Well here\’s your problem then

So, a council diretor gets a very hefty pay off:

The Daily Telegraph can disclose that Mr Dolan was handed £569,000 last year after taking \”voluntary redundancy\”. He received his normal salary of £157,000, including the notice period. He also collected a redundancy payment of £167,000, even though he had worked for the council for just six years.

Last night, the council said the redundancy payment covered 20 years of work for other local authorities – an arrangement that would be highly unusual in the private sector. The council also agreed to pay an extra £239,000 into Mr Dolan\’s gold-plated pension scheme to cover payments that would have been made had he continued working until 65.The remaining £6,000 of his record payment covered lost benefits.

That\’s cute: getting the 11 years of pension contributions for not working for 11 years. But this isn\’t, he says, unusual:

Last night, Mr Dolan defended his payment. “The calculation that you would undertake for a street cleaner of the same age as me would be identical,” he said. “It wouldn’t have been the same figure but the calculation is the same. There are no added extras, there are no fat cat golden handshakes.”

Well there\’s your problem. The entire sector seems to pay these ridiculous redundancies (calculated not on time working for an employer, but time working in the sector) plus pensions for years not worked.

Get rid of those and we\’ll be able to cut the public secotr wage bill without touching in the slightest front line services.

5 comments on “Well here\’s your problem then

  1. Shorter this post: “if we unilaterally tear up the contracts that people who made the choice to work in the public sector signed up for, and massively cut their overall lifetime earnings, then the public sector wage bill will be lower”. Well, yes. Slavery would also help achieve that.

    In the private sector, you decide to take a job and sign a contract with your employer based on total pay. Your employer can’t unilaterally change that contract to your disadvantage. The public sector should be the same. Suspending contract law just because it’d save the taxpayer money is the mark of a tyranny, not a free country.

    (I agree it’d probably make sense not to extend these terms to new hires, but that’s a separate point that won’t save us any money for 30 years…)

    In general terms (and said as someone who’s only ever worked in the private sector), I completely don’t understand the mass hysteria about public sector pay. I made a choice not to take a public sector job because I didn’t like the sound of the bureaucracy or the low frontline pay, and the pensions & redundancy benefits weren’t high enough to make up for those disadvantages.

    Everyone who works in the private sector has clearly made the same analysis – we know this, because otherwise they’d be working in the public sector…

  2. @john b

    It’s a difficult problem because I tend to be strongly in favour of both certainty in law and that contracts should be honoured.

    However, there is a distinct problem to address in this context; what do you do when a numpty, corrupt, or scorched earth government deliberately fucks things up creating decades of liabilities in favour of rabbit’s friends and relations? Do you honour these daft contracts or do you seek renegotiation?

    In the private sector, and you were saying that it would be unfair to treat the public so differently, you renegotiate contracts that become untenable. That process needs to happen with some very poor, (from the point of view of those forking over the cash), contracts and I think we can do that without chucking the rule of law out the window.

  3. In the private company that I work all the employment contracts were renegotiated early 2009 as the crisis struck. No one was overly happy but everyone understood that it was either renegotiate or the company doesn’t survive so no one made a big fuzz of it…

  4. The contracts with the public sector were not made in good faith with the people who were paying the employees’ salaries (i.e. us.) But even if we honour in full the terms of the contracts already made, the necessary corollary of this is that the redundancies have to be swingeing. That’s the way it works in private business when times are tough: either everyone takes a haircut or some of the workforce get the push. No reason why it shouldn’t be the same in the public sector. Pay cuts or job cuts. Which? I’ve been presented with the choice. It’s not easy either way, but refusing to have made it altogether would have meant everyone going down.

  5. Falco: I don’t think you can say numpty/corrupt/scorched-earth government here – the whole point is, these contracts have been going for people’s entire working lives. If Gordon Brown had hired 100 of his mates in January 2010 on 10-year contracts with the full 10 years’ pay due on redundancy, then of course there’d be no problem setting those aside (and throwing all concerned in chokey), but that didn’t happen.

    David G:
    I’m also not clear on how the contracts are “not made in good faith”. Again, if we were coming out of a four-year Chavez style aberration where a leader with 30% of the vote claimed dictatorial powers, overthrew the system and put his cronies in charge, then that’d be a fair claim – but that hasn’t happened. This is just “continuing what’s happened since WWII”.

    But yes, sure, make the redundancies swingeing and change terms for pension and redundancy entitlement that isn’t already accrued – just ensure that everyone’s paid according to their contract now.

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