Why the private sector is no model for the public sector to emulate

Last week John Cridland, director of the CBI, dismissed the impact that public sector union strikes could have. He said: "Today the most they can do is disrupt people's lives – it probably won't disrupt the economy." (reported in Guardian)

Does that mean we should discount today's ramblings by the British Chamber of Commerce (BCC) which told the BBC "many parents would lose pay for taking the day off work to look after their children, and productivity would be hit" - while demonstrating the private sector's longstanding flexibility, understanding and provision of childcare needs.

With an even greater ability to demonstrate why the public sector doesn't want to be leveled down to the private sector, David Frost of the BCC went on to give his view on pensions, adding "reforms to bring them into line with those in the private sector are essential ... The private sector has had to wake up to the tough realities of pension provision in a rapidly changing world".

Mark Serwotka, PCS general secretary, rebuts this point in today's Morning Star,

"The truth that private-sector workers have suffered horrific attacks on their pensions is indisputable. It neither follows from this truth that public-sector workers should suffer the same fate nor that public-sector pensions are unfair on private-sector workers"

The "rapidly changing world" the BCC refers to has seen the number of private sector workers entitled to an occupational pension slip from nearly half a decade ago to under one-third today. Yet, corporate profitability has increased through that period, and the directors of large companies have pension pots that have continued to rise unabated. The average chief executive of a FTSE 100 company now has a pension pot worth £5.6 million.

What the private sector bosses are worried about is neither the impact of the strikes nor the injustice of public sector pensions, but the fear that the pensions debate might highlight the injustice of private sector pensions.

See the LEAP guide: Public Sector pensions - the Facts

Fence-sitting Labour needs a push to the left

Last week, on 22 June, MPs debated the economy. It was an 'opposition day' in the House of Commons, which means the opposition party tables a motion for debate on a subject of its choosing.

The Labour frontbench chose the economy - neatly on the first anniversary of George Osborne's 'Emergency Budget'. Their motion is set out below:

That this House notes that on 22 June 2010 the Chancellor announced his first Budget with a target to eliminate the structural deficit by 2015-16 through an additional £40 billion of spending cuts and tax rises, including a VAT rise; further notes that over the last six months the economy has not grown, in the last month retail sales fell by 1.4 per cent. and manufacturing output fell by 1.5 per cent. and despite a welcome recent fall in unemployment, the Office for Budget Responsibility predicts that future unemployment will be up to 200,000 higher than expected; believes the Government’s policies to cut the deficit too far and too fast have led to slower growth, higher inflation and higher unemployment, which are creating a vicious circle, since the Government is now set to borrow £46 billion more than previously forecast; calls on the Government to adopt a more balanced deficit plan which, alongside tough decisions on tax and spending cuts, puts jobs first and will be a better way to get the deficit down over the longer term and avoid long-term damage to the economy; and, if the Government will not change course and halve the deficit over four years, demands that it should take a step in the right direction by temporarily cutting VAT to 17.5 per cent. until the economy returns to strong growth and by using funds raised from repeating the 2010 bank bonus tax to build 25,000 affordable homes and create 100,000 jobs for young people.

Very moderate stuff - and still the 'too far and too fast' line. However, it would be foolish not to recognise that this is progress from the "cuts deeper than Thatcher" line of Alistair Darling barely more than a year ago.

The pledge to cut VAT and re-institute the bank bonus tax should be welcomed as the modest, progressive measures that they would be - esepcially since they advocate hypothecating the revenue into affordable house-building (though not council house-building) and job creation to tackle youth unemployment.

However trade unions and Labour Party members still have much further to go to move the party to a more radical position of 'no cuts' - although very welcome that Unite's Executive has passed this very clear policy.

There is the sense of a real battle going on within the Cabinet at the moment. It has also manifested itself over the 30 June strikes with Ed Balls initially breaking cover to say "The trade unions must not walk in to the trap of giving George Osborne the confrontation he wants to divert attention from a failing economy". He neither supported nor condemned the strikes.

On Saturday, Ed Miliband told the Guardian the strikes were a "mistake" and said "I don't think the argument has yet been got across on public sector pensions as to some of the injustices contained on what the government is doing. Personally I don't think actually strike action is going to help win that argument and I think it inconveniences the public" - seemingly not having looked at polls showing 48% of the public supported public sector workers striking to defend their pensions, with only 36% opposed.

But later on Saturday, Peter Hain saluted trade unions "fighting for justice" in the public sector, and followed that up with an appearance on Andrew Marr where he said "One of the things that's led to this situation is the government's reckless and arbitrary attack on public sector pensions without being willing to negotiate. I mean here's Michael Gove coming on your programme and he's urging parents to break strikes. That's not a responsible way of resolving these situations". He also added it was not for Labour to urge union members to go to work saying political leaders should be trying to resolve strikes, not applauding or condemning them.

The question Labour is failing to clearly answer is 'which side are you on?' Labour continues to sit on the fence. It needs members and unions to give it a firm push to the left.