Why I support today’s strike action
Today’s strike is likely to be the biggest co-ordinated day of action for a generation. While the strike is headlined as one about pensions, there are – of course – a lot of other concerns motivating public service workers: service cuts, staff reductions, pay freezes, reform of the NHS and a general feeling of the squeeze. But the draconian laws governing trade union action which we receive as a lasting legacy of the Thatcher era constrain the ability of trade unions to take co-ordinated action on these points. The public service pensions issue is able to cohere all our public service workers behind a single banner of defending pension provision. A banner beneath which unions can legally organise action across all our services.
So are teachers, nurses, VAT inspectors, care workers and Court staff right to be coming out on strike? At its most basic level, I would defend the right to withhold labour in protest whether or not I agreed with the dispute – whether that be a trade dispute or a wider political dispute with Government. But, setting that principle aside, what are the real issues here?
As has been covered extensively in the wider press, the Coalition government is intending to reform all the public service schemes. The most immediate effect is a significant rise in member contributions – the intention is that a full increase of a little over three per cent will be introduced in a staged way with the first increase applying from April 2012. While no increases will be paid by the lowest paid, this will have a significant effect on some members particularly in the context of what for some will be a lengthy wage freeze. Schemes will also change from being based on final salary at retirement to being based on average salary over a career. This will have the biggest impact on those who experience significant pay growth over their careers – those with flat careers will be less affected. Finally the age at which pensions can be drawn without being reduced will be increased up to State Pension Age. This means that for some members, the age at which they can draw their pension unreduced will increase from 60 to 68 – a significant change. These changes come on top of the switch of indexation of benefits from a link with rpi to a link with cpi – a change which some have estimated as a cut in value of 15 per cent.
Some will argue that these changes are actually far less significant than those which have happened in the private sector. Shouldn’t the feather-bedded public service employees wake up and smell the coffee and take their share of the pain of the economic crisis? Doesn’t their going on strike just show how out of touch and greedy they are?
I would argue that public service pension schemes are worth defending – although not for the reasons most people put forward. I think many people do feel unconvinced by many of the arguments put forward in defence of public service pensions. So let’s just take a few minutes to rule out the normal arguments:
1. Public servants are selfless individuals focussed only on providing care for the sick/elderly/vulnerable so they deserve special treatment
But many people in the private sector do much the same job (often the work has been contracted out of public service). The greying of the line between public and private sectors makes this argument more untenable. And the public service includes its fair share of pen pushers, bean counters (noble occupations both) and 9-to-5-ers
2. Public sector workers don’t get bonuses or perks like private sector workers so they deserve the pension scheme
But I can point to a lot of private sector workers who have never received a bonus or a perk. And in any case, the odd free keyring or trip abroad really doesn’t compare with a guaranteed index-linked pension for life
3. Public sector workers get a lower salary to reflect the value of their pension
But the evidence on this is equivocal. And if it is true, then would public servants be willing to give up their pension for a pay rise?
4. Public servants decided on their profession because they realised the value of the pension. It is unfair of Government to back out of the deal now.
I’ve yet to hear a teenager or a graduate say, ‘I want to be a teacher because of the fabulous accrual rate in the Teachers’ Pension Scheme’. So this always sounds to me like an ex post facto justification. In any case, the current deal protects everyone over aged 50 and all the benefits people have built up are protected. Employees don’t generally take a job only on the proviso that none of their terms and conditions are ever changed. In fact many people are used to constant tinkering with allowances, holidays, hours and duties.
So if these justifications don’t stand up, why should we be supporting our public service workers? I’d mount the following defences:
1. The Public/Private distinction is wrong
First, as a society we can afford to support people in old age. We should do it in the most cost effective and efficient way we can. Individual private sector schemes are inefficient. Money is creamed off by financial advisers, consultants, fund managers and annuity providers. The state can provide pensions cost effectively and does so to its public servants – and it should continue to do so. In fact, I’d be even happier to support our public servants if their banners demanded that we let anyone who is working join a public service scheme – and we can then rename it the Basic State Pension.
Second, worsening public service schemes does nothing to improve private sector pension provision. Indeed as the public service set the standard, the effect would be the opposite. The idea that worsening public service schemes will make things fairer is particularly wrong-headed. If we had a failing school and a good school, no-one would argue that the good school should be made to fail to make things fairer – so why is this argument made on planet pensions?
2. Everyone is entitled to a decent pension
When I use the word ‘entitled’, many people I class as fellow travellers shudder. The word conjures up an image of the person who knows what they are due from the state and who won’t lift a finger more than they have to in order to get it. But I would base entitlement on the fact that if we don’t have to worry about pension provision, we can get on with the real job of making things that help society move forward. This effect is at both the individual level and at the level of society – so much of our best young talent is creamed off by fund managers and management consultants. If this didn’t happen, we would be in a much better position to deal with carbon capture and biological engineering.
3. Pensioners are not a burden
There is a widespread idea that pensioners (and public service pensioners in particular) are feckless lazy people who bank their handouts and spend them on cruises and sit watching daytime TV. If they think this through, most people know it’s wrong. My office experience is that all workers with children rely on the reserve army of pensioners for child care. The ‘retired’ are also active neighbours (keeping others out of hospital or social care), charity workers, WRVS volunteers and provide the general busy bodying that society actually relies on. Of course we could choose to professionalise all these roles and pay some-one to do them (we’d need to find the money obviously) but I think our pensioners are doing a pretty good job. The fact that we gladly make the wealth transfer that makes all this work possible makes us a better society.
4. Collective solutions work
This is a hard sell in our individualistic society, but having a collective approach to pension provision is not just more efficient but it provides a cohering element to the public service. The old democratic idea that the Welfare State provided for all – ‘from Dukes to dustmen’ has a mirror in the NHS Pension scheme applying from car park attendants to consultants.
It is for these reasons, I will be supporting our public servants in their strike action.
Throughout October and November, The Independent Online is partnering with the Institute of Ideas’ Battle of Ideas festival to present a series of guest blogs from festival speakers on the key questions of our time.
Hilary Salt is the founder of First Actuarial plc and the chair of the Manchester Salon. She is writing in a personal capacity.Tagged in: cuts, government, pay freeze, pensions, private sector, protest, public sector, strike
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