Brown to hit public sector pay
Jan 6 2008 23:05
what do people think about Brown's announcement today that he's going to try and be tougher on public sector pay?
http://news.bbc.co.uk/1/hi/uk_politics/7173656.stm
will libcom be keeping the dispatch thing going? it certainly looks like there's a lot of room for keeping that up, and also something on which the government can be hit on.
Jan 6 2008 23:39
#2
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what do people think about Brown's announcement today that he's going to try and be tougher on public sector pay?
Sterling has to be kept scarce in order for it to be worth the gas, oil and food we import. The question of incomes versus prices is really one of territorial self-sufficiency in energy and agriculture.
Jan 7 2008 09:53
#3
There is a thread in Organise already about building a pay claim for 2008, please post there:
http://libcom.org/forums/organise/making-pay-claim-2008-14122007
Jan 7 2008 10:03
#4
MPs have been asked by Brown to only vote themselves a 1.9% increase to be in line with the public sector.
Jan 9 2008 14:05
#5
has there ever been any studies as to what element, if any, of inflation can be attributed to public sector pay awards, even if those awards are at or above the current level of inflation, and in any case isn't it the bank of england's job these days to control inflation through monetary policy and not the govts
this whole hiding behind the inflation argument is a complete red herring
even if MP's vote themselves a 1.9% rise it means fuck all in practice, it's not like there's any kind of equivalance between the overall compensation package of MP's and public sector workers
Jan 9 2008 14:09
#6
oisleep wrote:
has there ever been any studies as to what element, if any, of inflation can be attributed to public sector pay awards, even if those awards are at or above the current level of inflation, and in any case isn't it the bank of england's job these days to control inflation through monetary policy and not the govtsthis whole hiding behind the inflation argument is a complete red herring
It is. Inflation itself is just a red herring. Inflation is companies putting up the prices of goods they sell. Most of these things get easier and cheaper to make each year because of new technology. They just want to cut wages. If workers win pay demands, then they can put up prices (inflation) to cut them in a different way, but then workers can make bigger pay demands.
Jan 9 2008 16:10
#7
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isn't it the bank of england's job these days to control inflation through monetary policy and not the govts
The Government sets the inflation target (2%?), the BoE sets the interest rate to deliver it based on their models of economic performance.
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this whole hiding behind the inflation argument is a complete red herring
Not really. Suppliers hike prices in order to take advantage of any increase in the amount of money in circulation. Unless they’re going to raise tax to finance public sector pay rises, the Government will have to borrow from the BoE. If that’s not paid back with interest then the amount of oil you can buy with a pound will decrease because there’ll the be fewer assets to back the currency. It’s a Forex thing really, our own devaluation in ’67 is a good a case study as any.
Jan 9 2008 16:58
#8
Carousel wrote:
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this whole hiding behind the inflation argument is a complete red herringNot really. Suppliers hike prices in order to take advantage of any increase in the amount of money in circulation. Unless they’re going to raise tax to finance public sector pay rises, the Government will have to borrow from the BoE.
Not that I think it matters anyway... but that's incorrect. Inflation also means the government getting more money in income tax, corporate tax, VAT etc. For example last year private sector pay went "up" about 3.7% on average. Sub-inflation rises are of course real pay cuts.
Jan 9 2008 17:20
#9
John., it's not "incorrect". And as for this "real pay cut" stuff, it sounds like you're searching for a moral justification like the unions. As if one is required. If you want to have a debating society style discussion about it, you could as easily argue that public sector workers deserve a pay cut because they’ve delivered fuck all.
Jan 10 2008 07:02
#10
looking at the consumer confidence & spending levels at the moment carousel (did you you used to be lazy riser?) there's no way suppliers would have a hope in hell of raising prices on the back of an increase in money suppply, so while that argument may be theoterically correct i don't think it has much relevance to the practacalities of the current situation
article in the FT today on this topic, a bit simplistic argument on it but it backs up the red herring point
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If the government’s object in limiting public sector pay rises is to put a brake on inflation, it is unlikely to have the desired effect, according to economists and remuneration experts.“They [public sector pay rises] have nothing to do with inflation,” says Stephen Nickell, head of Nuffield College, Oxford and a specialist in labour economics.
The evidence suggests that inflation is driven by private sector pay, he says: “It is the things that are produced by the private sector that go into the calculation of inflation – hair cuts, potatoes.”
Martin Weale, director of the National Institute of Economic and Social Research, echoes that view, noting that private sector employment dwarfs that of the public sector. Because nurses and teachers do not sell their services in the high street, a rise in wages does not lead to higher unit prices, he says.
If, for example, car manufacturers were to raise wages significantly above the rate of inflation, this would eventually creep into car prices. But that is not true of services provided by police or civil servants. Only if public pay rises were sufficient to spill over into the private sector – and there is no evidence that they do – would the civil servants’ wages be inflationary.
“Inflation comes from letting demand rise too rapidly before production,” Mr Weale notes. “What I really can’t believe is that, when private sector pay rises are 4 per cent, a rise of 2.5 per cent for the public sector is inflationary.”
City economists share this view. George Buckley, UK economist at Deutsche Bank, notes that private sector employment dwarfs that of the public sector, so it is difficult to make the case for a spillover effect. In recent years, he says, public and private pay have been moving in opposite directions, with civil servants losing out.
http://www.ft.com/cms/s/0/bbc6639c-bf08-11dc-8c61-0000779fd2ac.html
Jan 10 2008 08:36
#11
Carousel wrote:
Suppliers hike prices in order to take advantage of any increase in the amount of money in circulation. Unless they’re going to raise tax to finance public sector pay rises, the Government will have to borrow from the BoE. If that’s not paid back with interest then the amount of oil you can buy with a pound will decrease because there’ll the be fewer assets to back the currency. It’s a Forex thing really, our own devaluation in ’67 is a good a case study as any.
ok, so raise taxes - just don't levy them on those at the bottom end of the income scale
Jan 10 2008 09:26
#12
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there's no way suppliers would have a hope in hell of raising prices on the back of an increase in money suppply
Ha ha. No, I mean it’s not as if OPEC or anybody ever do anything like that. Pay rises increase demand, how do you think it’ll effect the going rate for a Wii? Whilst we’re at it, increasing the amount of Sterling in circulation is bound to make it worth less, did anyone bother checking the circumstances of our devaluation in 1967? You all sound like Callaghan, “It’ll not effect the pound in your pocket comrades!”.
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ok, so raise taxes - just don't levy them on those at the bottom end of the income scale
Ho ho. Ho ho ho ho. What? Out of a sense of moral justice? I tell you what, why not start a telephone campaign to lobby your MP. Perhaps they could reintroduce a 70's style price-and-incomes policy. That worked great.
Jan 10 2008 10:10
#13
oisleep wrote:
article in the FT today on this topic, a bit simplistic argument on it but it backs up the red herring point
Good article find oisleep. Still, I think from "our" POV we should be careful with those sorts of arguments because that could be used against private sector pay claims, which of course I'd also support.
Jan 10 2008 11:59
#14
Carousel wrote:
Ho ho. Ho ho ho ho. What? Out of a sense of moral justice? I tell you what, why not start a telephone campaign to lobby your MP. Perhaps they could reintroduce a 70's style price-and-incomes policy. That worked great.
why don't you make a positive assertion?
Jan 10 2008 12:51
#15
Well yeah this ends up with the old thing that basically, the only way to stop inflation without cutting workers’ wages is to cut bosses’ wages instead.
Jan 10 2008 13:13
#16
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why don't you make a positive assertion?
Gosh, I dunno. Maybe it’s because the prices of food, housing and energy are a function of international confidence in Sterling rather than a preponderance of vacuous leftist clichés. Besides, I’d have thought “anarchists” would want to destroy the economy, not fix it. So, the inflationary pressure incurred by public sector pay demands is a positive thing in itself.
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Good article find oisleep. Still, I think from "our" POV we should be careful with those sorts of arguments.
I should coco. Weale is attacking a straw man, the government's position is, in fact, his own point about final salary pensions and so on. Public spending is inflationary, whether it goes on wages or not.
Just to note that dispatch isn't 'libcom' - one of the people involved with dispatch doesn't even post on here, but yeah I think there'll be a new issue when things get going again (and hopefully a post-mortem of the summer/autumn as well at some point).