Monday, October 12, 2009

Geoff responds to Kevin Keen on Pay Freeze

The letter from Kevin Keen, until recently the manager of the Dairy, “Sorry, States workers” (JEP, 9 Oct), demonstrated not only a deep prejudice against the public sector workers but also a fundamental misunderstanding of basic economics and industrial relations. It also gave a less than accurate picture of the state of the economy.

To suggest that they should feel lucky not to be made redundant or be forced to take a pay cut is simply offensive. The first draft of the Health Business Plan did indeed threaten redundancies for some staff. Thankfully these were later withdrawn. Whilst, regrettably, there have been some redundancies in the private sector, their numbers have been fewer than many anticipated.
As to pay, whilst some employers have taken the opportunity to cut or to freeze their employees pay, this has not been the rule, but the exception. Cost of living pay rises have been awarded by many companies and bonuses have continued to be paid, especially in the finance sector.

The difference is one of representation. Where employees are represented by a trade union or strong employee association, they have been better treated. I have a list of 14 private sector groups where the workers are represented by Unite, whose representatives have negotiated pay awards at or above the March RPI of 2.1% through the normal process of collective bargaining. The public sector has similar representation, but they have had their rights to bargain removed by the arbitrary, unilateral and late decision to impose a pay freeze.

In the meantime the details of the Fiscal Stimulus Plan have been announced, with some £26 million going into building and renovation projects and a further £6 million on infrastructure. The vast majority of this money will be pumped into local private sector companies. This is exactly what government should be doing in a recession; spending money to keep the economy going and save jobs. This is £32 m to support the private sector. Does Mr Keen and the Chamber of Commerce object to this? Of course they do not. But in the same breath, he objects to some £3.5 m going to the public sector to stimulate the economy. This is sheer hypocrisy.

The need for government to maintain spending through a recession is a basic tenet of economics. As David Blanchflower, until recently a member of the Bank of England’s Monetary Policy Committee recently commented “Lesson one in a deep recession is you don’t cut public spending until you are in the boom phase”. Commenting on the Tory party proposals to cut public spending and freeze pay, he said that they would “push the economy into a death spiral”.

All the public sector representatives are asking for is the restoration of their collective bargaining rights. The Chief Minister, along with his supporters should recognise the justice of the public sector workers’case and step back from the confrontation with their employees that they have provoked.
Geoff Southern


  1. Lesson one in a deep recession is you don't cut public spending until you are into the boom phase. Poor Kevin and his kinderkarten economics cannot even understand the basics.

  2. Has Mr Keen and his members of the chambers of commerce entirely lost the plot ! If the Public sector take a paycut and that's what this is, it will be those very same members of the chambers of commerce that will feel it as people tighten thier belts.
    Or prehaps the theft of the tax payers stabilization fund by the private sector is Mr Keen's answer to increasing monetary supply. That builder should be named and Shamed.

  3. Line my pockets with gold and I will pull the ladder up Jack


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