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Adrian R   21/09/2012 at 07:59

I don't doubt these Professors can support their proposal with lots of theory - economists always can, and usually find at least two completely contradictory theories to tell us what we should do at any time. That's half the fun of being an economist. But their theory seems to leave out three things. One, that public-sector pay doesn't leak out of the economy, it provides customers for the private sector who then pay taxes to fund the public sector. Cut pay and you cut demand. So the second people to suffer if this is put into practice will be the shops and businesses in areas where demand is already so low they can only afford to pay themselves less than more prosperous parts of the UK. And, two, businesses large and small report that the single biggest block to a full-scale recovery is a lack of confidence in the market. Further demoralising a large group of consumers already suffering from widespread institutional PTSD after constant reorganisation and widespread job-losses is really going to help that, isn't it? Finally, "public-sector" pay isn't homogeneous but ranges from council receptionists and benefits administrators to hospital consultants and head teachers; the cost in time, money and energy to individually negotiate salaries across that mix would be enormous, and in my experience of analysing local authorities the majority of people are already earning well below national average salaries. Back to school, please, professors, and think again.