The unions strike again


The public sector strike today will be an inconvenience to many people – schools will be shut, university lecture halls will be even emptier than usual and most public servants’ jobs won’t be done. The reasons for striking are understandable – many people in the public sector will have to wait six years longer for their occupational pensions than they expected – but not exactly defensible. There’s no reason that public sector workers should, by default, have an easier ride than private sector workers. Being a nurse in a public hospital is difficult work, but surely no more difficult than being one in a private hospital.

Under current rules, working for the state brings with it quite a few benefits already: the biggest one is probably that your employer isn’t likely to go out of business. But the other big benefit is that the things your employer does are subject to public approval. Whereas a private company can lay off workers as it needs to, and negotiate benefits on a case-by-case basis without a huge worry about the PR impact it will have, the government’s actions are almost entirely driven by a quest for popularity. Argos can sack people as it has to in order to stay profitable, but sometimes governments prefer to go broke than do the unpopular but necessary thing.

For public sector unions, a strike is a great way of taking advantage of this strange situation. I have a bit more sympathy for the people marching today than, say, tube drivers on £50,000 a year demanding more or people marching against layoffs in general, because this pensions change will force a lot of people to reconsider their life plans. The change needs to be made, though – there isn’t any money left, and there’s no reason public sector workers should get an easier ride than private sector ones.

Really, the system is to blame: it is madness to have a pensions system that’s funded out of current expenditure. For that to work, it requires a constant influx of people either through immigration or fertility. Neither appear to be on the cards. A far better system would be one like Chile’s, where people save throughout their lives for their own pensions, which they own and can invest as they like. That’s robust to demographic changes and makes people less dependent on government as well. The real challenge is figuring out how you get from here to there – maybe that’s what the unions should be thinking about instead of spending their time trying to squeeze the current system for all it's worth.