Capping payouts


The Unions are threatening strike action following Francis Maude's announcement that the cap on redundancy payouts to civil servants will be decreased to 15 months instead of the current 6-year maximum. Civil servants are not too happy.

But there is no getting around the fact that the current rate is ridiculously high. True, only a small portion of all public officials are eligible for the maximum amount allotted. But it’s also true that the average rate is three years’ worth of salary, far greater than the benefits offered in the private sector (the average being two weeks’ pay for every year worked). And it costs the taxpayers 1.8 billion pounds annually. With record levels of deficit, this luxury is no longer affordable.

Obviously there is bound to be some sort of remuneration to cushion the transitory between-job period, yet the scale has to be sensible. Apart from increasing the budget deficit, such a high rate disincentivizes workers to find a new workplace. Large benefits perpetuate unemployment by removing the element of urgency. Why find work when you can enjoy leisure and compensation at the same time?