I know, I’ve said it before. I’m perfectly adequately paid – I may be ten years in the pay stakes behind my friends from University who went into the law (one of them in the year below me recently retired) or the city (I’ll never catch up), but I have a work-life balance and a level of job satisfaction that, in principle, makes up for it. That’s much less true for a lot of other local government employees, to whom a 5% real-terms pay cut has the potential to cause real damage.
Similarly, ‘all the money’s gone’, and faced with a choice between a pay freeze and no pay at all, obviously a pay freeze sounds more appealing. It could be worse, in Ireland and some other places things are so bad the public sector are seeing pay cuts (on the other hand, some of those economies are in deflation, so in real terms there’s not much difference). That said, with every extra year, I find myself wondering what else I could do with my life, and quite how bad it would be if redundancy struck while the terms are (relatively) generous, rather than later.
Still, though, it feels over recent years as though we’ve been told that in the good times, we need low pay rises ‘to anchor inflation expectations’, and in the bad times, we need low pay rises ‘because the deficit’s too bit’. So we get low pay rises; meanwhile, inflation goes up regardless, and the deficit is either hopelessly enormous anyway (stage right) or a good thing anyway because it’s what’s keeping the economy from going back into recession (stage left). When inflation is low (because of the VAT cut) we don’t need a pay rise because inflation’s low, but when VAT is put back up again, we don’t need a pay rise because the increase in inflation is temporary (so, er, wasn’t the decrease also temporary then?)
So in that vein, here’s my graph again, updated for today’s figures. The red line is cumulative inflation. The blue line is cumulative inflation in a hypothetical world where the Bank of England had precisely met their target, and the purple line is the cumulative local government pay settlement, assuming the Employers stand by their offer of ‘nothing’ for this financial year. The Labour delegation are now proposing to recognise persistent high inflation with an offer of 1%, but as things stand the Conservative and Liberal Democrat groups are standing firm at 0%.
Anyway, Nick Clegg said yesterday that “when there has already been pay restraint in the private sector, when the public pay bill now costs the country £160bn every year, and when the alternative is greater job losses we cannot refuse to now look at public sector pay too“. I’m not sure what restraint is, if it isn’t consistently rising less quickly than prices over a full five-year period, but I guess we’ll see soon enough.