Some union leaders may have given up the fight, but their members shouldn't

Public sector pensions are affordable and sustainable. That is not just the opinion of LEAP, but of the National Audit Office and the Public Accounts Committee, who both acknowledge, along with the IFS and the Hutton report, that the cost of public sector pensions is falling relative to our GDP - due in large part to the reforms achieved in 2007-08 between the then Labour government and public sector trade unions. These reforms according to the NAO save the taxpayer £67bn over 50 years.


Why then have public sector union leaders, for example those in Unison and the GMB, signed up to a deal that makes further cuts to public sector pensions?

George Osborne announced in his October spending review that he wanted to cut public sector pensions to cut the debt, not in pension schemes (which does not exist), but the debt caused by the banking crisis and recession:

"From the perspective of filling the hole in the public finances, we will seek changes that deliver an additional £1.8 billion of savings per year in the cost of public service pensions by 2014-15 – over and above the plans left to us by the last government."

So why would unions sign up to cuts to public sector pensions to pay for a crisis their members had no role in causing? In effect, by signing up to the government's agenda the unions are also accepting the their argument that a bloated public sector caused the crisis.

But, you may ask, didn't the unions wrangle concessions out of the government? Not according to the government's lead Minister in the dispute, Treasury Secretary Danny Alexander:

The heads of agreement deliver the Government’s key objectives in full, and do so with no new money since our November offer. In future, scheme pension ages will match the state pension age and schemes will be on a career average basis; all the agreements are within the cost ceiling that I set in November, and will save the taxpayer tens of billions of pounds over the decades to come.

Danny Alexander said on 2 November that he was announcing his final offer. So these fake negotiations since have not gained a single penny extra. If not worth signing up to on 2 November, why sign up now?

In a dispute about working longer and paying more for a worse pension, Danny Alexander has won on all three counts. As he told the House of Commons:

"We have already made some changes that deal with short-term pressures, including changing the basis of pension uprating to the consumer prices index and increasing member contributions by 3.2 percentage points, phased over three years. Those proposals are unchanged ... In future, scheme pension ages will match the state pension age"

So on each of the key questions union members should be asking what has my union (in the case of Unison, GMB, ATL, FDA and others) gained so that it could recommend this 'deal' (more honestly described as total capitulation)?

What's more, an emboldened Danny Alexander proudly announced the true political agenda behind the pensions reforms his government sought: "The new pensions will be substantially more affordable to alternative providers". So in signing up to this scheme, union leaders are facilitating the privatisation of their members' jobs as well as the theft from their pensions.

Union members, and even union excecutives, of course have yet to have their say on the proposals, so at the moment this backroom capitulation has yet to be signed off. Union branches and trades councils are already organising for a no vote and to put pressure on their executives, so their leaderships may have to fight again.

To date though, it is a tragic reflection of the UK's trade union leadership that after the biggest strike for a generation, there is an utter vacuum where an industrial action strategy should be. Capitulation now, will leave the government emboldened to cut more jobs, privatise more services, and further constrain pay.

Minimum wage 'welcome' and 'an insult' say unions

For the fourth year in succession the national minimum wage will rise below the rate inflation, when it is uprated in October 2011.

LEAP has previously criticised the TUC for submitting below-inflation bids for the minimum wage, and then for welcoming an even lower rate.

This year with RPI at 5.5% and CPI at 4.4%, the national minimum wage rises only by 2.5% - up by 15p to £6.08. For younger people aged 18-20 it rises only by 1.2% and for 16-17 year olds by 1.1%.


Len McCluskey, the general secretary of Unite rightly condemned the rises

This small increase in the minimum wage is completely outstripped by the current rate of inflation. The rise will do little to help the lowest paid in our society keep up with the rising cost of food and fuel.

But he reserved his venom in defence of young workers:

The paltry increase in the minimum wage for the under twenties is an insult. There is no reason why younger workers should be paid less and have to struggle more to keep up with the cost of living - it's tantamount to exploitation. Workers should be paid the rate for the job regardless of age. This is yet another attack on young people by this Tory-led government.

Yet again though the TUC played its usual supine role, with Brendan Barber describing the real terms cut as "a welcome pay boost for around 840,000 low-paid workers in the UK."

Most outrageously though, Barber uses the bosses' arguments to defend below inflation rises:

"The LPC [Low Pay Commission] has taken great care to ensure that the new rates are set at a level that will not damage job creation in these uncertain economic times."

When corporate profitability is at an all-time high, the TUC is asking workers to accept declining pay in order to shore up corporate Britain's profit margins.

But while the TUC's general secretary was speaking for business not workers, this year's TUC President (and Unison general secretary) Dave Prentis set out the reality of what this means for low paid workers and put the economic case for a higher increase:

"This small increase is totally outstripped by the rising cost of essentials like food and fuel. The vast majority of a low paid worker’s pay is eaten up by basic living costs – so increases in inflation hit hard.

“We know that many low paid workers are already struggling with heavy debt. Others are cutting back on food, and what they spend on their children. Not only does this show that many families are really struggling – it’s also bad news for local shops and businesses.

“It’s wrong to suggest that a smaller rise in the young people’s rate is better for businesses. Hitting young people’s spending power is a direct hit on those businesses. We need strong demand in our economy to stimulate growth and recovery. Young people also need a helping hand – they are victims of a recession that they did nothing to cause.

“A bigger rise would have also helped restore the balance of fairness in our country – which is suffering hugely under the Tories. It seems incredible that MPs can claim expenses of £3.2 million in just two months, but young people are fobbed off with an extra 10 pence.”

These are welcome signs of unions shaking off the passivity of the TUC. Labour representation is an industrial issue, not just a political one.

Inflation, the minimum wage and the TUC

Inflation figures out yesterday showed inflation had risen to 3.5% on the CPI measure and 3.7% on the RPI measure.

As LEAP research published in September 2009 showed, inflation tends to hit the poorest hardest.

All parties are threatening public sector pay freezes, and a freeze in the National Minimum Wage has been called for by the Association of Convenience Stores, British Chambers of Commerce, and by CIPD.

Let's be clear a freeze means a cut. In real terms, a freeze would be a 3.5% cut.

Thankfully, at the 2009 TUC, USDAW (not the most radical of trade unions) passed a motion calling on the Low Pay Commission (LPC) - of which the TUC is a part - to "significantly increase the National Minimum Wage". The motion also called for the full NMW to be payable from 18 (currently those aged 18-21 are paid a lower rate).

So when the TUC made its submission to the LPC what sort of significant increase did it call for? 20p. Yes the TUC - "the voice of Britain at work" - with clear Congress policy for a significant increase instead calls for the minimum wage to be increased by just 20p from £5.80 per hour to £6.00. The CBI, BCC and FSB must be laughing their arses off. We know they will call for a minimal increase and the LPC will settle somewhere in the middle.

20p by the way is 3.4% - around or slightly lower than many experts believe inflation will average this year. So the "significant increase" is a real terms freeze. And what of applying the NMW to all from 18? No, the TUC submission advocates all three age discriminating bands remain and all increase by 3.4% - so young workers won't even catch up.

Last Friday even New Labour was floating "a pledge to raise the minimum wage sharply" in the Independent. What incentive is there though for Brown to take a radical turn when even the TUC is not calling for a sharp increase?

On hearing the new inflation figures, TUC General Secretary Brendan Barber said:

"The inflation message is don't panic. The rise today has more to do with what was happening a year ago than anything new in the economy, and is likely to fall back to its target range in due course."

"Don't panic" - wasn't that the refrain of the ineffective Corporal Jones in Dad's Army?

Extra: Watch Paul Mason's piece on inflation on BBC Newsnight. It's followed by a debate between Tory spokesperson on competition John Redwood MP and PCS General Secretary Mark Serwotka over public sector pay policy

Extra 2: Unison calls for reopening of pay settlement in local government - obviously they are panicked, despite Mr Barber's reassurances ...

CIPD unveils a business manifesto for the rich

From today's Morning Star
by Lizzie Cocker

A professional management body has come under fire for demanding a freeze on the youth minimum wage and public-sector pay.

The influential Chartered Institute for Personnel and Development (CIPD) unleashed a string of attacks on the lowest-paid in its pre-election manifesto, which was launched on Tuesday.

It also recommended a removal of the default age of retirement and an abandonment of the 2011 employers' National Insurance increase.

The CIPD claimed that these proposals would be essential in tackling youth unemployment, which spilled over the one million mark during this recession.

But Left Economics Advisory Panel (LEAP) co-ordinator Andrew Fisher said that the current youth national minimum wage of £3.57 "is already a national disgrace and is 3p per hour less then was deemed acceptable 12 years ago for other workers."

Public-sector union Unison warned that such changes would not help the "lost generation" but fuel it.

Unison general secretary Dave Prentis said: "This 'manifesto' will not lead to economic recovery, it will lead to the exploitation of hundreds of thousands of workers.

"It is disgraceful that young people are being targeted by the CIPD and singled out as being 'lucky enough to have jobs.'

"Vulnerable young people, who are struggling to get by on a startling rate of just £3.57 an hour, should not have to pay the price for greedy bankers' mistakes."

Mr Fisher said: "For the CIPD to come out with a manifesto focused on pay cuts for the young and public-sector workers while proposing tax cuts for business is laughable.

"It is advocating a redistribution of wealth from poor to rich.

"Its approach is economically inept. Any money saved on pay would simply go to profits for bosses and dividends to shareholders, rather than on new job creation. You can almost hear the snorting and grunting as this CIPD nonsense was written from the trough."

The government is currently carrying out a review of the default retirement age which stands at 65 and a Treasury spokesman confirmed that the CIPD's "views will be fed into that review."