All entries for Wednesday 18 June 2008

The wage deal "everyone" is talking about

With today’s announcement that Shell have agreed a two year pay deal with their work force worth 14% overall there appears to be outrage in on the BBC’s “Have your say”. Mind you, Have Your Say has always been full of people moaning about everything left right and centre, with a slightly left lean because it is the BBC after all. The union can tell their members they got more than they asked for, the company can be thankful it will actually pay less than they were going to have to. The spin being of course two years worth of inflation at 3.3% (if you are dumb enough to believe the CPI), 4.3% (if you believe the RPI) and about 9% if unlike the people compiling the statistics you don’t buy a TV, VCR, Computer and iPod on a monthly basis. Realistically the deal isn’t actually for that much, and even worse for them, that increase will put them all in the 40% tax bracket (helpfully lowered by the 10p tax fiasco) and help Gordon that little bit more in taking money off us. So the drivers are better off in numbers terms and standing still in real terms.

The rest of us if you believe the comments are meanwhile falling behind dramatically, especially those poor public sector workers. Comments abound about nurses, teachers and police officers all being paid far less than the tanker drivers. I agree that people in these three professions (and lets include the fire service, armed forces and the highways agency in this too) all perform jobs that are essential for the function of society. These people do deserve to be rewarded appropriately for their work. They also need to be freed from filling in paperwork that adds no value. They are perhaps the only jobs I can think of though where the actual job is vital and does not involve the creation of intellectual property.

In order to actually MAKE money rather than create it, you have to have something tangible, something physical that you can pass on. That might be a product such as a car, it might be a piece of computer software or even a financial product from a bank. The crucial thing is that all of these things have a value to another person. You cannot establish an economy on selling things in shops (after all the internet allows companies to sell what they make directly far more effectively now) and pushing paper around. We need more engineers designing better, more effective and efficient products, more manually skilled people creating value in the economy and less creating money by guessing in hedge funds (though it is important) and public sector pen pushers. The trouble with a service economy is that while Accountancy and auditing is vital to a large company, the majority of the service economy consists of things people can do without quite effectively. Tangible products like food and fuel are far more vital and less likely to be cut back on.

So what on earth do we do about the situation? Undoubtedly this mood in the country is damaging and likely to lead to more requests in both the public and private sectors for a raise, not that that helps because in order to fund wages companies increase their prices and so the cycle goes on. Consolidation in the market will also happen to a greater extent under these wage demands leaving fewer larger players and smaller niche companies but less “middle ground”. Increasing wages is a last resort and an admission that inflation is truly out of control. What the government should do, could do but won’t do is this:

Education

• Change performance standards for schools from an absolute figure to relative. A 5% improvement on sweet fa is more of an achievement than taking 88.5% clear up rate to 88.7%. If performance standards are based on improvement rather than target of pass rates then perhaps we can get back to teaching properly
• Remove forward visibility of exam papers from teachers so pupils actually have to learn the curriculum rather than learn how to answer an exam question. It makes the jobs harder for teachers but we can offset this by reducing the amount of paperwork they are made to deal with
• Emphasis on Science, Maths, English and practical skills in our schools… making these subjects fun is the key to helping us develop more people who are interested in them. Of course not everyone is cut out to work in these areas and vocational skills are just as important and not emphasised enough right now other than in lip service. People also need a grasp of the basics (like… you have to pay your credit card off). I’m not saying that all other courses should be abandoned, but the basics must be there behind everything and at a suitable level
• Stop dumbing down A-Levels and get rid of the 50% to have a degree target unless you wish to destroy the value of a degree
• Fund universities the same for a home student as for a foreign student with the government paying the balance over a predefined threshold
• Encourage University<=>Business partnerships
• Student loans to be reduced to a flat 2.5% APR in perpetuity, directly paid off by the student, boundary for payment to rise with income tax boundaries annually

Police, Fire

• Decreased bureaucracy for front line to deal with, emphasis on catching criminals not on paperwork
• Salaries to be linked to performance improvements, overall service pay bill to rise by half the rate of inflation each year, up to the service how to distribute this
• Streamline structure

NHS

• Streamline, end of story
• Funding to be based on value and merit of projects
• Increases in salary for front line care, static for administration
• Reduced administration
• Waste as a defined performance metric

Public Sector Pay and Pensions

• Just like the private sector you have to pay for the pension
• Final salary terms to be comparable to remaining open private schemes
• No public sector worker to be taxed, jobs to be advertised at equivalent salary but no channelling of money from A to B
• Public sector pay to be reasonable compared to private sector but to lower end of range instead of median or upper

Tax

• Abandon NI and roll it all into Income Tax
• Increase personal allowance to £10k
• Simplify tax system, two bands, no tax credits, everybody pays, around 30% for a basic band earner (same as now) and around 45% for a higher earner
• Reduce corporation tax but remove all exemptions every company pays
• DVLA Tax disc fee to be dropped to £10 if bought online, £20 to accommodate administration if paying by post/post office
• 2p/litre on fuel duty as a base point
• Fuel duty to be coupled to price of raw fuel, an increase in the cost of oil should have a corresponding decrease in the level of tax, equivalent to 50% of the rise e.g. if fuel cost increases 2p/l then tax should decrease 1p/l
• Fuel duty to rise annually, but fuel price should never be further the 10% from mean European cost
• Stealth taxes – just no. Plain and simple, VAT at 17.5% on everything bar food and 5% on domestic fuel, rising by 0.5% per annum until 17.5% is reached

Public Transport

• Mass investment in rail transport
• Regulation of rail fares to ensure it remains the most cost effective transport method
• Appropriate bus and rail routes for working economy

Energy

• Nuclear power for base load
• Renewable peaking loads
• Domestic CHP endorsed
• Community CHP/District heating encouraged

By streamlining the public sector and the tax system we can get people out and working to generate money again. As the fuel cost rises the economies of sending things to the far east for manufacture become less viable, we may yet see Britain begin to manufacture more.

Lastly if you believe you aren’t paid enough you do have options:

• If you think you are worth it and back it up, ask for that raise
• Go for promotion or another job elsewhere

We’d all like more money to make life easier, but just because someone else is getting it doesn’t mean we automatically deserve it.

Christopher Hinds : 18 Jun 2008 17:59 |  Tags: Public Sector Shell Union Wages |  Comments (0) |  Close comments |  Report a problem