Context is all…
This week the UK’s Trades Union Congress (TUC) has been meeting in Manchester. And they are an angry group. The coalition government’s austerity measures are expected to lead to 600,000 public sector job losses, as well as pay freezes and pension reforms over the next five years. The TUC warned of a “darker, more brutish” society and called the Government the “demolition Coalition”.
The TUC is probably the closest thing that the UK has to a Marxist party. I’ve wondered this week how many of the semi-comic TUC members have ever delved into the delights of Das Kapital in all its glory. Certainly Bob Crow the transport union leader, seems full of the “workers of the world, unite” rhetoric, but I doubt that he’s read a book in his life, let alone Das Kapital. Crow happily occupies the space between pond-life and night-club doorman, yet is a scarily powerful force in deciding whether the real workers of the world are able to get a train or a bus to their workplaces.
He was heard commenting at the Congress that having Bank of England Governor Mervyn King speak to the TUC was like Christians inviting Satan to preach their Sunday sermon, adding that the £300,000-a-year Guv’nor has a chauffeur-driven car. I’m not entirely sure of the relevance of the chauffeur driven car to his attack, but I presume it is an attack on all “Capitalists”, each and every one of whom have chauffeur driven cars. (So far I’ve managed to miss out on this perk of the free-market economic model, but I will look into it). As an alternative to listening to Mervyn King, Crow said he would be listening to a Colombian trade unionist talk about the oppression of workers in his country, where union membership is illegal, and who have the constant threat of jail hanging over them. A sad story I’m sure, but a far cry from the world that the members of Bob Crow’s union occupy.
In one sense it disappoints me that I am even writing about Bob Crow, as it means that I have paid attention to the verbal cow pats that he produces so readily. Anyway, in a wonderfully juxtaposed piece of irony, the Office for National Statistics has published a report this week that identifies that the real victim of poor worker’s rights in this country is the average man or woman working in the private sector. Their report found that full-time public sector staff earned an average of £74 a week more than those in the private sector. Once employer pension contributions were included, the gap rose to £136, illustrating the generous pay-and-perks deals enjoyed by local and central government workers.
In its September Economic and Labour Market Review, published yesterday, the national statistician reported that the average weekly salary for public sector workers in April last year was £539, compared with £465 in the private sector. The difference was more stark when pensions were included because fewer than half of the private sector workforce were enrolled in a retirement scheme, compared with nearly all in the public sector – many of which are taxpayer-subsidised final salary schemes paying two thirds of working income for life. Including employer pension contributions, the total average remuneration package for the public sector was worth £615 a week and £479 for a private sector worker. Mark Littlewood, the director-general of the Institute of Economic Affairs think tank, said the report illustrated “just how preposterous” the TUC’s claims were.
“The idea that the public should rally around these ‘oppressed’ workers is ludicrous,” he said. “Why should their higher salaries be paid for by waitresses and hairdressers? An attack on public sector pay is not an attack on the poor but the privileged.” Mr Littlewood said the research would have been even more depressing reading for private sector workers if job security had been included. ”The likelihood of losing your job in the private sector is much higher,” he said. The number of public sector workers swelled under the past Labour government from 5.2 million to more than six million.
In response to the report from the ONS a chap called Adam Lent, who holds what is surely a oxymoronic job as “head of economics” for the TUC, said: “You can’t make direct comparisons. The public sector has many more professional and highly skilled workers within it than the private sector. Averages simply do not tell us anything useful.” For the TUC’s sake I hope they aren’t paying this guy very much.
Wrapped within all this comic stupidity, lies a very scary problem, which the TUC is just a part of. I watched Iain Duncan-Smith, the work and pensions minister, on the Jeff Randall segment of Sky News on Tuesday evening. He highlighted some very scary statistics about the nature of state dependence that exists in parts of British society. There are close to 4 million households, containing 5.4 million adults, in which no-one has a job. Amongst these numbers, 1.9 million children live in homes where no one works – fuelling fears that the benefits culture will be passed from one generation to the next. In total, 7.3 million children and adults aged under 65 live in workless households. A further 2.5 million are deemed currently unemployable and are receiving incapacity benefit. A staggering statistic of this particular roster is that if you have been on incapacity benefit for more than a year, you are statistically more likely to die, than to find a job.
In the face of these “headwinds” one solution is to artificially create more public sector jobs – which has typically been the Labour government strategy over the years. This approach has some merit in the short-run, but the artificial creation of these “non-jobs” leaves both a financial and a social burden which is ill-advised over the longer-term. In Northern Ireland for example over half the working population are either directly or indirectly employed within the public sector. This is a legacy of past governments creating jobs in the province as part of a solution to the Troubles. There is now a clear culture of State dependence, and an effective crowding out of private sector job creation that will be hard to fix.
When William Beveridge produced his report in 1942, which was the forerunner to the first creation of a true Welfare State, he identified five “Giant Evils” in society: Want, Disease, Ignorance, Squalor and Idleness. Social security or “insurance” as he called it, was only one part of a “comprehensive policy of social progress”. Policies of social security, he said, “must be achieved by co-operation between State and individual” and the State “should not stifle incentive, opportunity, responsibility; in establishing a national minimum standard of living, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family”.
In this last point the State has failed over recent times. The context that has been created has actually perpetuated some of the Giant Evils that Beveridge was looking to root out of society. I’m firmly of the view that everyone, including those falsely claiming incapacity benefit, actually want to better the situation for themselves and their families given the opportunity to do so. It will be very hard, if not impossible, to force people to change their behavioural patterns overnight. A context change is required, and the current deficit crisis is as good a reason as any to get back to a social security framework that is closer to Beveridge’s concept than Bob Crow’s.