Union Hypocrisy Over Pensions
The Guardian published a thoughtful article by Phillip Inman the other day - highlighting trade union hypocrisy over public sector pensions.
Here are some of the key points from the piece:
"With pension reforms on the way, the public sector unions must not defend the better-off in the name of ordinary workers.
Who would be a public sector union leader? The pay might be decent, but the axe-wielding this week and Lord Hutton's report on public service pensions means it's going to be a tough two years.
If George Osborne marries his spending cuts with Hutton's message of higher pension contributions, lower benefits and longer working, Unison's Dave Prentis and his fellow union leaders will be forced to square up. On the face of it the unions have a strong hand. Militancy should be guaranteed.
Yet two barriers stand in the way. Job cuts, which are already underway, will be piecemeal, without any obvious flashpoint for industrial action. Then there is the pensions debate, where unions have found themselves preparing for battle after their leaders have fallen over themselves to vacate the high ground. The high ground, in this case, relates to the case for a sustainable retirement system.
If Prentis et al defend final salary pensions they lay themselves open to Hutton's charge that unions seek to defend the generous salary linked benefit rewards management above those of shopfloor workers. Arguably, it is the overly generous promises to the higher paid in the public system that is helping send costs through the roof.
The main beneficiaries are those in the higher echelons of the NHS, the teaching professions and the police. If a worker's entire retirement income is calculated on their last pay cheque and their length of service, a long unbroken record of service and escalating pay rises in the last 10 are crucial to a lucrative retirement income.
Step forward the male middle manager. And there are plenty of them. If they retire on £50,000, which is not uncommon, they could receive a pension of £30,000 a year. Compared to a banker's bonus it sounds modest, but to provide a pension at that level costs at least £1m.
When Hutton says we need to think about moving all public sector workers to a career average scheme or its equivalent, he is explicitly attacking the huge sums paid to these managers. A clerical worker, by contrast, could spend most of their working life on £16,000 a year and retire on the same amount plus the occasional inflation-linked pay rise. A career average pension would pay them roughly the same as a final salary scheme.
So why are the unions prepared to man the barricades for the public sector's fat cats? A cynic might say leaders such as Prentis are conscious of their own super-sized pensions. Public sector senior directors sitting on the other side of the negotiating table also want to keep the final salary link for their own benefit.
A more generous interpretation puts the union leaders at the top of a pyramid of members who fear changes to their pension as simply a way to replenish the exchequer without attacking the banks. That may be so. However, the contradiction in the union's stance will undermine public support and play into the coalition's hands.
Mark Serwotka, head of the Whitehall union PCS, agreed to a career average scheme for 450,000 civil servants. Can unions, most of whom privately agree final salary is dead, avoid fighting for the better off in the name of ordinary workers?"
So there you have it - and from the pages of the Guardian no less.
The bottom line is that the union hullabaloo over pensions is all about protecting the position of higher paid groups - because low paid workers get no real benefit from a final salary scheme.
Here are some of the key points from the piece:
"With pension reforms on the way, the public sector unions must not defend the better-off in the name of ordinary workers.
Who would be a public sector union leader? The pay might be decent, but the axe-wielding this week and Lord Hutton's report on public service pensions means it's going to be a tough two years.
If George Osborne marries his spending cuts with Hutton's message of higher pension contributions, lower benefits and longer working, Unison's Dave Prentis and his fellow union leaders will be forced to square up. On the face of it the unions have a strong hand. Militancy should be guaranteed.
Yet two barriers stand in the way. Job cuts, which are already underway, will be piecemeal, without any obvious flashpoint for industrial action. Then there is the pensions debate, where unions have found themselves preparing for battle after their leaders have fallen over themselves to vacate the high ground. The high ground, in this case, relates to the case for a sustainable retirement system.
If Prentis et al defend final salary pensions they lay themselves open to Hutton's charge that unions seek to defend the generous salary linked benefit rewards management above those of shopfloor workers. Arguably, it is the overly generous promises to the higher paid in the public system that is helping send costs through the roof.
The main beneficiaries are those in the higher echelons of the NHS, the teaching professions and the police. If a worker's entire retirement income is calculated on their last pay cheque and their length of service, a long unbroken record of service and escalating pay rises in the last 10 are crucial to a lucrative retirement income.
Step forward the male middle manager. And there are plenty of them. If they retire on £50,000, which is not uncommon, they could receive a pension of £30,000 a year. Compared to a banker's bonus it sounds modest, but to provide a pension at that level costs at least £1m.
When Hutton says we need to think about moving all public sector workers to a career average scheme or its equivalent, he is explicitly attacking the huge sums paid to these managers. A clerical worker, by contrast, could spend most of their working life on £16,000 a year and retire on the same amount plus the occasional inflation-linked pay rise. A career average pension would pay them roughly the same as a final salary scheme.
So why are the unions prepared to man the barricades for the public sector's fat cats? A cynic might say leaders such as Prentis are conscious of their own super-sized pensions. Public sector senior directors sitting on the other side of the negotiating table also want to keep the final salary link for their own benefit.
A more generous interpretation puts the union leaders at the top of a pyramid of members who fear changes to their pension as simply a way to replenish the exchequer without attacking the banks. That may be so. However, the contradiction in the union's stance will undermine public support and play into the coalition's hands.
Mark Serwotka, head of the Whitehall union PCS, agreed to a career average scheme for 450,000 civil servants. Can unions, most of whom privately agree final salary is dead, avoid fighting for the better off in the name of ordinary workers?"
So there you have it - and from the pages of the Guardian no less.
The bottom line is that the union hullabaloo over pensions is all about protecting the position of higher paid groups - because low paid workers get no real benefit from a final salary scheme.
