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Academics call for end to national pay bargaining in the public sector

Senior economists from leading universities have urged the Government to scrap national pay bargaining in the public sector, which they say harms the quality of public services and makes it harder for private sector firms to recruit in some areas.

Any such plan to force public sector workers to negotiate salaries individually would meet stiff resistance from trade unions and both Labour and the Lib Dems.

But in their open letter to a national newspaper, the professors from LSE, Cambridge, York, Warwick and Birmingham say: “National pay rates in the public sector means that public sector wages are out of line with local conditions in many parts of the country. In some areas, the public sector struggles to recruit staff because wages are too low. This worsens public services such as education and health in those areas.

“In other areas, the private sector struggles to recruit, making it hard for private sector firms to survive and expand. Neither is good for Britain.”

The economists suggest that total public sector pay in each area should remain the same, but allowing individual negotiation of salaries would mean more public sector workers being recruited in some areas – suggesting pay cuts for others.

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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.

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