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Thursday, March 19, 2009

Public Sector Crippling Private Sector

The Times reports that as the private sector contracts and sheds jobs, as the recession worsens, the public sector is in fact growing. The Times notes that:

- Public sector pay rose by 3.7% in the year to January 2009. Private sector pay fell by 1.1% cent in that period.

- 30,000 jobs were created in the public sector last year, with 105,000 lost in the private sector.

There may be a tenuous, theoretical argument, that keeping people in the public sector at least lessens the unemployment figures. However, the reality is that the government is broke and that it relies on the private sector to fund its public sector largess (eg do not forget that, unlike the private sector, public sector pensions are still final benefit schemes).

Paying ourselves to wear high visibility jackets, carry clipboards and form fill may in the short term keep people off the unemployment register. However, in the long term unless we cut our cloth according to our tax take, and remember that it is the private sector that powers the economy, this shortsighted policy will spell economic and social disaster for Britain.

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