A SOBERING ARTICLE ON THE PUBLIC SECTOR

Various articles today have carried reports on the growing gap in pay and conditions between the public sector and the private sector in the UK. In the Sunday Times, the front page story shows that public sector workers earn 7 per cent more on average than their peers in the private sector. This is a pay gulf that has more than doubled since the recession began.

The report also showed that:

• Since Labour came to power in 1997, the number of public sector workers has increased by 914,000 to more than 6 million

• The average annual earnings of public sector workers rose to £22,405 last year — compared with £20,988 paid to the average private sector worker

• Public sector wages are rising at 2.8 per cent, compared with 1.1 per cent in the private sector

• Public sector employees are also enjoying better working conditions – the average public sector employee worked for 35 hours a week – lower than the typical private sector worker.

• The average state employee enjoys three or four more days of holiday a year than the average private sector worker.

• Public sector productivity fell by 3.4 per cent in the decade from 1997 — compared with a rise of 28 per cent in the private sector over the same period.

• Most civil servants receive employer pension contributions worth 19.4 per cent of their salary paid into their final salary pension scheme each year. This is more than three times the average of 6 per cent paid by private sector firms into their employees’ less generous defined-contribution schemes last year.

• Most private sector workers have to work until they are 65 to claim their company pensions whereas the average public sector retirement age is 58.

• Public sector workers take an average 9.7 days of sick leave per annum as compared with 6.4 days in the private sector.

• The generous pay and perks offered by state employers is encouraging more graduates to favour working in the public sector – nearly 39 per cent of public sector workers are now graduates, up from 25 per cent in 1998. Only 20 per cent of private sector workers have a degree, a rise of 5 per cent since 1998.

• Despite the sharpest downturn in living memory, the British state’s recruitment drive has continued with 300,000 civil servants, administrators, social workers and other officials hired since the collapse of the Northern Rock bank in September 2007. In the past two years alone, the NHS headcount has risen by 107,000.

• More than 700,000 people lost their jobs in the private sector during the first three quarters of last year. In comparison, about 44,000 state workers were made redundant during the same period — but despite these losses, the public sector’s total job count still increased by another 47,000.

Given this, it doesn't take a genius to work out that any government that is serious about reducing public expenditure will have to start with the behemoth that the public sector has grown into during the last decade.

However, public sector expenditure alone just isn't good enough and what is more critical for recovery is the growth of the private sector in the UK once more, something which the current Government has singularly failed to focus on during the last eighteen months of the worst recession since the 1920s.

There is now much talk in both Cardiff Bay and Westminster about strategies for economic renewal but if these do not concentrate primarily on stimulating the expansion of the private sector, then the economy will be slow in recovering over the next few months and may even be in serious danger of plunging into another recession by the end of 2010.