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A strike against children

June 30th, 2011 Posted in Pensions, Public Sector Reform by

Today’s strike action, principally by members of the NUT (teachers) and PCS (public sector workers) unions, is a strike against children in defence of privilege.

It is strike against children in the small sense of depriving many of a day of the education their parent’s taxes have paid for.

It is strike against children in the deeper sense that what the Unions demand is for future generations to carry the burden of their  privileged pension commitments today.

There are many detailed points of due process and politics that contribute to this dispute. Underlying it is a battle over two very simple point of principles.

Whether or not those of us who can afford to fund our retirement should do so.

Whether or not there should be equivalence between public and private sector provision.

In the private sector principle one is settled. Final salary schemes are being replaced by defined contribution schemes.

In the public sector there is still a pervading sense of unreality that the trillion pound gap between promises and payments can be bridged without reform.

On question two old arguments dishonestly claiming public sector are particularly poorly paid or that the work is radically different to the private sector are deployed by the same people who argue for fairness and equity in many other areas of public life.  

What reform is proposed is not even equivalence with the private sector (bar retirement ages), just a less generous form of defined benefit based on career average earnings. It is a modest, generous, and reasonable reform, around which discussions are still in process.

Public sympathy in that regard, which is currently fairly balanced, is unlikely to warm to the Union cause.

They deserve to lose. They will lose.

If they don’t our children, and theirs, will pay the price. 

The government should hold their nerve.

8 Responses to “A strike against children”

  1. Neil Says:

    It’s a strike against privilege in defence of the children.
    The privileged created many of the Country’s problems.
    Where are the privileged making their sacrifices?
    Are they reducing their pension benefits?

  2. Andy Mayer Says:

    Neil, while I empathise with the frustration of staff who have been misled by the assumptions these gold-plated pensions could be paid, it is entirely clear that they are greatly under funded, particularly at the top end of the civil service hierarchy. Staff contributions are not keeping up with payouts and future taxpayers, i.e. our children, should not be expected to reduce their own standard of living and pensions to bail out these schemes. Nor should the public sector expect substantially better pensions and earlier retirement than that commonly available to the people paying their wages.

    I hope you agree.

    The answer to your last question is yes. There have been substantial reductions in pension benefits across the private sector through the end of final salary schemes that were not sustainable, lower annuity rates, Gordon Brown’s pension taxes, and weaker returns from investments.

    The answer to your third question is also yes, in recessions, including the most recent one, inequality tends to decrease. The very well off lose substantially from stock market crashes and falling interest rates. Wages & benefits at the bottom tend to fall more slowly.

    I would also suggest hoping that there is some mythical group of ‘guilty men’ or bankers responsible for everything and with the resources to make the nasty debt go away painlessly is wishful thinking. Blaming the banks for government spending decisions is like blaming your credit card for your shopping habits.

    Blaming politicians has more merit, but they respond to public opinion. Visceral opposition to deficit reduction and cuts is hardly going to give us politicians that feel motivated to promote living within our means. If you want to avoid this pain in future vote for parties and individuals who are fiscally responsible.

  3. Neil Says:

    Maybe the privileged I refer to are the politicians who are making these demands. I read elsewhere that the average MP’s pension is around £21,000 and any that become Ministers really reach the big time.

    With regard to some public workers their contract of employment includes a year’s salary going into the pension pot every 5 years and it is not all paid by the taxpayer. In the case of teachers and I’m sure many other groups, the pension funds were ‘raided’ by employers to encourage early retirements so they could cut their wages bill by employing younger/cheaper staff. Just as in the private sector a saving in the wages bill was made and future implications ignored.
    It suited the politicians and the Nation’s wage bill but where are their acts of contrition?

  4. Andy Mayer Says:

    I agree that politician pensions should be subject to the same rules as other public sector workers. I believe that is the proposal. If it doesn’t turn out that way in the voting I’d imagine for some it will be the expenses scandal all over again.

  5. david clayton Says:

    Ok you argue that nonsense if you want. How many teachers voting Lib Dem in future? Not the brightest bunch of politicians are you.

  6. Mark Littlewood Says:

    @david. Obviously, the sensible, moral thing to do would be for the Liberal Democrats to unbendingly represent the narrow self interests of a producer class…

  7. Psi Says:

    @ david

    Is andy a politician? You may want to check that rather than throw it around like an insult.

  8. Ian R Thorpe Says:

    Teachers are the new miners?

    On retirement age, pensions etc. we all have to be realistic. We either work longer, cut back our expectations to fund twenty to thirty years retitrement or sign a contract committing us to die at 70.

    For me it’s a no brainer. At 62 I have only needed to work part time for over ten years but I will work as long as I can because I enjoy what I do and it gives me a sense of purpose.