Time to smell the coffee about pay

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This letter in the Guardian needs reproducing in full:

There is an urban myth that all pay in the private sector is frozen, and so public-sector pay should be frozen too. In fact, pay awards have continued in the private sector this year - about two-thirds have awarded increases, from 1% to 4% or more. Your article (Chancellor signals pay squeeze for public sector, 6 July) uses misleading earnings figures which seemingly give credence to the urban myth. You write: "Average earnings in the public sector for the three months to March 2009 (including bonuses) stood at +3.6% in the public sector, compared to -1.2% in the private sector." This private sector figure is dramatically negative almost entirely because of a large drop in bonus earnings in the financial sector in February and March. (Earnings growth in finance in February was -28.4% because of the drop in bonuses for high flyers.)

The data for April 2009, using figures not seasonally adjusted and excluding bonuses, shows earnings growth of 2.5% in the private sector and 3.3% in the public sector, consistent with IDS research on pay settlements. In the private sector, the official figures show manufacturing (where most freezes are) at 1% and private services at 2.9%.

The recession has hit some companies extremely hard and others much less. There is a spectrum, within which we have found pay freezes at one end and increases up to 4% at the other. It would be quite ridiculous for an urban myth about the private sector to become the basis of policy for the public sector.
Alastair Hatchett Head of pay services
Ken Mulkearn Editor, IDS pay report, Incomes Data Services

Quite so.

And this one too:

When will we get a government that recognises the value of the public sector? We reward those who make money with status and high pay while the people who clean our streets, deal with our rubbish and care for our vulnerable people seem to be thought barely worthy of respect, let alone a decent income. If all those earning over £100k swapped jobs with bin men, social workers, police officers, etc, we might see a change in attitude.
Mick Belford

Again, spot on. Most of those doing these jobs add more value to the world than any number of private sector advertising agency staff charging a fortune to work out how to deplete the planet of resources at an ever faster rate and increase our sense of unhappiness at the same time.

So Polly Toynbee is right when she says today:

Public pay mirrors the private world, and it is not some world apart. Although a step or two behind, the same patterns take hold, including some of the worst aspects. Since 1997, national health service chief executives have had double the increase of average NHS pay, copying private sector managers soaring away from their staff. As there seems to be no way of insulating one sector from the other, a government should have a view on what happens to private pay. Very tentatively, Darling expressed mild concern about BAB — Bonuses are Back — in the City. A white paper this week will modestly attempt to rein them in by obliging banks with risky bonuses to hold extra capital as security.

It is in the private sector that we need cuts — or more tax if they refuse to do it. The reason is straightforward: much (and I know, not all) of what the the private sector does is froth on the top of the cappuccino, nice but wholly unnecessary. It’s the state sector that provides what we need most: health, education, housing (oh yes — all of it is regulated), safe food (oh yes — again, we only have that because it is regulated), transport infrastructure, safety, protection and so much more. They are, if you like the coffee in life. The froth is the extra. And we can do without some froth — we can’t do without the coffee.