How the government is using the “Public Sector Pay Differential” to divide, conquer, and rip-off both private and public sector workers.

It is a lesson handed down by a succession of marauders, from bloodstained raiders in longboats to their ink-stained heirs in the party political policy units, that a small focussed determined well incentivised force will always scatter a larger uncoordinated opposition. 


Make a well targeted attack, scatter the enemy, then pick them off.

The masters of using a small force to scatter numerically superior opposition - Hannibal, Caesar, Napoleon, "Fast Heinz" Guderian - are joined by a politician no less adept at this tactic: "Faster than I look" Eric Pickles, Secretary of State for Communities and Local Government.

The continuing government assault ostensibly on public sector pay uses the ‘confuse and conquer’ tactic to provide a downward ratchet on all pay, both private and public. As an example of confusion, these two graphs on "Average Weekly Pay, 2011" show the same Office of National Statistics data. Because of the different scales on the left hand side of the graphs one seems to show a big pay differential while the other seems to show a very small difference.

The ratchet being used here is a five-step rip-off.

• Step1 – Transfer low paid staff from public sector to private sector. (According to a report by Income Data Services, "20 to 25 per cent of public sector cleaning jobs have transferred to the private sector over the last 14 years")
• Step2 - include high paid staff from the rescued banks, RBS and LloydsTSB, who since 2009 have been counted as Public Servants by the Office of National Statistics.
• Step3 – Compare public sector and private sector wages. Private sector now looks lower, because of the swap of low paid permanently out and high paid temporarily into the public sector, as described above.
• Step4 – Cut public sector wages - using the differential as an excuse.
• Step5 – Cut private sector wages – which no longer have to compete with a public sector differential.

The inclusion of staff from RBS and LloydsTSB, the banks rescued by the British taxpayers, as ‘public servants’ naturally added some va-va-voom to public sector salaries. 

Fortunately the Office of National Statistics helpfully strips out the bankers from their statistics. This reveals that the actual wage differential is much lower than Whitehall would have you think - less than 2%. A difference significantly accounted for by the lack of minimum wage burger-flipping and casual/ temporary labouring jobs that pull down The private sector average.


And as we all know, there are some things done in private that are best not done in public. The IDS report shows the pay distribution in the Public Sector  does not show the same degree of male/female pay disparity.

To further accelerate this rip-off, the Department of Communities and Local Government has quietly removed the promise made by private sector employers who have taken over public sector staff to “ensure that new joiners to the transferred-out workforce are offered terms and conditions which are, overall, no less favourable than those of the transferred staff”.

This little noticed change removes the requirement that outsourcing companies must not slash the salaries, pensions, and other terms of employment of the roles - whether filled by existing staff or new recruits. Now, new recruits into these roles are no longer protected. With the staff turnover rates higher in low paid jobs, an outsourced former public sector department can be quickly ‘refreshed’ with new faces on lower pay. Thus further increasing the ‘public sector premium’, driving down public sector pay, thence driving down private sector pay. You get how it works?

Eric "faster than
 I look" Pickles

On this shameless backsliding, Pickles asserted:

Removing this guidance will help create a level playing field, ensure more opportunities for innovation, help ensure better value for taxpayers' money in the provision of public services, and remove red tape that hinders job creation.

This joins a continuing spew of ridiculous mullarkey from our politicians:

• MPs claiming controlling their allowances would discourage the poor from becoming MPs. 
• George Osborne claiming he is cutting pensioners allowances because they are too complicated for them. 
• Gordon Brown claiming that multi-year pay deals should be welcomed as they gave employees certainty on their income (forgetting the remaining uncertainty on their expenditure).

In a further whack with the "Divide and conquer" crowbar, the government plans to give each taxpayer an annual statement on how much of their taxes go in benefits. The purpose is to focus on the amount that goes on benefits, hoping to generate mass support for cutting benefits in order to cut taxes. Cuts in taxes that would provide a few extra pounds for the majority on the basic rate, but save thousands for those paying at higher and top rates.

Mock up of a 'tax receipt', produced by HM Treasury

In this rush for clarity and transparency, will the government also require pension providers to provide a statement of how much of your pension fund goes in charges?  Or will it force the Office of Fair Trading to change its decision that the banks don't have to tell you how much you lose when they quietly drop your interest rates.

Britain is already the most unequal of the large EU countries. 

Driving down pay doesn’t mean things get cheaper for us ripped-off Britons. Nor does it mean more decent jobs will be created.

What does not get into the salaries of the many goes into the bonuses and dividends of the few.