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Talks must recognise financial realities
14 March 2010
The decision by the government and the trade unions to resume negotiations on pay may or may not yield an agreed settlement.
If it does, then it is imperative that any deal clearly delivers the kind of transformation required in the public sector. In short, we need better value for money. Ictu general secretary David Begg said that a collapse of the talks would be ‘‘catastrophic’’.
However, it would be no less serious for the country if the government were to agree to some deal which led to an overall rise in the cost of providing public services, without delivering the kind of reforms essential to our competitiveness. The anger of ordinary public servants at the way the economy has been run is understandable.
We are all angry. Yes, part of the problems we now face are - as trade unions leaders are wont to say - ‘‘not the fault of the ordinary worker’’.
Our government, banks, regulators and developers have indeed created a sorry mess. Yet part of the mess is also that our public finances have got completely out of line and we are now spending much more than we are taking in. This is the fault of successive governments and of those who managed the public sector at the highest level.
This can be fixed in only two ways - cutting spending and increasing taxes - and, with borrowing still more than 10 per cent of GDP, there is more of both to come.
These talks must reflect the fact that we are still in the midst of an economic crisis.
The last couple of budgets have started the job of correcting the public finances, but there is more - much more - to be done.
If this is to be achieved without a catastrophic fall-off in the level of public service provision, then reform is essential.
We simply cannot afford to reverse the pay cuts and the pension levy. The government needs to insist that, if there is to be some commitment not to cut pay further, then what is given in return must be firm, tied down and deliverable.
Unfortunately, what the crisis has highlighted is that we, as a country, have been spending too much and paying ourselves too much. To combat this, the private sector has had to go through a massive upheaval, with thousands of job cuts and reductions in other costs and pay. Public sector employees have suffered through the pension levy and pay cuts. Nobody is happy, but the reality is that unless, as a country, we reduce our costs of doing business, we will not resume a path of growth and job creation.
If the government has a responsibility to conduct the negotiations with this in mind, the trade unions have responsibilities too.
They should not be continuing protests of any kind with talks now under way. They must bear in mind that pressing the button for further industrial conflict could have very serious repercussions for the country.
We are about to enter a volatile and risky period when the government tries to implement its plans to stabilise the banking sector. Further industrial action at a time when government policy will already be under intense international scrutiny could be very costly.
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