Sunday, July 05, 2009

Public Sector Pay Freeze? No Thanks!

It's never a shock if the Mail or the Express have a pop at public servants, but when the liberal papers launch a headline attack on our living standards that spells trouble.

Steve Bundred uses a column in the Observer to call for public sector pay restraint whilst lauding both his own record of hacking back service provision and the current experience of the "loony right" administration in Hammersmith and Fulham.

It simply isn't true that public sector workers have been having a ball for the past few years and can now therefore expect to accept pay restraint with equanimity. As I pointed out in the run up to last year's local government pay dispute, local government pay fell behind average earnings by 4.5% from 2002 to 2007.

It's not only the living standards of public servants which are at risk from reactionary nonsense masquerading as common sense however, Bundred's daft plan to hold down the pay of thousands of workers who earn far less than he does could also do real macroeconomic damage.

In a recession every capitalist employer wants to cut the pay of their own workers (to restore profitability) whilst hoping that other employers will increase the pay of other workers (to provide a market for their products). The market system cannot resolve this contradiction.

However, the state can boost spending directly by maintaining the living standards of that section of the workforce which it employees. As Will Hutton points out elsewhere in today's Observer, it is this sort of reflationary spending, rather than spending cuts, which we need from the Government right now.

We need a vigorous response to this attack from our trade unions, emphasising both the injustice and the economic illiteracy of attacking public sector pay in a recession.

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