November 2011 saw the biggest strike in the UK for 30 years. Various polls (in both left and right wing press) suggested an average of 70% of the population supported the public sector workers involved in the action.
Here’s more information on what exactly public sector workers are and why they were striking.
1) Are Public Sector Employees Wealthy?
2) Are Public Sector Employees Lazy?
3) Are Public Sector employees Greedy?
4) What Are Gold-Plated Pensions?
5) Is There Any Need For Further Reform To Public Sector Pensions?
6) Will The Strikes Achieve Anything?
23% of all UK employees work in the public sector and some of those employed in the private sector consider this quarter of the workforce to be receiving benefits which are not appropriate to the current declining economic system.
What exactly makes working in the public sector such a lucky place to be?
Are Public Sector Employees Wealthy?
Reports suggest that back in 2008, public sector employees in the UK got paid 4.3% more than private sector employees. Even as a recession gripped the country, this pay premium supposedly increased to 8.8%. Unfortunately, some factors had been omitted from this calculation –
The nationalisation of banks such as Northern Rock or Lloyds means that these employees are included in the public sector from the end 2008. Financial sector wages have substantially increased the average public sector wage.
The lowest paid jobs within the public sector (cleaning, refuse collection, catering) have also been outsourced to the private sector – dragging down the average private sector wage. Furthermore, when similar roles within each sector are compared (rather than public Vs private in their entirety), it transpires that graduates working within the public sector are paid 3.4% less than in the private sector.
Public sector workers are not laughing all the way to the bank.
Are Public Sector Employees Lazy?
There is a widely held belief that those in the private sector work longer hours, therefore working harder than those in the public sector. This statistic is skewed by the fact there are more part time jobs in the public sector – sharing the opportunity to work and earn a wage with even more people. This leaves time for the people in part time jobs to take on their unpaid work of caring for children or parents.
Public sector employees also work an estimated 120 million hours of unpaid overtime a year – the equivalent of employing an extra 60,000 people. People are less likely to work unpaid overtime in the private sector.
This would suggest public sectors workers aren’t afraid of a bit of elbow grease!
Are Public Sector Employees Greedy?
This argument isn’t about whether services provided by the public sector such as education, healthcare, infrastructure and policing should exist – it’s about whether everyone should fund them or just the users of the services should fund them. How could a person working in a factory benefit from a student taking a degree course?
Surely anyone who works in the public sector is just concerned with stealing money from everyone else’s pockets through being paid by the government? Are the only people who benefit, those who directly provide the service and those who directly consume it?
Fortunately, public services don’t operate such isolation. Some studies suggest that every pound spent on local public services generates an additional 64 pence for local businesses. It has also previously been reported on this website that while a random university would cost £100m to operate, it generates £700m of activity in the community and would be involved in the employment of 6500 people.
Public sector employees aren’t greedy – they help others who don’t even directly consume their services.
These photos can also be viewed individually on Flickr here.
What Are Gold-Plated Pensions?
The private sector champions a system known as ‘defined-contribution pensions,’ those in which the employee and employer pay in a fixed amount at the time the money is taken out of the paypacket. There is little risk to the employer with this type of pension as the level of return is based upon how the contributions are invested, for example in the stock market. The returns on the investment (which may be positive or negative) are credited to the individual’s account.
Public sector pensions are known as gold-plated due to the fact that they are ‘defined-benefits pensions.’ They either pay out a portion of the final salary earned by the employee or are index-linked to inflation. These can be extremely costly to the employer (the government) but provide a safer investment and a more comfortable retirement for the employee. It is made even more costly to the government and the public purse because of an aging population (rising life expectancy and declining birth rates).
The government has already attempted to reduce their payments to public sector pension schemes by increasing the retirement age (making people contribute for longer for a shorter retirement) and linking pensions from the Retail Prices Index to the slower-rising Consumer Prices Index. Further proposals include increasing employee contributions and moving employees from final salary schemes to career average schemes.
Essentially, retirement funds are becoming less profitable for public sector workers and that is why the strikes occurred in June and November of 2011.
Is There Any Need For Further Reform To Public Sector Pensions?
Some suggest that the public sector should be thankful for any contributions from the government as public sector pension pots are funded from the taxpayer’s purse. While
In fact, private sector workers are a greater cost to the taxpayer’s purse than public sector workers in retirement. Employer contributions to defined-contribution schemes are on average, less than half that that paid towards final salary schemes. The government is currently paying more taxpayers money into private sector pension schemes through tax concessions than into public sector pensions.
Two thirds of private sector employees are also not in any employer-backed pension scheme. The cost of supporting them in retirement is simply passed back to the State.
Others suggest that the pension reforms already made by the government reduce costs to the taxpayer by £67 billion over 50 years, with costs stabilising at 1% of gross domestic product (GDP) or 2% of public expenditure.
It is worth bearing in mind that this is an incredibly small dent on the public purse. In the past year the government has committed 28% of public expenditure to welfare (including pension payments), 24% to debt interest and defence, 23% to health, 13% to education, 5% to law and order, 4% to housing and environment and 3% to transport.
Some public sector workers suggest the reforms are not necessary as £2bn more in NHS pension contributions are handed to the treasury than it pays out in benefits every year. Some suggest that even with no more contributions, the local government pension scheme could still pay out every single one of its liabilities until 2031.
Will The Strikes Achieve Anything?
A massive 4.8% of the population participated in the strike on the 30th November 2011 causing massive disruption. It would seem that the Public Sector are justified in objecting to further reforms of their pension schemes, but will striking prevent the government making further changes to the pension schemes?
The last time there was a general strike was in 1926 when only 2.3% of the population joined in. The difference here was that support was more wide spread across different sectors and it lasted for 9 days. Police Officers didn’t go into work, teachers stayed at home, shops didn’t open, chauffeurs refused to drive their masters cars, printers refused to publish papers, workers in all industries put down their tools. The cause was the continued cutting of miners wages that forced hundreds of thousands into poverty. Communities organised so that they didn’t need to depend on big industry or government. They produced self-reliant networks. Solidarity strikes have now been outlawed.
But in the end, no agreement was made. The strikes didn’t achieve anything. What would be the next move for the public sector workers? Could there be 3 million people ‘occupying’ buildings and open spaces? Indeed a day of action has already been called for the 15th December, 2011.
Occupation is a method practised by UK Uncut and Occupy LSX. As it involves trespass, it is already illegal and the author of this article dosen’t condone it – but it can be far more disruptive and gather a lot more attention than striking.
Here’s an example of an Occupation organised by Occupy LSX on the 30th November strikes.