Tag Archives: private sector

Public Sector Pay – Time to redress the balance.

For too long we have been operating in the UK a publicly funded job creation scheme, which in itself would not be such a bad thing were it not for the fact that those taking from and taking out of the public sector would appear to be entirely motivated by money.  That, in public service, is fundamentally wrong.

The median average hourly rate of pay in the public sector is 30% higher than the private sector.

http://www.bbc.co.uk/news/magazine-12549785

We had last weekend the well publicised story of the former leader of South Somerset District Council leaving his post and accepting a pay off in salary, redundancy payments and pension contributions of £569,000 after 6 years service.

Yes, that’s right, you read it correctly, FIVE – HUNDRED & SIXTY NINE THOUSAND POUNDS!

http://www.telegraph.co.uk/news/newstopics/politics/8342025/Council-boss-who-got-record-pay-off-in-line-for-another-lucrative-position.html

My issue is that none or certainly nowhere near enough of the money that is spent on wages in the public sector goes to those that deserve it most.  Nurses, Teachers, Police Officers, Fire Fighters.  There are countless others I can add to that list.  These are the people that should be reaping the benefit of the increase in standards that we have seen in the last 10 years in public sector pay and conditions.  So why aren’t they?

The problem is that those that enter public service in these posts do so generally out of a sense of vocation, purpose and to serve others.  They don’t do it first and foremost for the money, they do it for a whole host of other reasons.  Therefore they tend to be at the back of the queue when it comes to being rewarded for the great work that they do.  They deserve a great wage for doing great work.  They don’t get it.  That sucks.

I don’t buy the argument that Public Sector bodies need to pay great salaries to attract great talent at the top.  If you are motivated by money ( and there is nothing wrong in that ) then by all means stay in the private sector, take your risks, take your chances and fill your boots.

If you are motivated by a desire to serve the greater good and public service ticks that box for you then by all means go run a hospital, a local council, but why on earth should you even think you should be paid more than the Prime Minister for doing so?  Who is running the remuneration committees in these organisation?

Certainly don’t walk away with in excess of 1/2 million quid for voluntary redundancy when the vast majority of those in your employ are earning less than 25 times that number!  That disgusts me.   It smacks of greed, lining of one’s own pocket from the public purse.  I know it happens, it is just not right and something needs to be done to stop it.

I would be delighted were I to be evidencing the average median hourly rate in the public sector was 30% higher than the private sector because nurses were paid so much more.  That figure is so high because those at the top have their noses in the trough, and its our trough.

If the CEO of a FTSE 100 company is being paid millions that is an issue for his or hers shareholders.  It is their money, not mine ( unless of course they are a bank! )  Time to redress the balance.  Give the money to those that deserve it most.  That is the basis of great public service.

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Filed under Careers, Remuneration

Where will the new jobs we need come from?

All over the developed world we hear a similar story.  Rising unemployment in the face of improving (in various degrees) economic conditions.  Take the United States.  It’s gross domestic product has recovered from the recession far better than in Britain, Germany, Japan and Russia, yet the unemployment rate in the US remains significantly higher than in those countries, particularly Germany and Japan (where admittedly labour laws make it much more difficult and costly to lay workers off).  America is producing more and relying on fewer people to do so.

Last week Steve Ingham, CEO of Michael Page, the UK’s second largest recruiter, attributed a 40% increase in permanent job orders to “jobs churn” ie people moving jobs as opposed to new jobs being created.  The unemployment numbers in the UK are, in the grand scheme of things, flat.

A 6% fall in GDP ought to have caused a similar fall in employment numbers, but it didn’t, mainly due to employees being prepared to take pay cuts and cuts in hours rather than face unemployment.  Unemployment in the 3 months to November 2010 in the UK was 7.9%.  In the same period 2009 it was 7.8%.

There are some encouraging headlines to be found in private sector jobs growth.  In the nine months to September 2010, the private sector in the UK added 184,000 employees.  In the same period public sector employment fell by 77,000.  We had net jobs growth, surely a good sign?  Those organisations that are hiring are only replacing headcount that was cut, and in many cases cut too fine, during the recession.

Youth unemployment in the UK is perhaps the most worrying sign.  A record 951,000 young people aged between 16 and 24 are out of work.  Where will the jobs come from that will stimulate the employment market and prevent a generation of disaffected young people?

For as long as I can remember the drive in business has been for more and more and more efficiency.  Improving productivity has been the name of the game.  Do more with less.  We have invested (rightly) so much in technology that we no simply no longer require the same number of people to produce substantially more.  That trend is only going in one direction.

It is innovation that will drive new jobs growth.  The jobs we need are going to come from new and emerging industries, companies that today don’t exist will appear tomorrow and grow to employ thousands.  10 years ago we never had Facebook.  Twitter didn’t exist.  Google was an infant.  Between them they employ today thousands of people.  The Ipod, the Ipad, the Blackberry.  They have all come about in the last 10 years.  What will be the product developments of tomorrow?

We need governments across the globe to create the conditions to encourage entrepreneurs.  We need to make it easy and inexpensive to employ someone.  We need the law to continue to protect the rights of individuals in employment.  Those rights must be balanced with the flexibility employers need as the business grows.

Emerging technology, new energy, healthcare?  What are your predictions?  Where will the jobs growth we need come from?  I would love to know your thoughts.

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Filed under Job Creation

Job creation or devastation?

Governments can create jobs in the public sector.  However unless they are balanced by jobs growth in the private sector, the public sector will not sustain employment and wealth creation.  Private sector prosperity creates the wealth required to sustain great public services.  It is the responsibility of government to create the conditions in which private sector businesses can flourish.

This means lower taxation to encourage re – investment.  The more you can encourage businesses to re – invest, the more jobs they will create, the more they will grow, the more sustainable they will be, the more profitable they will become.  The more people employed, the greater the revenues, the greater the profits, the more goes back in to the public purse via taxation.  It’s a simple model.  The more you tax business, the more ways business will spend money trying to find (legitimate) ways to avoid paying those taxes.

Across much of the developed world at the moment the argument is that we cannot afford to reduce taxation.  I understand why, but we are trapped in a vicious downward spiral.  Businesses are hoarding cash.  The survival mode of the last few years has meant strengthening balance sheets has been order of the day.  Having done that, confidence and the conditions required to re – invest still do not exist.

If you have cash right now then arguably you will emerge from this period much stronger.  Valuations are low, assets are distressed.  If you are in a position to acquire then the opportunity to strengthen your business is too good to miss.  So why are we missing it?

Its going to take a brave leader to create the conditions to encourage business to start spending again.  However do it we must.  Public spending must be cut, that much is clear.  Unless governments create the right conditions to encourage private sector investment and spending,  the private sector will not be able to pick up the “slack” created by public sector cuts, particularly in employment.

We need governments to be brave, strong and decisive.  Then we need them to step aside.   Short term pain, long-term gain.  Fail and we risk generations of disaffected unemployed.  It is too high a price to pay.  Action is needed now.

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Half full or half empty?

This morning the latest UK Recruitment and Employment Confederation / KPMG UK Labour Market Survey is out.  Good news is to be found amongst the headlines.  Firstly the number of job vacancies grew.  There are more jobs available in September 2010 than September 2009.  More people were appointed to permanent jobs in September 2010 than 2009.  These are positive signs and should give cause for optimism.  They don’t.  Why is that?  Good news doesn’t sell newspapers, it doesn’t work on air.   The 24 hour media world in which we now live is not interested in painting a positive picture.

Take the BBC (those purveyors of doom and gloom for us Brits).  The headline for the above report reads as follows;

“Jobs market growth slows again”

Talk about how to turn a positive in to a negative!  We have jobs market growth.  However virtually every media outlet reporting this story focuses on slowing jobs market growth.

Why is jobs growth slowing?  Nothing here that we weren’t expecting, nothing that we all know needs to happen.  Jobs market growth is slowing is because public sector hiring activity has slowed dramatically.  It had to.  At one point we had 52% of the UK workforce working in the public sector.  Simple economics dictate that is impossible to sustain.  We just can’t afford it.

Back to the good news.  There is continued strong demand for engineering, construction and executive staff, reflecting the recovery in the private sector.  We need it.  Services (public or private) cannot sustain an economy, we need to make stuff.  Growth in manufacturing is vital to the long-term sustainable success of the UK economy.  Job creation in the private sector is great news for all.  It is job creation in the private sector that feeds the great public sector services we have in the UK.

Back to the headlines?  If your glass is half full, you have jobs growth.  That gives people, business and employers confidence.  It encourages people to think positively about investment intentions, hiring intentions.  Confidence is fragile but it is crucial to so many elements of the economy.   If your glass is half empty and jobs growth is slowing, you are nervous.  You are not going to hire, invest, grow your business, create jobs.  The talk is of a double dip in the jobs market in much the same way as it is talked about incessantly about the economy.

I wonder if journalists ever stop to consider the wider implications of what they report?

Self fulfilling prophesy?  Be careful what you wish for.

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Filed under Hiring, Job Creation

Anything to be gained from a jobless recovery?

I guess good news doesn’t sell newspapers.   This weekend was full of the latest views on double dip, inflation, stagflation, rising interest rates, dropping consumer confidence, rising unemployment and a jobless recovery.  None of these are fact.  For sure all are simply possible scenarios and all warranted countless column inches.  Someone once warned me ” be careful what you wish for”.

Much is being made of the jobless recovery.  Regular readers of my blog will know my views when it comes to unemployment (frankly one person out of work who does not wish to be is one person too many).  However, trying to take the positive from the negative I considered what is to be gained from the doomsday scenario the newspapers are suggesting.

Firstly a jobless recovery is not an accurate description.  It is simply not the case that employers are not hiring.  What is true is where they are hiring.  A recent Chartered Institute of Personnel and Development survey highlighted 36% of employers expect to lose staff in the next three months.  Despite this threat of cuts, the CIPD’s net employment index, which measures the number of companies planning to hire against the number planning to lose staff, is still in positive territory at +two (admittedly down from +five three months ago but still a positive number).

Dig a little deeper in the numbers and that’s where things get interesting.  What you will see reflects the stark difference between the public and private sectors, with the private sector showing strong hiring intentions at +19 while the public sector gives a reading of -35.

This is great news.  The private sector is hiring.  We have grown to depend for too long on an overbloated public sector and we need now to take the medicine to protect ourselves in the long-term.  I am not talking front-line services (I am married to a nurse and clearly too much of a coward to consider such a thing!).  Anything that puts more nurses on hospital wards, policeman on the street or makes for better public transport is to be supported and applauded but it is the private sector that drives long-term, sustainable economic recovery.

It is the private sector that creates employment and wealth, that pays down the massive public debt we have accrued in the western world.  It is the private sector that puts huge sums in to the public purse through taxation to create world-class public services.  It is the private sector that drives innovation, that will create the tools that are required to combat climate change, hunger, water shortage, disease.  This gets forgotten all too often.  It is the private sector that got us in to this mess and it will be the private sector that gets us out.

It will be the private sector that re – trains out of work former public sector workers and it will be the private sector that re – hires them.  Will this happen quickly enough to ease the pain for such individuals?  Probably not.  Rarely does any return to work happen quickly enough for the person concerned.  Governments need to create the environment that encourages entrepreneurialism to thrive.  For it is entrepreneurialism, the seeing and seizing of opportunity that will create long-term sustainable employment.

Human Beings are incredible.  In adversity comes incredible strength, determination, invention, creativity.  Through adversity comes great change.  We might just be living in one of the most exciting times in history.  Sure its tough, but let’s make the most of it instead of constantly finding ways to talk ourselves in to an even bigger mess.

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Filed under Job Creation