A few thoughts on the Public Sector pensions strike today. Things are polarising, people are taking sides.. I have decided to take the side of the tax payer. The public sector workers feel unhappy about proposals to reduce the benefits of their pensions in at least two main ways. Firstly the age at which they can take their pensions is increasing and secondly they will have to contribute 3% more of their salary to their pension plan. They are not keen on this, I doubt I would be. But the following realities apply:
Firstly, there is a huge black hole in the funding arrangements for public sector pensions. They are not self funded, the state through the tax payer will have to meet the bill. The unions in briefing documents sent to all their members as part of their Ten Key Facts and Myth-buster propaganda state that Local government pension schemes are viable but they disingenuously refer to the fact that currently contributions exceed pension benefit payments. They will at the moment as percentages of higher salaries from increased numbers of Public Sector employees only have to fund smaller pensioner numbers with smaller entitlements. Everyone else’s evidence suggests there is a massive black hole to be paid for by someone in the future.
Secondly, it is now a matter of record that public sector salaries have matched and overtaken those in the private sector. Once upon a time, people took employment in the public sector with the rationale that although the pay was lower, the job was as secure as possible and the pensions were good. Now they have both. In addition to that, other benefits such as paid sick leave and holiday entitlement are invariably better then in the majority of private sector jobs. Only one in seven in the private sector enjoy sick leave on full pay. For the majority, its Statutory Sick Pay only – you too can get by on about £80 a week, and by the way, the first three days are not payable. Not surprisingly, average days per year “on the sick” are 50% higher in the public sector.
Over 90% of public sector workers have a pension plan compared with a much lower percentage in the private sector. This includes many low paid and part time workers. So the dinner lady or lunchtime assistant is far more likely to have a pension than a waitress in a restaurant. As these public sector workers understandably receive pensions that are small, it has allowed the unions to quote figures of how low public sector pensions are ON AVERAGE and also in some cases use these figures to make comparisons with FTSE 100 directors pension arrangements. Strange , they never make comparisons with some of the high paid people in the public sector. According to research over a year ago , there were in excess of 39,000 in the public sector earning over £100,000 and over 9,000 earning more than the prime Minister.
The unions claim that it isn’t fair to ask their members to pay more as they are already enduring a pay freeze. Out here in the real world they would find that the self employed in the vast majority of cases have seen their earnings decline significantly over the last 5 years. There are over 4 million self employed in the UK, how many of them even have any sort of pension? The reality is that when it gets tough in small businesses, the saving for a pension is the first thing that gets cut.
Ask a taxi driver, independent shopkeeper, hairdresser, waitress, builder, gardener, milkman, mechanic and legions of other self employed people if they have seen their earnings grow by a third during the last three labour terms of government? One sector has seen that growth. Ask the same community who pays if they are ill? Ask them to explain to you how they are not entitled to job seekers allowance and other unemployment benefits if they could no longer work. Ask them if they have much sympathy with the public sector strikers today and I expect many of them would probably paraphrase the statement made by Alec Baldwin’s character in Glengarry Glenross : ” If you don’t like it, leave”. After all, as the public sector bosses are so fond of reminding us when justifying their salaries: “We would only be earning this in the private sector.” Now’s your chance.