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| Saturday 30th August 2024
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| Hi Friend, Public Sector Pay Awards ... "Stuffing Their Mouths With Gold" ...
Junior doctors had been offered a 22.3%
pay rise to end strike action. Train drivers have been offered a 15%
settlement, teachers and nurses have been offered a 5.5% settlement. Such spending
on public sector pay will not easily be absorbed into more restrictive
fiscal targets from The Chancellor..
In 1948, Aneurin Bevin was
asked how he had achieved an accommodation with doctors in the creation
of the National Health Service. He explained he did it by “stuffing
their mouths with gold”. A generous pay award and the right to treat
private patients as a sideline helped.
Starmer and Reeves appear to be using
the same technique to resolve conflict in the public sector. “Stuffing
Their Mouths With Gold’ with generous pay awards.
More savings on spending, or higher taxes
will have to be found to pay for the awards. Even the triple alliance
of the big three taxes may be at risk, at the onset of the new Labour
Five year term.
Only a quarter of voters believe that Labour’s
public sector pay deals are affordable, according to recent polling for
The Times.
YouGov polling suggests only a third of voters think the party has handled the problem well.
Almost
40 per cent of those questioned said the government had handled the
issue badly, including 15 per cent of those who supported the party at
last month’s election.
A quarter of voters said they thought the
deals would make future strikes more likely, while a third said Labour
was too close to the trade union movement. Only 22 per cent said that
the party had got the balance right.
The government is preparing
to publish its long-awaited workers’ rights package when parliament
returns next month amid concerns from business leaders that it will
strengthen the hand of the unions and raise costs for companies.
The
Federation of Small Businesses has warned confidence among small
business owners fell back into negative territory in the second quarter
of the year, largely due to higher private sector wages.
The
Trades Union Congress (TUC) is expected to press Labour for “pay
restoration”, to make up for a decade of public sector real-terms salary
cuts, when it holds its annual conference next month.
Economists
estimate that each one percentage point rise in the public sector pay
bill would cost taxpayers about £2.5 billion. To restore public sector
pay to the 2011 level in real terms would theoretically require a 21 per
cent increase, of more than £50 billion.
The survey found that
despite worries about the cost, a majority of people were in favour of
ministers agreeing pay deals to end the strikes.
Just over 40 per
cent said the 14 per cent three-year pay deal for train drivers was
the right thing to do, while 38 per cent insisted it was wrong. The 22
per cent deal offered to junior doctors was backed by 57 per cent of
voters but opposed by 27 per cent.
The Tories had budgeted for an
increase of just 2% in public sector pay deals. The imposition of a pay
cut in real terms was never really realistic. The hidden costs of low
pay deals are huge. They include, strike action and disruption.
Increased waiting lists in the NHS, low grades in schools and increased
waiting times on platforms.
Low pay results in low morale, high
staff turnover, increased recruitment difficulties, high training costs
and huge on boarding challenges.
Stuffing their mouths with gold
may appear to be an expensive solution. Stuffing their mouths with
“suckanhock and wampum”, makes low pay deals too difficult to swallow,
leading to a greater increase in hidden cost.
Suckanhock a dark-coloured kind of shell -money, Wampum a traditional shell bead.
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| That's all for now. Have A Great Weekend Break ... John
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| To understand the markets, you have to understand the economics ...
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References This week's posts relies on extracts from our daily "What the Papers Say Review." Certain research content has also been generated using Perplexity AI. This is our favorite AI research tool. Photos are from The Adobe Stock and The Saturday Economist Slide Deck.
Only a quarter of voters believe Labour pay deals are affordable … The Times
Rising Costs Sap Confidence of Small Business ... The Times |
| © 2024 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
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