Public and Private Sector Pay and Pensions: Debunking the myths
Let us begin with recent statements by certain Government Secretaries of State. In their wilfully deceptive statements they say that, while inflation increases have been limited to 1% (well below the rate of inflation), they have, nevertheless been given pay increases averaging 3.8% because of increments.
The way public sector pay operates is like this. A range of incremental points, for each branch of the service, is agreed at national level. Salaries are set at points on the incremental table. When people are new to a post they are paid at a level well below the level set for that position.
Over several years they are gradually brought up to the rate for the job by mean of increments. Each year they advance by one incremental point. In London an addition for the increased cost of living there is paid at a flat rate (London Weighting)
How Salaries are Costed
For the purpose of costing a position is treated as being paid at the actual salary dictated by what is generally known as the “top of the incremental scale”. The savings made by employing people well below their correct salary is hidden and generally used to subsidise other areas of activity. How and where is a mystery!
The Chaos to Come
This is why the nurse I live with has seen a real terms decrease in the spending power of net pay of around 15% despite years of additional experience. Being on an incremental pay scheme he does not receive the inflation correction.
How this mess, on salaries, will be sorted out later is beyond me. It is going to be a nightmare.
All manner of people doing the same job and with similar experience will each be on different rates!
This morning Philip Hammond was on the Andrew Marr show declaring that public sector workers are paid 10% more than private sector workers because of the additional amounts paid by the employer towards their pension schemes. He is wrong again.
Private sector employers pay exactly the same amount into their pension schemes.
Grand Larceny in the Private Sector
Perhaps he is thinking of the periodic raids those employers make on the pension funds they are entrusted to safeguard. Here again, Local Authorities frequently raid their pension schemes to subsidise Council Tax. Very occasionally it works the other way around.
The way Private Pension schemes operate is a scandal which Government should have addressed decades ago. Those Companies that raid their pension schemes are guilty of nothing less than grand larceny from their employees. It is not their money and they have no right to touch it. The answer is not to penalise Public Sector workers but to legislate to stop this theft.
Blind or Dumb?
If politicians are so ignorant of the basics or are so prepared to lie, deliberately on such bread and butter matters, it is small wonder our essential services are in such a state. We are losing nurses, doctors, firemen, policemen, soldiers, sailors, airmen, marines at a rate of knots.
Some nurses, for example, are replaced but by people who lack the most basic linguistic skills necessary and whose qualifications deserve far greater scrutiny. When my partner moved to the UK he had to spend many months on student nurse pay proving his capabilities despite being a highly qualified nurse from one of the countries most advanced in healthcare. An adaptation course of six months was compulsory.
Should Hammond Resign?
Economies are about balance. Where a component of the economy is under State control it is essential Government ensures its relationship with the Law of Supply and Demand is not jeopardised by unrealistic and impractical constraints. It is quite clear the market in health care staffing and other essential professionals has been severely distorted by artificial controls on the rates for which it is paid. If Hammond cannot find a way to correct this then he should resign.
© PJW Holland MMXVII
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