Alex Hern runs through four myths about the public sector strikes, and shows why they're all false.
1. Pensions aren’t sustainable at the level they are
As Stephen Henderson wrote in July:
The Office of Budget Responsibility’s July 2011 Fiscal Sustainability report (pdf) looks long into the future (2060) and guesses at the likely proportions of GDP that might arise as the population becomes more elderly.
The assumptions are based on current policies, not government proposals. Confirming earlier findings in the Hutton Report (pdf), they clearly predict the cost of public pensions will fall from 2% of GDP to 1.8% in 2030 and 1.4% in 2060 – without any of the current Hutton proposals.
Even Hutton himself accepts that they are sustainable, although he attempts to draw a distinction between sustainable and affordable.
2. Public sector pensions are higher than private sector pensions
The reason for the disparity in average pension isn’t because public sector pensions are higher, but because so many private sector employers don’t offer any pension plan at all.
As Nigel Stanley revealed on Monday:
• Two in three private sector workers are not members of a workplace pension scheme;
• Private sector pension provision increases sharply with pay, while in the public sector it is much more evenly distributed;
• Two in three public sector staff earning between £100 and £200 a week are in a pension while only one in seven private sector employees in the same wage band are in a pension;
• Pension provision in the private sector varies hugely between sectors, with four in five workers in the energy sector having a pension, but only one in 16 in the hospitality sector having one;
• While senior public sector staff are in the same schemes as the rest of the employees in their sector and often pay bigger percentage contributions, top directors in the private sector (FTSE 100 directors) have pensions worth nearly £4 million on average.
3. Strikes are the work of ‘militants’.
Despite claims of “apathy” from politicians such as Boris Johnson, the response from the thirty unions which have been balloted has been strongly in favour of the strike. 78 per cent of Unison voted in favour of the strike, 83 per cent of the GMB, 75 per cent of Unite – all mandates which any politician would kill for.
Even when turnout is taken into account, the unions still exceed the mandate of prominent politicians such as, well, David Cameron and Boris Johnson:
You may remember, of course, that Johnson was elected Mayor of London in 2008. He gained 42.48 per cent of the first preferences in London, on a turnout of 45.33 per cent. So London has a mayor triggered by less than a fifth of the voting population – just 19 per cent.
David Cameron is the head of the government of the United Kingdom of Great Britain and Northern Ireland by virtue of his being the head of the largest party in the commons. He achieved this feat thanks to his party getting 36.1 per cent of the votes cast, on a 65 per cent turnout. Which means that, like Unite, just 23 per cent of those balloted voted in favour of a Conservative government.
In addition, the strikes are hardly the work of militant unions. Even putting aside the fact that calling Unite, the largest union in the UK, ‘militant’ stretches the definition, the headteacher’s union has voted for a strike in the first time in its 114-year history. The only militants involved are Michael Gove and the rest of the Tory cabinet.
4. Public sector pensions should be made more like private sector pensions
This is, at it’s head, the argument being made by the government. Every time they talk about ‘gold plated’ pensions of the unions, it is an attempt to divide and conquer.
As Owen Jones argued at Labour List:
Private sector pensions are one of the great scandals of our age. Only 40 per cent of private sector workers are now in an employer-sponsored pension scheme. It’s even worse with low-paid workers: only 20 per cent of those earning between £100 and £200 a week are in an employer-backed scheme.
But the argument should not be to drag down the pensions of public sector workers: it should be to drag up the pensions of private sector workers. Why punish public sector workers for the bad practices of private sector employers? If we do, we end up in a race to the bottom.
And as we said in October:
The claim that public sector pensions should be low because private sector pensions are low is often heard. But why should it be true? Why not instead make the opposite argument: that the only reason why private sector pensions are as high as they are is because they face competition from the public sector.
Some business may offer a fair pension out of the goodness of their heart, but many more offer the lowest that they can get away with – and if workers aren’t offered a better alternative in the public sector, then that low will be much, much lower.
242 Responses to “Four myths about today’s strike: Busted.”
Anonymous
Absolutely fantastic piece and should be more widely distrubuted.
Anonymous
Really. And you believe Hutton and the Treasury?
Why would they assume they are holding AA corporate bonds with no risk of default, instead of using an RPI linked instrument to calculate the present value of the liabilities?
Ah yes, the rate is higher, so it makes the problem smaller.
That’s why the liabilities don’t appear on the books. They, Labour, Liberals or Tories have no intention of paying out in full.
So an extra year on the state retirement age for many. Another 5,000 plus stolen because they spent all the contributions.
So here’s the question. How much would it take to buy a public sector worker out of their pension?
1. 10% extra on salary
2. 20% extra
3. 30% extra
4. 40% extra
5. 50% extra
What’s a fair trade off? No future pensions, but extra salary now and the worker makes their own provision.
At which point are they better off opting out?
Stephen Thoms
What a load of rubbish. Has nothing been learnt from the incompetent Gordon Brown days?
Christine Hill
RT @leftfootfwd: Four myths about today's strike: Busted by @alexhern: http://t.co/w1Ks7YKo #n30
Newsbot9
Market equivalent pay to the private sector would mean an average 80% rise.
And you’re still always better off opting out, given your Tories mean to make pensions worthless one way or another.