Saturday, 26 November 2011

Why the pension strike is a mistake

At the risk of upsetting some of my friends and followers, I want to explain why I believe that the pension strike by thousands of public sector workers next week is wrong, will achieve nothing and will in fact set back what is an understandable wish on the part of the unions to defend the terms and conditions of their members. 

Whether or not you agree with this proposition, let's have a bit of context.

Since last year's general election - where there was a 65.1% turnout, of which more later - the coalition has launched a sustained attack on the public sector. Widely condemned NHS reforms, constant belittling of the value of the public sector (Louise Mensch recently referred to the private sector as 'real jobs'), criticism of pay levels and a pay freeze, privatisation at every opportunity and of course massive cuts which seem to be biased against on northern local authorities serving deprived communities: cuts resulting in fewer police officers, nurses, carers and other key front line staff. And against this background, of course, comes the spectacle of nothing whatsoever being done about obscene bankers' bonuses (the first commitment in the coalition agreement) and senior executive pay spinning out of control.

It should come as no surprise then that when the Government tells public sector workers that they must  work longer, pay more for their penisons and get less pension when they do retire, they are hurt and angry. It is not possible to see the pensions issue in isolation from the other attacks on public sector pay and services I've described. Whilst some of the arguments behind these changes are incontrovertible - people are living longer, and final salary schemes are expensive and generally not available to workers in the private sector - it is a cruel distortion to describe public sector pensions - an average of around £4000 a year in local government, falling to £2800 for female employees - as gold plated. Also, public sector pension schemes are talked about as though they are all the same, but the truth is that they differ considerably in respect of employees' and employers' contributions. Some are funded, meaning that they have enough money to cover their future liabilities, and some are not.

So having said all of that, why do I think the strike planned for next Wednesday is a big mistake? There are a number of reasons:

It won't work. There is not a cat in hell's chance that this strike will change the Government's mind. In fact the opposite is true. The unions started out in this conflict with a significant degree of public support. That will evaporate as quickly as a Lib Dem manifesto commitment when bins aren't emptied, children can't go to school or Granny's hip operation gets delayed. The unions have walked into the trap, losing public sympathy and strengthening the Government's negotiating position. Making significant concessions when it was too late to affect the strike ballot was a tactical masterstroke, enabling the Government to portray itself as super-reasonable and the unions as intransigent. The threat to remove those concessions from the table is not rhetoric, but a real possibility.

There is no mandate. The truth is union members did not vote for this strike. To take Unison as an example, only 29% of their members voted. Taking into account the votes against strike action, that means that 77% of their members didn't vote in favour. It is ridiculous, as some have,  to compare this with the general election election result where two thirds of voters voted. I actually believe that union leaders would prefer not to go ahead with the strike, but don't feel they can stop it without significant loss of face. Legally, they would also have to re-ballot if they decided to strike at a later date and it seems highly unlikely that they would get a yes vote in those circumstances.

It's still a good deal. What is on the table, taken with recent Government concessions, is still a good quality pension scheme. Index linked final salary pension schemes are becoming as rare as a week without a Vince Cable gaffe. Tax free contributions currently averaging 6.4% supplemented by employer contributions averaging around 13-14% produce a pension that is hardly available in the private sector. It is ridiculous for Ken Livingstone to compare a 'Dinner Lady's' pension with that of a cabinet minister. Comparison with a supermarket checkout worker would be more appropriate. This is the main problem the unions face in trying to retain the support of the public. It used to be argued that a top class pension scheme was the trade off for uncompetitive pay, but that is no longer the case. Comparison of median salaries show the public sector to be lower paid, but if job-for-job comparisons are made I believe it's a different story.

This is the nuclear option. Once there has been a national strike on this scale, already being described as the biggest in a generation, there can't be another anytime soon. And there may well be causes that better justify co-ordinated strike action: safeguarding the services we all value and need, for example.

So what should the unions be doing? Firstly they should call off the strike now. The Government would hate this and judging by the voting figures their members wouldn't be too upset. They may even recover some of their lost public support: at least they wouldn't lose even more. Instead, if they can get a real mandate from their members, they should target industrial action, whether strike, work-to-rule or whatever it may be, on areas that will disrupt government, such as national and local tax collection, without causing major inconvenience to the public.

The whole point of industrial action is to show Government how angry union members are - hardly supported by the ballot turnout - and to put irresistible pressure on the Government to change course which, as I've already argued, this strike will massively fail to do

Full disclosure: I receive an index-linked local government pension


  1. I get your drift but it seems to me that this Government is riding roughshod over us all. If we don't stand up and shout then they'll just find more ways to shaft us. The bottom line is they are bullies. It's not popular but I think if your in a union it should be complusory to cast a vote. I am not an ex civil servant nor do I have a huge public sector pension but I support Wednesday's strike