the pay gap between the public and private sectors. As everyone surely knows by now, average public sector pay is considerably higher than private sector pay. When we last blogged it, we reckoned the public sector premium stands at an astonishing 50% - once we take account of the full cost of those gold plated pensions.

How did we reach that conclusion? We based it on the following analysis from the Office for National Statistics, which compares the public and private sectors in terms of both gross pay and total reward (ie including employers' pension contributions):

The conclusion is overwhelming - for both men and women, for both high and low earners, for incomes including and excluding pensions, public sector employees do much better than private sector. The median full-time employee in the public sector gets nearly 30% more than his/her counterpart in the private sector, once we take account of the employer's pension contribution.

And in truth, the public sector does even better than the ONS numbers suggest. That's because the ONS only takes account of the employers' explicit pension contribution, a contribution that hugely understates the true cost of public sector pensions.

As we blogged here, the true cost of public sector pensions as a percentage of salary averages around 25% more than current pension contributions. Which means that we need to gross up the public sector total reward numbers even further. At the median income level that takes the public sector premium up to a staggering 50%+.

All of which is pretty shocking.

But the public sector unions and their supporters have come up with an answer. They say that the public sector premium reflects the fact that public sector employees are on average better qualified than their private sector counterparts.

Here for example is what the TUC says:

"The obvious retort to the small-state brigade when they harp on about average pay [do they mean us?] is that the private and public sector workforces are different. As the private sector employs more unskilled workers on the minimum wage than the public sector, and the public sector has a high proportion of professional workers (such as teachers and doctors) it is not surprising that average pay is higher in the public sector...

...there has been a big growth in employment of graduates in the public sector over the last ten years – much bigger than in the private sector. Even in 1998 the public sector was already employing more graduates. Given that graduates are paid more than others, this in itself would tend to make average public sector pay higher. There are quite significant decreases in the proportion of public sector staff with higher education short of a degree (which we will call diplomas for simplicity) and those with other qualifications."

And the TUC is quite right - the proportion of public sector employees who are graduates is indeed much higher than it is in the private sector. In fact, at nearly 40%, it is twice as high.

Now, the TUC reckons that explains why public sector pay is higher. They're better qualified than the dolts working in the private sector, so naturally they get paid more.

Whether qualification and other differences really do explain the earnings gap is the very thing Tyler is currently attempting to bottom out. But it raises another perhaps even more critical question - in our current parlous economic state can it possibly make sense to have so many of our expensively educated graduates working in the public sector?

Because as the TUC highlights, although the public sector "only" employs just over 20% of Britain's manpower, it employs 40% of our graduates. 40%.

Can we afford to have 40% of our best brains working in the non-wealth producing public sector? Don't we need them in the private sector creating the prosperity that will power us out of Labour's economic crater?

That's a real Christmas riddle.

What's that?

Most of those supposed public sector grads are no such thing? Their growth merely reflects the "significant decreases in the proportion of public sector staff with higher education short of a degree (which we will call diplomas for simplicity)"? Many of those new public sector grads are merely redesignated diploma holders (like nurses)?

Hmm. You've probably got a point there.

Hmmm...

The mince pies are calling. Happy Christmas everyone.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay, universities

That's Not Fair!

You said it, Bro

The Treasury has just published the Hutton Report on Fair Pay in the Public Sector.

As BOM readers will recall, back in the summer Mr Cam commissioned Will Hutton "... to investigate pay scales across the public sector, and make recommendations on how to ensure that no public sector manager can earn more than twenty times the lowest paid person in the organisation."

In other words, Hutton's job was to address the scandal of fatcat pay in the public sector - a scandal that was first exposed in a series of reports from the TaxPayers' Alliance (eg see here). And to work out how to implement a 20-to-1 cap on top public sector remuneration.

But predictably enough, left-winger Hutton has found it impossible to stick to that very clear remit. Instead, much of his 128 page report is a polemic on top pay in the private sector, driven by 1970s-style politics of envy.

He kicks off by charting how the pay of the top 1% has pulled away from the average:

No matter that this relates to just 1% of the population, and most them are being paid by the market not taxpayers, for Hutton it's a serious problem:

"Substantial and growing pay inequality poses a serious challenge to society and Government. Do high earners deserve such large rewards? And is it fair that a wide and growing gap should exist between the pay of those at the very top of the income scale and the rest of the population?"

Fair? This is the market, Will. The thing that in just two millenia has lifted us from mud huts to plasma tellies. Sounds fair to us.

He goes on:

"...chief executive pay for Britain‟s leading listed companies rose by around eight times between 1986 and 2010... It is increasingly doubtful whether this has been proportional to increases in performance, or even reflects the real demand and supply for executive services. Chief executives have become treated as business super-stars drawn from an ever narrower potential pool... benchmarking between firms locks them into a kind of arms race... Any one company that tries to stand out against the trend risks losing its top people and inviting markets and investors to view it as second rate. Little... seems capable of creating more rationality or slowing the pace of increase... There is widespread scepticism whether this degree of increase in executive pay is fair."

Fair - there it is again. Look Will, we don't care what private sector chief execs get paid - especially when the figures relate just to the 100 FTSE100 CEOs. We only care about what they do for us as customers, whether they deliver good returns to us as shareholders, and whether they stay within the law. Everything else is so much envious wibble.

Now public sector pay, that's a different matter entirely. Because we have to fund that through compulsory taxation. We're very interested indeed in what those guys get paid because it comes straight out of our wallets. We can't choose to take our custom elsewhere, and we can't sell our shares in their companies.

So what does he say on top public sector pay - ie the job he was asked to do.

First, he tells us that there are now no fewer than 20,000 public sector employees in the top 1% of income earners (earning over £117,523 pa). Well, actually he doesn't tell us that - he merely rehashes some numbers given on a recent Panorama programme.

Anyway, most of those 20,000 turn out to be doctors employed by the NHS (ah, those brilliant Simple Shopper pay deals). But there are also 4,000 managers distributed across the various bits of the public sector as follows:

These findings are broadly consistent with what the TPA has previously published in its Public Sector Rich Lists (eg here) - if anything, Hutton's overall fatcat number is a shade higher than the TPA's.

In terms of pay growth under Labour, Hutton confirms that top public sector managers generally did outstandingly well. For example, between 2000 and 2009 chief execs of NHS hospital trusts got an average 50% increase in real terms:

The bottom line is that Hutton pretty well agrees with everything the TPA has been saying on public sector fatcats. So naturally he offers his thanks to the TPA for their outstanding service to taxpayers.

Except... just a cotton pickin' minute... he doesn't offer his thanks.. Actually he suggests the TPA has been misleading the public:

" Top pay in the public sector has come under greater media scrutiny in recent years... But public understanding remains divorced from the data set out in this[report]...

Limited understanding feeds through into the wider debate. Campaign groups such as the Taxpayer' Alliance argue that the public sector must get value for money – which they define as paying the lowest amount to secure a suitable candidate – but that it does not currently achieve this...

A media narrative which over-concentrates on public sector 'fat cats' while not offering the same proper scepticism and focus over what is happening at the top of the private sector does not lead to understanding, and can undermine the desirable move to greater transparency over pay."

Allow me to translate:

The TPA has been far too successful in focusing the public's attention on the cavalier way in which the public sector wastes their hard-earned cash. The spotlight on fatcat pay, and the number of bureaucrats who get paid more than the Prime Minister, has resonated with taxpayers in a way that has caused huge discomfort for the promotors of big government. People like Hutton need to hit back, and they aim to throw taxpayers off the scent by suggesting the real problem is excessive pay in the private sector. Welcome back 1970s incomes policy and the politics of envy.

And what about the job Mr Cam actually asked him to do? That 20-to-1 pay ratio cap for the public sector?

Well, Hutton likes the idea. He likes it for a number of reasons, but in particular:

"A pay ratio is an easily understandable reference point, and could give the public confidence that public sector pay is being kept in check. Defined appropriately, this can have more flexibility than merely using the Prime Minister's salary as a benchmark."

In other words, by accepting this ratio cap, public bosses could maybe get taxpayers off their back, while simultaneously getting round the current de facto pay cap of the PM's salary. The latter clearly has to go, since post Cam's self-imposed cut, it's down to a measily £142,500 pa.

Are you ready to be fooled?

PS So should Mervyn King be fired as Bank Governor? The preposterous lefty Blanchflower reckons so, because of King's supposed political bias. But in truth, there is no bias. Like most of his predecessors, King almost certainly reckons everyone down the Westminster end of town is rubbish. The WikiLeaks "revelation" that he thought Cam and George inexperienced and too political is what all previous Governors have thought about all inexperienced politicos ever since 1694 - you should have heard what Governor William Ewer said about Pitt the Younger in 1782. Cam would be mad to sack King - we'd be straight back to the final bunker days of Mad Murdo McMad.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: politics of envy, public sector pay

Our Overpaid Public Sector

Sorry... what pay cuts are you talking about?

Yesterday's research study from the Office for National Statistics confirmed what BOM readers have known for some time - Britain's public sector employees are on average paid much more than their private sector counterparts.

Here's the summary table (click on image to enlarge):

As we can see, the ONS have done their comparisons both for gross pay, and for gross pay plus employers' pension contributions. They have looked separately at men and women, and they have also looked at different points in the income distribution.

The conclusion is overwhelming - for both men and women, for both high and low earners, for incomes including and exlcuding pensions, public sector employees do much better than private sector. The median employee in the public sector gets nearly 30% more than his/her counterpart in the private sector, once we take account of the employer's pension contribution.

And in truth, the public sector does even better than the ONS numbers suggest. That's because the ONS only takes account of the employers' explicit pension contribution, a contribution that hugely understates the true cost of public sector pensions.

As we blogged here, the true cost of public sector pensions as a percentage of salary averages around 25% more than current pension contributions. Which means that we need to gross up the public sector total reward numbers even further. At the median income level that takes the public sector premium up to a staggering 50%+.

Now, the ONS paper argues that since most private sector employees no longer get company pensions, the comparison ought to be confined to those that do. And if you do that, you find that the private sector actually does better than the public.

Hmm.

You see, these days (thanks largely to the destruction wrought by the late unlamented Great Helmsman) private sector pensions are mainly confined to senior employees. So by restricting the private sector sample to those with company pensions, you introduce a massive bias towards the better paid. Hardly surprising then, that group does better than the average public sector employee - it also does a lot better than the average private sector employee.

No, the numbers say that - once you take account of the full cost of pensions - the typical public sector employee gets up to 50% more than the typical private sector employee.

Skills differences?

That's the argument used by the public sector unions. They say that the typical public sector worker is better qualified and does a more demanding job.

Yeah. Right.

For one thing, nobody should be prepared to pay more just because people have more paper qualifications. As everyone surely knows, degrees these days are ten a penny.

And when we looked at the evidence on the kind of jobs people actually do (occupational mix) we found a very muddy picture. The public sector does indeed employ more "professionals" than the private sector, but  it employs far fewer "managers and senior officials", and virtually no "skilled trades". And at the bottom end of the scale, there is virtually no difference in public and private sector employment of "elementary occupations".

As others have commented, yesterday's ONS report blows a massive hole in the union case against a public sector pay squeeze.

There must be no wobbling on either the pay freeze or the reform of public sector pensions.

PS A piece of really good news for the autumn. Sky News has expanded Jeff Randall Live to one whole hour. It's now on at 7pm, which means Tyler need never watch the ghastly pontificating Bishop ever again. Last night Randall conducted a lengthy and revealing interview with Iain Duncan Smith. Unlike virtually every other interviewer, he allowed IDS time to explain his programme of welfare reform, he didn't sneer, and he didn't keep interrupting with smart aleck attacks. Required viewing.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay

Public Sector Pensions Crisis

It's the same all over

Right across Europe public sector pensions are in crisis. For years, successive governments have made outlandish pension promises to their employees that their taxpayers were never ever going to be able to afford. And les poulets are now well and truly coming home to roost.

This morning sees the publication of an excellent new report on our own crisis. The Public Sector Pensions Commission (PSPC) confirms the harsh reality - public sector pensions are far too expensive and we simply can't afford to continue with them on the current basis.

First, debt. As we've blogged many times, the vast majority of public sector pensions are unfunded - ie there are no assets to back the liability, which therefore represents a pure debt we owe to public pensioners. Realistic assessments of this debt put it at well over £1 trillion, dwarfing our official national debt. Naturally HMG's own estimates understate the total - mainly because they overstate the discount rate applied to future payments - but the PSPC report provides this handy summary of all the latest estimates:

As we can see, Towers Watson - one of the world's leading independent actuarial firms - now put the true debt at an eye-watering £1.2 trillion, or £45 grand per household.

That's bad enough, but unfortunately the debt is still accumulating at an alarming rate. The best independent estimate (from Policy Exchange) says that the annual cost of the pension entitlement being accrued by current public employees is running at £34bn pa (2007-08). True, that's partly offset by the annual payments to existing pensioners (which reduce the outstanding liability), but shelling out £25bn pa on pensions is not what you'd really call comfort.

The second point is that public sector pensions are now miles better than those on offer in the private sector, and it simply isn't fair to expect hard-pressed workers in the private sector to pay higher taxes to featherbed public employees.

Of course, the public sector unions and their media supporters argue that these pensions form a perfectly fair and above board part of overall public sector remuneration. They say that they have accepted lower pay today against the promise of a better pension tomorrow.

But the truth is that overall public sector pay is not low relative to private sector. As we blogged here all the mainstream public sector groups (those famous teachers'n'nurses) currently do pretty well relative to the wider economy.

And when it comes to pension provision, the public sector advantage is huge. In the private sector - even if you're one of the mere 11% now in a defined benefit pension scheme - the total benefit to you averages around 19% of salary (and you'll likely have to contribute to that).

In the public sector, the benefit is much higher. Although the employers and employees are together only contributing around 20% of salary, even after Labour's modest reforms for new members, the benefit to employees averages 44% of salary, increasing to an extraordinary 71% for the uniformed services:

So the average policeman gets a total remuneration package that's 71% higher than what it says on his pay slip. No wonder we can't afford to employ them any more.

What's to be done?

Obviously there needs to be a drastic pruning of benefits. And the PSPC offers a menu, including:

• Increase the pension age - most existing members of public sector schemes can still draw a pension at 60 (the police get it at 50, and firefighters at 55); with our vastly increased life expectancy, that has to increase.
• Reduce benefit accrual rates - ie cut the amount of extra pension each employee earns for each year of work from its current average of around 1/60th of final salary
• Move to career averaging - ie instead of basing an individual's pension on his final salary in his final year of employment, base it on his average salary over his whole career

They provide this handy table comparing the effects of the three options. They ask how far we'd have to go with each of the options separtately to bring the average overall cost of public sector pensions down from their current 40-70% of salary to the c20% actually being contributed by employers and employees together:

The choices are stark: either the pension age will have to be increased to around 80, or the accrual rate will have to fall from 1/60th of final salary for each year's service down to around 1/100th, or 1/80th if career averaging is introduced.

But however stark the choices, and however much resistance the unions put up, change has to come. All sensible commentators are agreed on that.

Labour already had one fumbled attempt at reform. But with the unions as their paymaster, they were never going to push it through. As the PSPC points out, not only did they leave entitlement rules for existing employees untouched, even for new employees what they took away with one hand they gave back with the other. So that was a flop.

Cam has to do much better. He may have appointed Hutton to take the initial flak, but it's Cam himself who will have to push it through to a final conclusion. Half-measures are not going to do it and he must steel himself for a long and bloody battle.

PS So why has Sir Alan Budd quit so soon? The left are naturally slavering, but there's no getting away from the fact that it is very troubling. We knew he was only there to get the thing up and running, but we'd all assumed he'd stay until the OBR had been put onto a permanent NAO-type footing - reporting to Parliament - and his successor was known. Replacement? It seems unlikely that Robert Chote would want to leave the IFS to take this role, but he's being touted by many. The other name being pushed by the left is the dreaded Blanchflower, but that would kill the OBR stone dead. Very tricky, although it does underline one point - no matter who produces the public finance forecasts, they will always be subject to a wide margin of dispute and disagreement. Which is why an OBR is no substitute for a properly articulated set of fiscal rules - see many previous blogs.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: pensions, public sector pay

Underperformance Pay

More shocking revelations this morning on the pay of top public sector bureaucrats:

"Chief executives of foundation trusts — the top band of NHS trusts — earned £157,500 in the year to March 2009 and had a 7.8 per cent salary rise. The report, from Incomes Data Services (IDS), showed that the average pay rise for chief executives across the health service was 6.9 per cent — the equivalent to an annual salary rise of almost £10,000. It followed a 6.4 per cent rise in 2007-08."

This compared to a 2.75% rise for nurses, and put the top paid managers on well over £200 grand a year.

The editor of the IDS NHS Boardroom Pay Report says: “It seems that the equation has fallen on the side of high salary awards with pay continuing to run ahead of the rest of the workforce.” Yes, it sure does seem that way.

So how can it possibly be justified?

We're back to the peanuts and monkeys argument - if taxpayers aren't prepared to pay up, then the public services will be run very badly.

But paying loads of money to the bosses doesn't necessarily solve the problem. You could simply end up with a bunch of overpaid monkeys - and there are plenty of indications that the NHS has done precisely that.

The more thoughtful public sector managers recognise that their big pay increases have not resulted in much change. The extra money has simply gone to people who would have been doing the job anyway.

There's a very frank and interesting article on this in today's Times by Sir Norman Bettison, the Chief Constable of West Yorkshire. He says he's not worth his £213k pa, and goes on:

"People join, and remain in, the public sector because of a sense of vocation — to make a difference to society or to the quality of people’s lives.

The best leaders are those who can secure long-term public value and a vision for their staff. Not some mercenary performance manager peddling a short-term fix. And, here is the irony: public sector leaders would have continued to provide that leadership for far less pay."

Well done Sir Norman, for sticking your head above the parapet.

And even if all this extra money did somehow manage to attract a whole new cadre of brilliant managers from outside, would they be able to manage?

Suppose all  those successful private sector managers who've spoken up against the NICs increase had spent their careers working in the public sector instead. Would they have been allowed to manage? Would they have had freedom to take the nasty decisions that are so often necessary to shape winning businesses?

Take the BBC. Personally, I've no idea whether boss Mark Thompson is a monkey, but he sure gets a load of peanuts (£800 grand pa). And yet nobody could seriously argue he runs an efficient operation. BBC waste and expense is legendary.

Just today we hear he's caved in to pressure on closing down 6 Music. Here's a pop-pickin' music station that costs taxpayers a packet and could easily be provided by the private sector (if there's actually a demand for it, that is). But a few months campaigning by opponents of closure - and doubtless some backroom pressure from the politicos - has sent Thompson running for the hills. He's folded without a fight.

And that's the public sector for you. There's no upside for managers taking courageous decisions. There's no crucial bottom line like private sector businesses have. No paying customers whose word is law. Just a load of political pressure and fudge.

As we've blogged many times, the only way we can achieve real efficiency in the public sector is to break it up, and put customers in charge. Choice and competition are ultimately what drive efficiency in the private sector - not better managers per se. The better managers are the result of choice and competition, and the horrible realisation that nobody owes you a living.

When it comes to the recruitment and retention of managers, the truth is that most public sector organisations are in competition not with the private sector, but with other public sector employers. The reason that the public sector is unappealing to management talent from the private sector is not a simple question of pay, but the contraints under which public sector managers must operate.

Which leaves us paying increasing amounts of money for underperformance. Underperformance that is hard-wired into the public sector's very structure.

PS Not everyone thinks all those pay increases for public sector bosses have been wasted. The colourful and controversial London Assembly member Brian Coleman was last night given a free hit by BBC News to say that objectors like the TPA "know the price of everything and the value of nothing". The really shocking thing is that Coleman - who incidentally spent nearly £10 grand of our money on taxis in 2007-08 - reckons he's a Tory. He makes Tyler ashamed.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: productivity, public sector pay

Town Halls Still Rich

No April Fools joke - Kent once again the winner

For those concerned about public sector profligacy, the TaxPayers' Alliance's annual Town Hall Rich List has become a must-read. Indeed, it's not too much to say that it's changed the policies of all three main parties, who all now promise much more transaparency and accountability over what top council officials pay themselves.

So well done TPA.

Well, thank you very much.

The fourth annual Rich List is published today (download here). Key points:

• 1250 council staff earned more than £100,000 in 2008-09, a 14% increase over the year. 
• 31 earned more than the Prime Minister
• The average pay rise for these Town Hall fat cats was 5% - in the same year, teachers got 2.3% and nurses got 2.7%
• The highest paying council was Kent, which had 27 bureaucrats on more than £100,000 (the top 2 got more than £300 grand)

Of course, one of the really useful things about the Rich List is that you can check on your own council - the one that's just demanded yet another increase in Council Tax (and despite the need for national belt-tightening, CT is still set to rise by an average 2% next year).

In Tyler's case, Surrey County Council has 7 staff on over £100k, with the Chief Exec on £205k.

Well, actually that's no longer true. As we blogged here, the Chief Exec and several other top staff (including at least two others from the 7), subsequently"left" after the Council's services got slammed for poor performance by the Audit Commission. Things were so bad that a temporary Chief Exec had to be parachuted in to sort it out, finding "a failure of leadership, culture and governance in its widest sense".

Which just goes to show - you can pay top dollar, that's easy. But it doesn't make a blind bit of difference to the quality of service provided.
 
As we've blogged many times, the only thing that will achieve that is full fiscal decentralisation. Councils must once again be made accountable to local people and not the Whitehall (and see this TPA Research Note).

PS A special pat on the back for the TPA's John O'Connell, who produced this year's Rich List. Production requires sending out and sifting through the hundreds of Freedom of Information requests to individual councils, so well done John.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: Local Authorities, localism, public sector pay

Public Sector Pay - Who Gets What?

Don't you believe it

Whoever wins the election will have to tackle the pressing issue of public sector pay. At a time of grave fiscal crisis, with taxes rising and private sector pay under the cosh, the current arrangements are simply not sustainable.

Clearly, discussions in this area tend to generate more heat than light, so we thought it would be useful to set out some facts on who gets paid what.

Let's start with an old favourite - GPs. As regular BOM readers will recall, Labour's crazy new contract stuffed GPs mouths with so much gold they nearly choked (eg see this blog, and this). And as it happens, a BOM correspondent has recently sent Tyler a confidential document showing just what GPs are now earning, five years on.

It turns out that in the most recent year, the average GP practice earned each of its partners £135,000 pa.

And the top paid GP got £380,000. Yes, that's right - a heart-stopping £380,000.

In fact, 5% of all practices now generate over £200,000 pa for each partner.

Now, you may say they're worth every penny. And you may be right. But there's no denying it's quite a lot of money, especially when you put it in its market context.

According to the latest survey from the Office for National Statistics (Annual Survey of Hours and Earnings - ASHE 2009), median annual earnings for full-time employees in 2008-09 was £25,800. And just 10% earned more than £51,500. So virtually all GPs are comfortably in the top 10% of earners, most getting a multiple of £51,500.

HMRC also publish data on the distribution of total taxable incomes (ie including pay, pensions, and investment incomes), and their latest release shows that in 2007-08 only 5% of the population had pre-tax incomes above £61,500. And only 1% had incomes above £149,000.

So we can see that relative to the rest of the population, most GPs are now extraordinarily well paid.

And what about other less wedged public employees? Where do they stand in the pay rankings?

We've taken a rummage through the ONS data and come up with the following overview, covering all the usual "frontline" headline grabbers like teachers, nurses, firemen, and policemen (full-timers only, and note that Medical Practitioners includes not just GPs, but also somewhat less well paid groups like junior hospital doctors):

As we can see, all these groups on average earn more than the median full-time earnings across the economy as a whole. And senior staff groups are comfortably within the top 10% of earners.

So what does that tell us?

Fundamentally, it says that a squeeze on public sector pay will not trigger a huge recruitment and retention problem. Not only are jobs outside going to be hard to find, but public sector pay levels currently look generous against the wider economy (and that's without even considering those famous gold-plated indexed public pensions - widely reckoned to be worth another 25% on top of salary).

It also tells us we should be strong. Teachers 'n' nurses are always wheeled out to headline the resistance to pay restraint, but overall, they ain't doing too badly.

And what about those rascals who live in the Palace of Westmnister? This week we've been treated to a whole bunch of "retiring" members telling us how MPs need a whacking great pay rise to compensate for the new limits on troughing rights. Well, MPs pay is just about to rise to £65,737, plus a continuing range of allowable expenses. The pay sounds about right to us - in line with the median pay for senior civil servants (see chart). But as we've blogged before, the accommodation allowance should go - we should provide state owned flats, such as those that will be left over after the Olympics.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay

Public Sector Pensions Costs

Going up

The National Audit Office has been taking a look at those gold-plated, but entirely unfunded, public sector pension schemes (Unfunded? It means there is absolutely no money - no money at all - set aside to pay the future pensions. So all of it will have to come on a pay-as-you-go basis from taxpayers, either directly or indirectly via contributions from future employees on the public payroll).

The chart above shows how the cost of pension payments will soar over the next half century. In constant 2008-09 prices, total payments will more than treble, from £25bn pa to nearly £80bn pa.

Now according to the government, this won't be a problem because the economy will grow. So as a percentage of GDP, the cost remains close to its current level of 1.7%.

But according to the NAO that is grossly misleading.

To start with, the government assumes that the UK's productivity grows by 2% pa. Which would be a good trick if they could do it, but they can't. Over the last ten years productivity has averaged just 1% pa, a total collapse from the 1.7% pa Labour inherited - and scoffed at - in 1997.

And on top of that, it turns out that the government's projection ludicrously assumes that, whereas the overall labour force will grow by 20% - thus boosting GDP - the number of public employees will be frozen. And that from a Labour government that has increased public sector employment more than any government since... well, since the last Labour government. 

As the Major keeps saying, this lying bunch of incompetents are leaving us with more UXBs than the Luftwaffe. And we're still digging them up 70 years later.

****

And talking of historic parallels, WTF is the BBC giving an entire series of party political broadcasts to Labour's Simon Schama? As I understand it, Schama will be given free rein to deploy his considerable powers of persuasion to promote his left-wing political views. Who's getting the right to reply?

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: pensions, public sector pay

You Don't Say

Public sector pay and benefits have always featured heavily on BOM. Which is hardly surprising, given that the bill is now running at over £200bn pa, and pay levels in some parts of the public sector have escalated so astonishingly under Labour.

In 2007, the TaxPayers' Alliance started a campaign to publicise top public sector salaries, collecting data via published quango accounts and hundreds of FOI requests sent to local authorities. The results have been published in a series of public sector rich lists (eg see here) which have attracted considerable interest and comment, not least among ordinary taxpayers.

For quite a while, the government maintained it was a campaign got up by right-wing fanatics, and that the public sector needed to pay top dollar to attract top talent. Tyler himself was given a stern lecture by an ex-Labour cabinet minister on how such mindless campaigning served only to undermine "some of the valuable work" done by the TPA.

Which makes it all the more jaw-dropping to hear this today from our old friend A Darling:

"What is being paid [in the public sector] has sometimes lost the relationship it ought to have with what someone actually does. Once that happens, it’s not only unfair, it’s actually grossly inefficient...

In some quangos, local authorities and other organisations, the level of pay, especially at the top end, and bonuses have reached the stage where they don’t pass what I call the next-door neighbour test. If you can’t justify them to your neighbour, you’ve probably got it wrong...

It is not altogether clear to me why we pay very large salaries to people to do the same jobs as were being done 10 years ago for rather less.”

To which our response is you don't say. And which particular bunch of blithering idiots were at the controls while this was happening?

And what are said repentething idiots intending to do about it now?

Well, according to the report, it's pay cuts.

Yes, that's right. Not for Darling a mere pay freeze (as proposed by us eg in this blog), but actual outright cuts.

So is he going to follow the Emerald Isle, with its across-the-board public sector pay cuts of up to 15% (see this blog)?

Don't hold your breath.

Or anything else.

The last time a Labour Prime Minister tried to cut public sector pay it sparked a mutiny in the Navy. And he wasn't about to fight a General Election entirely dependent on his union paymasters for money.

No, public sector pay may be continuing to rise at a healthy clip while private sector pay is suspended over a nasty black hole (chart), and Darling may feel compelled to express discomfort, but that's as far as it will go. This is yet another little problem for George's in-tray.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay

Pruning The Public Sector Paybill

New Year - New Resolve

2010. We'll get going by wishing BOM readers a prosperous survivable New Year.

Right, enough pleasantries - back to that fiscal hangover. With George's first make-or-break budget now less than 6 months away, we need a much clearer focus on precisely how he and Cam are going to deliver the spending cuts the markets are expecting.

As we know, the task is huge. Depending on whose sums you believe, to balance the budget, we need to cut public spending by between £100bn and £150bn pa. That's 15-20% of public expenditure, or £4-£6 grand per household.

To put it another way, if Cam/Oz fail to cut public spending, they will need to increase taxes by £100-£150bn pa. Which would require, say, increasing VAT to 30% and doubling the standard rate of income tax to 40p (see here).

So what to cut?

As we blogged many times last year, one of the prime targets has to be the public sector paybill.

When last sighted (2008-09), that was running at £160bn pa in cash terms - 11% of GDP. This year, we estimate that percentage has risen to nearly 12%, reflecting the decline in GDP and the fact that public sector employment has increased again. And this is a burden that has got a lot heavier through the years of Brown's reckless spending splurge, with record numbers of new public sector jobs and higher pay all round :

It's complete madness. And note that this definition of pay excludes the net accrual of future public sector pension benefits. They currently add a further £40bn pa or so (see here - Table D.1). So the true overall public sector paybill is more like 15% of GDP*.

But at least the problem is now getting some airtime. George has promised to freeze pay for public sector employees earning more than £18k pa, the LibDems promise a total freeze, and even Labour will impose a freeze on the top 40,000 (see here for a handy summary of main parties' cuts proposals, produced by - yes, of course - the TPA). None of that is enough, but it's a start.

And the msm are preparing the way. Today's Sunday Times reports its own investigation (see here):

"Public sector workers earn 7% more on average than their peers in the private sector — a pay gulf that has more than doubled since the recession began.

Official figures show that staff employed by the state are enjoying bigger pay rises, working fewer hours and receiving pensions worth up to three times as much as those in the private sector.

Civil servants, National Health Service staff, council officials and other public sector workers have enjoyed a “golden age” under Labour, according to an investigation by The Sunday Times."

They've also produced some neat graphics summarising the key stats:

So what's to be done?

In the IOD/TPA cuts paper published last September, we recommended a two year pay freeze for all public employees except soldiers on the frontline, a 5% pay cut for the richest 10%, and increases in employee pension contributions and various other employment benefit reductions. Over two years we estimated that would build up to a £16bn pa total saving, or around 10% of the cash paybill.

Nobody says it will be easy, and Cam will need to face down our militant and over-mighty public sector unions. But make no mistake - this is the scale of saving we will need.

And if we don't do it?

BOM's friend Ted Bromund at the Heritage Foundation draws our attention to an identical struggle now taking place across the US.

There too, heavily unionised public employees have been been "coddled and spoiled" (as the Economist puts it), doing much better than most private sector workers, and imposing a cost burden taxpayers can no longer afford. The average pay of a Federal worker is $71,000 pa, compared to $50,000 in the private sector. On top of that, the public sector still offers medical insurance, and the kind of pension entitlements most private sector employees can only dream about (see here). What's more, public sector employment has been pretty constant through the recession, whereas the private sector has shed 6% of its workforce (see here).

So what are US politicos doing about the problem?

Yes, that's right - they're doing everything they can to avoid taking on the unions. Which means that instead of fundamental reform (such as scrapping their expensive defined benefit pension schemes), they're resorting to stop-gap measures such as recruitment freezes and asking employees to take unpaid leave. In other words they're passing the pain on to their customers via reduced service levels.

But in the US, states and municipalities can go bust, which means that local fiscal problems go critical a lot more than we're used to here. At least one city has gone bust precisely because it failed to grip its paybill (the Californian city of Vallejo - see here). And there are now some signs of minds being concentrated and political resolve beginning to stir, with New York leading the way on sweeping pension reform.

So as we wait for George to show us that axe he's supposed to have, we'd do well to watch the US. If the choice is between taking on the unions and bankruptcy, the sooner we put down the markers, the better.


*Technical nerd note: the accrual of future pension benefits does not cost the government anything in current cash terms - the government simply accrues a liability to pay those benefits in the future. In effect, the government is funding part of its paybill by borrowing from its employees. But that doesn't mean the taxpayer burden is any less - it simply means we have even more debt.

PS Highlight of the Xmas period? No contest - PD James does BBC R4 Today. Tyler purred with delight as she ripped into Mark Thompson over BBC pay, schmoozed Jumping Jack Straw into bashing the police for becoming the form-filling pc non-police Labour always wanted, and gently roasted Sir Ian Blair for failing to keep us safe. Almost worth the licence fee. Can't they make her Today's editor for good?

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: cuts, public sector pay

Rich At Our Expense

Purrrrrrrr

By a strange coincidence, this year's Public Sector Rich List from the TaxPayers' Alliance is published just as the row over bankers' bonuses explodes once again.

The Rich List first. This year, the TPA has discovered 805 public employees earning more than £150,000 pa (and that excludes local authority employees, who are covered in the TPA's companion study, The Town Hall Rich List). Among the "highlights" (data relates to 2008-09):

• 8 people got more than £1m pa
• 333 earned more than the Prime Minister
• The group's average pay rise was 5.4%, compared to 2.7% for a nurse and 2.3% for a teacher
• The group's average total remuneration is £226k per annum; by comparison, according to the Institute of Directors, a managing director of a private organisation with a turnover of between £50 million and £500 million (about the size of a typical quango) could expect to earn £141k and an executive director £87k.

And for the first time, the Rich List includes executives from our nationalised banks (but note it's only board members - ie it doesn't including all those high rolling traders and investment bankers who remain anonymous because they are not on the boards). There are 30 of them, including the List's top earner, Mark Fisher of the Royal Bank of Scotland, on £1.4m.

Which brings us back to those banker bonuses, with over 5000 of the varmints apparently in line for over £1m apiece - ie a total bill in excess of £5bn just for the top guys.

Should we care?

You bet we should. As my Lord Myners was explaining all day yesterday, these bankers have been bailed out with squillions of taxpayer dosh. Apart from the effectively nationalised banks (ie RBS and Lloyds), all the other UK banks are being propped up with open-ended taxpayer guarantees on their liabilities. WTF should we allow them to walk off with barrowloads of our cash?

So what of their threats to resign and go off to work for Goldmans?

Call their bluff, we say.

Look, the key reason we're still in this mess is because Brown has not grasped the nettle we've blogged about so often (eg here). However it's dressed up, we need to split high street retail banking away from investment banking (aka a new Glass-Steagall).

High street banking should go back to being a low risk utility type operation, fully guaranteed by taxpayers but heavily regulated and subject to a hefty annual insurance charge to pay for the guarantee. Pay packets would soon return to the the more modest levels that always used to exist in our high street banks.

In contrast, investment banking should be much less regulated, a thousand flowers should continue to bloom, but there should be absolutely no taxpayer guarantee, either explicit or implicit. Investment bankers should pay themselves whatever they like, but if their bets go wrong, they should be left to incinerate.

We desperately need to get on with this. The existing arrangements are not only grossly unfair to taxpayers, but over time they will hobble our nationalised banks into oblivion. Whatever they decide to do, they will not be able to match their competitors bonuswise, because we won't let them. They will inevitably go the way of all nationalised industries before them - second-rate and a drain on national prosperity.

So what would we do right now?

Irrespective of international agreement, we'd announce our own Glass-Steagall. From say, end-2011, any bank wishing to offer UK high street accounts guaranteed by the taxpayer would have to comply with new regulatory requirements. And those requirements would include complete separation from any entity offering investment banking services (there would be other restrictions as well, covering such matters as asset and liability liquidity).

Meanwhile, we'd say to our nationalised banks yes, you can continue to pay bonuses, but they have to be in the form of deferred equity in your new post-2011 offspring. Cash? Forget it.

Throughout history, so-called "rent seekers" have sought to capture government so as to extract unwarranted financial gain at the expense of taxpayers. But whether in the public sector or the private, taxpayers should not be expected to underwrite the riches of others.

PS And talking of rent seekers, the furore over Climategate is gathering pace. The conflicted tax-funded global warming industry has now woken up to the threat, and is trying to argue that lies and distortions from East Anglia aren't that important to the case - loads of other "respected" scientists have come up with the same results independently. Except of course, it isn't like that. As the splendid Prof Philip Stott pointed out on R4 Today this morning, the whole global warming biz is an inverted pyramid, resting on the work of about 40 scientists. And 39 of them work at East Anglia. Well, no, I made that last bit up, but it is only around 40, forming a very tight groupthink mutual support network. But like the man said, you can't fool all of the taxpayers all of the time.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: bank bailouts, bankers, eco wibble, public sector pay

Thursday Morning Blood Boil

Mind how you go

Is this government the worst we have ever had? Surely it must be. Yes, OK, they introduced gay marriages, and they stopped us going into the Euro. But apart from that, we can't think of anything they've done that hasn't turned into a disaster. And this morning we're treated to a rash of reminders.

1. Immigration

Labour has lost control of our borders. We all know that. In just 12 years, they have permitted more than 3 million foreign born migrants to enter, 5% of our entire population (eg see this blog). Some of these migrants have undoubtedly made us richer, but most have not (eg see this blog). It has produced dangerous social tensions, boosted now by mass unemployment, and there is absolutely no way of stuffing the genie back into the bottle.

Things are now so desperate, that even the arrogant clowns who rule over us realise there's a crisis. Unfortunately the crisis they see is not the one we're all so worried about. The one they're concerned about is that the immigration issue might lose them the next election.

So they've decided they'll admit to a few mistakes.

Today, Brown himself stood up to "admit ‘mistakes’ on immigration after BNP TV furore". Well, that's what the newspaper headlines said he was going to do before his speech. But when you actually read the speech itself, you don't find any such admission. All you find is a statement about how he now "gets it", and how it isn't his fault anyway because previous governments left him a shambolic immigration system that he is now valiantly fighting to sort out.

And the migrants he actually picks on for his draconian fuzzy new controls are not the low-skill alien culture type migrants everyone worries so much about. Instead, he says "we no longer need to recruit civil engineers, hospital consultants, aircraft engineers and ships officers from abroad - and so these and other jobs are being taken off the list." It's a classic shimmy - these highly skilled workers are not the people we're worried about. Most of us want people like that to be able to come in.

He tells us we can't have a fixed annual limit like Australia's because it would be too inflexible. Too inflexible for whom? We all know that employers want unlimited immigration because it depresses wages. But the rest of us want a clear limit because of all the social and public spending pressures mass immigration brings with it (see previous blogs).

And as for his argument that imposing a limit would "overturn our obligations to our EU neighbours", why not just have a limit applying to non-EU citizens? It's non-EU citizens who have made up more than 80% of the inward migration over the last decade (eg see this blog).

Brown still seems to think we're all stupid.

Gah!


2. Cost of Nanny

On one level, Labour's nanny state is a source of harmless national amusement. But as soon as you realise it's costing us a ton of money, the joke falls kinda flat.

Here's the latest episode from the Sun:

"POLICE chiefs faced ridicule last night over plans to give cops guides on how to ride a bicycle.

The potty pamphlets, running to 93 pages in TWO volumes, tell cops how to balance so they do not fall off.

The official Police Cycle Training Doctrine - the cost of which is estimated at thousands of pounds - gives full instructions on how to stop and get off a bike safely.

Officers will be taught how to brake and avoid obstacles such as kerbs and rocks. They are warned not to tackle suspects while they are still "engaged with the cycle"...

Officers are advised to wear padded shorts for "in-saddle comfort" and reminded to eat enough food and drink "adequate liquids" - because cyclists get hungry and thirsty.

Undercover cops are told they may need to go without a helmet to avoid being rumbled. But the guide warns: "This lack of protection must be noted and a full risk assessment of the required role to be undertaken."

No, no, stop it. I'm starting to get asthmatic.


3. Bonuses for catastrophic failure

We've blogged the issue of bonuses for public sector staff many times (eg see here). And today we hear about the latest bonuses being paid to the buffoons who run the catastrophically awful MoD. Despite all the equipment shortages and all the procurement cock-ups we read so much about, £47m has been paid out so far this year:

It makes you want to spit.

"The bonus figure covers just the first seven months of the financial year. The MoD said yesterday that the bonuses would average less than £1,000, but a senior civil servant could pick up £8,000. Last year, the department had 95 employees who were on a salary of more than £100,000. A private in the Army can be paid as little as £16,681 a year"

As we've said before, bonuses in the public sector are a farce. Unlike the private sector, the public sector is not targeting profit, or any such clearcut objective. There is no bonus pool driven directly by the money available. Indeed, there is no transparent and robust linkage back to any real world objective. Just another pile of box ticking commissariat wibble. The practice should be stopped.

And as for the BBC paying for its execs to stay in glitzy £647 per night Las Vegas hotels, I can't even bear to read the story.


4. Too posh to wash

The government is about to insist that all nurses now have a degree.

Why?

The health minister says:

“By bringing in degree-level registration we can ensure new nurses have the best possible start to meet the challenges of tomorrow. This is the right direction of travel if we are to fulfil our ambition to provide higher quality care for all.”

The minister obviously lives on an entirely different planet to those of us who've visited real NHS hospitals.

The Doc long ago tore out his few remaining wisps of hair over the fact that many essential nursing jobs like washing patients no longer get done by nurses. They are too posh to wash or to ensure patients are eating and drinking properly: upgraded beyond such menial tasks they instead now spend their time studying patient protocols and pathways. A fact not unconnected with the huge upsurge in hospital acquired plagues.

As we've said before, just make sure you keep up your BUPA payments.

And try to forget that state healthcare now costs each and every household nearly £5 grand pa.

I think I need to lie down.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: BBC, Immigration, nhs, public sector pay

More On Public Sector Pay

Public sector ahead for two decades

In the comments on yesterday's post DM Andy accused Tyler of cherry-picking his evidence on public sector pay, by only showing the last decade:

"That's a rather cherry picked graph there Tyler. The ONS data goes back to 1990 and shows the private sector started off lagging behind the public sector during the early 90s recession, the private sector moving into the lead in the boom years and now the public sector catching up again in another recession."

Now, Tyler can stand many things, but being accused of picking cherries is not one of them. So the above chart puts things right by showing the entire data period right back to 1990.

However, although the ONS average earnings indices show relative movement over time, they give no indication of relative earnings levels between the two sectors. So we've translated everything into cash terms (ie average full-time weekly earnings including bonuses) on the basis of the average earnings in April 2008 as recorded in the ONS's Annual Survey of Hours and Earnings (ASHE).

What do we conclude?

First, as Andy says, the public sector did pretty well in the early 90s recession. But then as the Major/Clarke golden decade got going, the private sector caught up, so that by the turn of the Millenium, it was roughly level pegging. Since then, the public sector has more than kept pace, latterly pulling strongly ahead again - just like in the last recession.

Second, for virtually the entire period, average full-time earnings in the public sector have been ahead of the private. The gap was highest in the early nineties, peaking at over 10% in 1992-93. Today, it is once again increasing (and on the median measure of pay it is even higher - at over 13%).

But what does this actually mean?

Well, that's when we get into all those apples and pears issues. For example, public sector unions (and Pol) argue that average public sector earnings have been artificially inflated by the privatisation of low-paid jobs such as cleaning. Others (such as HJ) point out that average public sector earnings are artifically deflated by excluding some high income groups like GPs, who are counted as being in the private sector even though the vast bulk of their pay comes from the NHS.

So these long-term trends do need to be treated with caution.

Nevertheless, the data certainly do not tell us the public sector has fallen behind in some way. If anything, they suggest the opposite.

Of course, we might be able to get a clearer fix by looking at the public/private comparison in more detail, for example by specific occupational group.

We don't have time to dig out all that data at present, but just as a taster, here's a chart on state teachers' pay relative to "other professional occupations" as recorded in ASHE. It's taken from the most recent report of the School Teachers’ Review Body:

As we can see, teachers pay is shy of the overall average for "professional occupations" (which you could easily argue is down to their holidays and final salary pensions). But over the last ten years, the percentage gap has been closing.

And the teachers illustrate something else we've blogged many times - the inefficency and unfairness of national pay scales. Whereas in London and the South East teachers might well argue they are underpaid, elsewhere - relative to local pay rates - they do very well:

So if you want to teach, go North or West. On no account choose London.

(Yet another reason for breaking up our huge national public service monoliths).

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: public sector pay