News from the New Party

Saturday, March 03, 2007

Public sector pay will always be poor

The proposed public sector pay settlement has caused anguish to some groups of workers who are expecting a below-inflation pay increase this year, and are therefore complaining of an effective pay cut. Whilst we sympathise, the fact of the matter is that public sector pay is always likely to be poor in comparison with private sector equivalents.

For a start, public sector pay is basically funded out of the public purse: in other words out of general taxation. Pay increases have to be paid for ultimately by taxpayers, and many of those taxpayers will be public sector workers themselves. Any pay increase paid to public sector workers is therefore paid for in part by the public sector employees themselves.

Secondly, the public sector ought, primarily, to provide public services. It is not, primarily, an employment agency, a point which seems to elude public service unions quite a lot of the time. There are numerous factors involved in public service financing, and the fact that they are run by government means they are even more of a headache than they would be anyway. Since normal market forces do not apply, pay negotiations for public sector workers are as distorted as any other commercial negotiations involving a monolithic, monopolistic public sector bureaucracy.

This is why, although the current Chancellor has "invested" astronomical sums of money in the National Health Service over the past ten years, many NHS trusts are running huge deficits and now public sector pay is under pressure (although, frankly, inflationary pressures in the country as a whole probably figure larger on the government's agenda at the moment). If public sector workers want to be paid better, the place to be is outside of the public sector. Of course, this is something that public sector unions really do not want their members to hear. Horror stories of horrendous working conditions in the private sector are scare stories generated by a trade union movement which is jealously guarding its few remaining fiefdoms in the national economy; and working conditions in the public sector generally are often woeful in any case. The NHS would be better off privatised, and so would NHS workers.

News from the New Party

News Highlights

News Archive

Public sector pay will always be poor