Tuesday 17 December 2002

The "Pensions Iniquity"

There was a very good article in yesterday's Glasgow Herald about the pension crisis. Alex Bell contrasts the pension rights of those in the state sector with people working for private companies:
While people in the private sector face fewer rest years and more working ones, the public sector still enjoy the old set-up. In return for as little as 30 years of labour, they can expect a guaranteed pension of as much as two-thirds of their final salary.
As Bell says:
It's a recipe for deep resentment and is likely to feature more and more as people realise the apparent iniquity of the situation.
But Bell goes on to write:
At the moment we accept this odd arrangement because it's a neat fix to a problem. By offering good pensions to public workers, the state can get away with low pay levels.
Many public sector wages are set nationally as we have seen in the firefighters' dispute, which is being negotiated at a UK level although the fire service is a devolved matter as far as Scotland is concerned. Private sector wages are largely set according to local conditions with much higher earnings in the Southeast than further north. This results in private sector jobs being more attractive than public ones in the London area but here in Scotland government jobs often outpay what private companies can afford. This can be seen in the job adverts in any Scottish paper. Consequently, many of the brightest people up here go into government jobs that give better pay and pensions than the private sector. This in turn contributes to lower economic growth in Scotland. We should end national (UK) pay negotiations in the state sector. In the longer term most of these jobs should be abolished or privatised.