Keen Brit-watchers must be wondering what the hell’s happening over here right now. We’ve just had our own peaceful version of a one day civil service strike, or was it merely a day of protest? Compare and contrast with Greece for example, and we seem to have been terribly British about the whole thing, yet in our unique island way the Brits are certainly revolting.
Take on the one hand the civil servants. Many are portrayed sympathetically by the (often accused of politically correct, left-wing bias) BBC as only striking for the first time ever, betrayed by an untrustworthy government seeking to renege on their employment terms and conditions, especially their long-standing and pension agreements (which pay massively generous returns compared to the private sector.) Many of them genuinely feel they have worse compensation packages than those in the private sector.
Meanwhile, firmly in the ‘blue’ corner, you’ll find the Rupert Murdoch owned press. Desperate, some might say, to curry favour with the UK’s centre-right coalition as the current Leveson Inquiry into the UK’s press standards, somewhat hijacked by miffed celebrities, rolls on. The Times and The Sun are telling us that the civil servants are wrong, and citing data compiled by the well-respected Institute of Fiscal Studies (IFS) to back them up.
Arguments roll on about the success or otherwise of the strike*/protest* (*delete as appropriate.) Was a turn-out two thirds of the size expected by the unions a ‘damp squib?’ I’ll leave that for you to decide. What interested me was some of the detail coming out of the IFS.
For example, government plans to cap public sector pay rises at 1% a year until 2015 will wipe out the pay premium that the civil servants have over the rest of us. While this may make uncomfortable reading for the averagely paid civil servant that baulks just as much at the mega-earnings of a small number of city bankers as the rest of us, that’s just tough – civil servants are, officially, it seems, 7.5% better paid than those of us in the private sector. That 7.5% difference between us has to be even greater if you strip out the skew arising from the mega millions being earned in the square mile.
Most of us private sector employees would probably live with this if it were the only difference. However the pensions issue has become a deeply divisive one over the last couple of decades. As one civil service union official helpfully pointed out yesterday, their pension contributions go to the government (ours go to pensions providers) and the government (i.e. all of us) has to pay out civil service pensions, which the unions claim are affordable.
And there’s the rub. Despite the financial crisis and record government borrowing, affordability isn’t actually the main issue – fairness is. Now don’t get me wrong. I sympathise with the civil servants. It hurts to be told that you have to pay in more to get less out. All of us in the private sector already know this to be the case, because we’ve had to deal with it ourselves for long enough since the private pensions market went sour.
It’s simply against the British spirit of fair play to let the civil service keep their cast-iron pensions while many low paid private sector workers already earn less and can also expect to retire into pension poverty. If the market return on pension contributions is X%, then that should apply across the board, public or private sector. Anything less just won’t wash, and I’m predicting that civil servants will see sense, and stop complaining about how bad their lot is, and quietly go back to counting the size of their pension pots compared to ours.
Although I could be wrong.
