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Nick Hayns: Public sector unions keep playing the same old tune

AS December slowly draws upon us, you’d be forgiven for feeling a sense of deja vu in the air. The X-Factor again whimpers to its yuletide denouement, with ITV desperately trying to make us care; Coca-Cola adverts begin to remind us that “Holidays are coming”; and, every day, newspapers find new ways to spell out economic collapse. It’s like the movie Groundhog Day but without the witty charm.

However, this week there is set to be another rerun. And one that is going to be far more irritating than a pop star wannabe massacring your favourite Beatles number.

You see, it’s the public sector unions again. You remember them threatening a “Summer of Discontent” only a few months ago? And Dave Prentis of Unison telling his members that “we’re in the fight of our lives... and we must win”? Well they’re back; and they’re set to ruin your, and my, Wednesday. Schools will be shut, operations will be postponed and the country’s borders, if not manned by soldiers, will be manned by no-one at all.

The issue, as before, is public sector pensions reform and an estimated two million or so union members are set to walk out from their posts in opposition to the Government’s proposed changes.

The Government wants public sector workers to contribute more towards their pensions; the unions say this is unfair.

In one respect, it is reasonable to feel some sympathy for such a stance – the unions struck a deal with the previous government on their pensions not long ago and, perhaps understandably, are none too happy having the debate opened up again. However, that deal was little more than a fudge and the responsibility has fallen on this government to find a sustainable path that should have been forged a long time ago.

Currently, public sector pensions are on average worth around 40 per cent of salary for most workers (that figure rises to nearer 70 per cent for police officers), yet the contributions made by both employers and employees into these schemes come nowhere close.

The result is a huge black hole which must be plugged with taxpayers’ cash, the ongoing liabilities for which are passed on to the next generation of taxpayers – our children, and our children’s children, in the vernacular. At well over one trillion pounds, this black hole has grown to become far larger than the official national debt (although, whisper it, true national debt is nearer five trillion), so reform is long overdue.

Much of the Government’s current travails in dealing with this issue are that it doesn’t seem quite to know how to present it to the public. Is this an issue of economic sustainability, or one of fairness?

The Government has thus far sought to present it as the former; and the unions have struck back with economic forecasts from the Hutton Report that show pensions liabilities falling as a proportion of GDP in the future (although you only need to look at any newspaper report on the economy nowadays to see the fallibility of growth forecasts).

However, the real issue is one of fairness. It’s often said that public sector workers are paid less than their private sector counterparts and so it is their benefits – increased job security, better pensions – which even things out. However, for some time now this has not been true. Office for National Statistics figures find public sector pay averaging roughly £1,200 a year more than in the private sector, and, in the past two years, the pay gap between public sector workers and their private sector equivalents has grown to some 16.5 per cent.

It’s probably worth remembering those statistics when, in the middle of your impromptu “Bring your daughter to work day” on Wednesday, Mark Serwotka, Dave Prentis or Bob Crow appear on your TV screen and ask for sympathy. Another fact worth remembering is that some 25 million people work in the private sector, only five million in the public. The former has learnt to operate in these new financial times – benefits have been curtailed, efficiencies found, budgets cut – but the latter holds on. This must change; reform is long overdue. Yes, the latter group comprises, among others, teachers, nurses, those people we are meant to revere and never criticise; but it does not cover up the fact that they currently enjoy pensions arrangements which are unfair, in truth unsustainable, and for which we (and future generations) must pick up the tab.

The public sector must wake up. Yes, tomorrow will be hugely irritating; but we’ve been here before. We, and the Government, must not bow before this strike action and we must stay the course for fundamental, sustainable and fair reform.

The X-Factor will no doubt rear its tuneless head next year, but let’s finally end the Groundhog Day of public sector pensions.

 

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