The thing is he’s right

Hammond said that while public-sector pay had formerly “raced ahead” of private salaries, the gap had now closed. But, he added, public-sector pensions skewed the picture. “When you take into account the very generous contributions that public-sector employers have to pay in for their workers’ very generous pensions, they are still about 10% ahead,” he said.

Not entirely right because even absent pensions public sector pay is still a little ahead. A reasonable pencil sketch being that up to about 2002 pay was roughly equal (without considering those pensions and other perks), public sector roared ahead as G. Brown bribed everyone he paid directly, recession hit, public sector fell less than private in 2008-10, more since then.

The end result being that public sector pay rose more before the recession and fell less after it.

As to why pay fell, well, we’re poorer, that’s what a recession means.

18 comments on “The thing is he’s right

  1. Brown again. We are still paying for having a certifiable madman in charge of the economy for thirteen years.

  2. Can I protest about the bizarre and ugly Americanism “absent pensions” when you mean “without pensions” or “apart from pensions”?

  3. “When you take into account the very generous contributions that taxpayers have to pay in for public sector workers’ very generous pensions, they are still about 10% ahead,” he said.

    There. Corrected it for him.

  4. Public sector workers should not pay tax of any kind. Recycling tax from the public sector is a waste of time and money. Instead a public sector worker should be paid what his/her equivalent in the private sector receives net, including pension rights and other perks.

    This would nicely illuminate the burden put on the private sector in order to pay for the public one, and should put a stop to the endless whingeing from people who imagine that their jobs are somehow more virtuous than others’ because they are paid from public funds. The opposite is the case, not diametrically, but in general (one could argue that a fireman is more useful than a croupier, though both have their contribution to make to the common weal).

  5. He is right. But then so was McMillan “you’ve never had it so good”
    He might have better luck than McMillan though, as there are a lot of private sector workers inclined to believe him.

  6. ‘Can I protest about the bizarre and ugly Americanism “absent pensions” when you mean “without pensions” or “apart from pensions”?’

    Obviously you can, see above. You also may.

  7. pedent: god, is *that* what he meant? I kept reading it and couldn’t work out what an “absent pensions” was.

  8. Thomas

    “paying public sector employees net rather than recycling taxes”

    You may have a problem outsourcing stuff versus employing individuals?

    For example, companies would likely have both public sector and private sector clients. Public sector budgets couldn’t easily adjust on the hoof. Etc.

    I like the general concept but it would need to be thought through?

  9. “Can I protest about the bizarre and ugly Americanism “absent pensions” when you mean “without pensions” or “apart from pensions”?’”

    How about “pensions aside”?

  10. Thomas Fuller,

    > Public sector workers should not pay tax of any kind.

    No. I’m sick of hearing this argument.

    First of all, the public sector should eat its own dogfood. If administering PAYE and NI is too complicated or too costly, then just think how expensive it must be for the private sector. The answer is to make it less complex for everyone; not to waive the admin costs for the privileged few.

    Second, if you make the entire public sector exempt from tax, they’ll quickly vote for tax rises for everyone else. Right now their desire for tax rises is tempered by the knowledge that they have to pay them too.

    Third, how would you tax someone who works in the public-sector during the week, but does a few shifts in the local pub at the weekend? Or the school dinner lady who also works in the local café? Or the semi-retired person who receives taxable income from a pension and also works for the government?

    This should put a stop to the endless whingeing from people who imagine that their jobs are somehow more virtuous than others’ because they are paid from public funds

    No it doesn’t. The “virtuous” public-sector workers are still paid from public funds. The whingeing will be as loud as ever, and worse still, they’ll now be able to claim that hiring an additional nurse / teacher / diversity coordinator costs less than before, therefore we should hire lots more of them.

    I’d put them all on emergency tax, then make them claim back the difference by filling in a Self Assessment form every year. Let’s see how they like it.

  11. Andrew M

    You’re right on every point. Mea culpa!

    We need to find another way to stop the whingeing.

  12. Exempting the public sector would reduce transaction costs. But these have fallen to virtually nothing since banks got computerised.
    Today you can buy an item from China for a pound, which includes the cost of the item, the cost of shipping, and the cost of transmitting the money. Transaction costs are now negligible.

  13. “We need to find another way to stop the whingeing.”

    You won’t stop them whingeing, but reducing the size of the State will certainly mean fewer of them whingeing.

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