Saturday, 8 July 2017

Homey logic.

Public sector workers should get a payrise because otherwise house prices might fall.

They've missed another important point, which is that wages in private sector have fallen faster than public sector wages.

10 comments:

formertory said...

.....and at the risk of sounding like a stuck record they've also managed not to mention (again........) that public sector emoluments (and there's a good word for a Sunday morning) almost universally include astonishingly generous benefits including the biggie, the taxpayer-indemnified pension scheme.

I'd never seen that HOA site before; had no idea it existed. And now I wish I'd never heard of it; just reading it makes me angry. My lovingly-prepared Sunday morning bacon'n'egg roll lies queasily in my stomach.

Mark Wadsworth said...

FT, fag packet, how much is the public sector pension worth as a % of headline, cash salary?

formertory said...

If it's assumed local authorities schemes give a reasonable guide, then those where I am now make an "employer contribution" of between 18.5% of salary and 21% of salary. Where I used to live, the LA paid 24% (and Council Tax receipts were less than the employer's contribution!).

Police, Fire and schemes where early retirement and early benefits are paid are off the scale, pretty much. If they were funded on a defined contribution basis to achieve the benefits the DB guarantees give, you'd be looking at vast sums of money at current GAD rates. Lola will have a better grip on that than I do, me being a pensioned parasite an'all these days.

With apologies for pedantry, your question has two answers. As life expectancy increases, but personal funding of pension schemes don't - to any great extent - then the value to the employee of the pension scheme in payment grows rapidly (more money paid out for same amount paid in). The difference is taxpayer-indemnified. The simpler interpretation - what's the total value of salary plus "employer" pension contributions slightly masks the true scale of the generosity. And so the true value of the cost to the taxpayer.

Dinero said...

What a load of nonsense . In homey logic it can't be that house prices rise more than wages, hence ideas such as put forth in the article.

Mark Wadsworth said...

FT, for sure, it's six million different calculations, but rag packet overall is it 20% 40% 60%?

Mark Wadsworth said...

Din, yes, clearly prices are rising faster than wages.

DBC Reed said...

Plenty of Daily Mail ranting about the public sector, which it is clearly thought should n't exist or should be subject to the disciplines of one of those private-sector swindlers who in Ed Miliband's days got on Question Time during the election and practically broke down in tears because they could only stay in business if they paid zero hours contracts.I must say I lost my respect for Miliband who is a big bloke and should have strode into the audience and layed the bloke out.
It is a matter of aggregates: the total amount of earnings from wherever in the economy should match the total amount of production. Simple.If you have robot factories (as envisaged after the Ist World War) you would have to dish out unearned income (National Dividends)to provide the effectual demand to sell them.Likewise you may have pensioners etc who do not contribute to production but can ,with help , contribute to demand.
The Mail school believes the only way the private sector can make a profit is to cut wages and incomes to the bone contrary to what Henry Ford found (probably by accident) all those years ago.

formertory said...

MW: if you mean how much is a guaranteed, indexed pension worth over a working life and then in payment over a retired one? Dunno, I'm not an actuary, but compared with the average private sector DC scheme and (say) a 25 - 30 year period in payment which'll be a hugely greater sum than the contributions, I'd take a flying guess at the 100% end of the spectrum - or more. It's the guarantee that's the costly bit, if you have to buy one.

The only risk to public sector pensions is that Government itself defaults on its own schemes and it'll be a cold day in hell before that happens, even if it means being paid in boxfuls of new three trillion Pounds Sterling notes. All with McConnell's signature on 'em.

Dinero said...

The figures used are averages and so I suspect that the average figures in the table are scewed by London and the south east house prices and wages and more public sector workers in the north with lower than average house prices.

formertory said...

Good to see Hammond getting the point at last. He's still not factoring in the indemnity value to the recipient of guaranteed benefits absolutely regardless of investment conditions, longevity or any other factor but at least he's got as far as recognising the 20%-25% uplift in pension contributions as part of the value of the emoluments package.