The snobbery of the TUC (and others)


by Rumbold
16th September, 2010 at 9:32 am    

The Office for National Statistics has published a report into the public-private sector pay gap. The report found that, including pension contributions, public sectors were paid on average thousands of pounds more a year then private sector workers. I haven’t read through the methodology, so can’t comment on any flaws or caveats. What I am more interested in is the reaction to the report, specifically by a senior TUC official:

Adam Lent, the head of economics for the TUC, said: “You can’t make direct comparisons. The public sector has many more professional and highly skilled workers within it than the private sector. Averages simply do not tell us anything useful.”

This might indeed be true. But what does it say about the TUC’s stance? Firstly, it could suggest that the TUC supports a free market in employment, which means they will no longer be campaigning against pay freezes. This can be deduced by the fact that Mr. Lent feels that the market should determine workers’ wages (by their qualifications), and not any external factors.

This may be a incorrect interpretation however. The other way to read it is that Mr. Lent feels that people with degrees/professional qualifications are better than those without, and so deserve higher wages. This is not a fallacy restricted to the TUC. An article in the Guardian recently articulated the same feelings. Why is this so? Well, if we let the market decide, that is not a problem. But if you don’t support a free market in employment (which the TUC doesn’t), then you have to make the case that degree-educated workers deserve more. Why though? Because they have sat in a classroom for a few years, as opposed to gaining experience working? This lacks an inherent logic (pay is determined by supply and demand, not educational achievement), as there is no reason other than market forces why say, a civil servant should receive higher wages than a cleaner. There is also a social mobility argument. Private school pupils are overrerepresented at the best universities, so presumably the way to encourage social mobility is for the state to place less emphasis on degree-educated individuals.

Since there is no intrinsic reason why degree-educated people and those with professional qualifications should receive higher pay than those without, the only justification could be snobbery and a sense of entitlement.


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  1. cjcjc — on 16th September, 2010 at 10:06 am  

    “The public sector has many more professional and highly skilled workers within it than the private sector.”

    Is that statement in fact true, and to what extent?

    Of course whenever public sector pensions are mentioned the unions immediately appeal to the supposedly lower pay of the average public sector worker.

    Those ONS numbers really are now quite dramatic.

  2. AcidBen — on 16th September, 2010 at 11:17 am  

    Surely the point is though that the ‘professions’ (which by and large now require degrees), are over-represented in the public sector, and for historical reasons if nothing else these jobs get paid more? Once you add old and new professions together the list gets pretty long. So, doctors, nurses, lots of other NHS professionals, teachers, social workers, youth workers, government professionals (economists, lawyers, statisticians, scientists) etc.

    Then add in other well-paid public sector jobs – police and police staff being a prime example. And don’t forget the large numbers of staff at publicly owned banks that ONS now counts as public sector employees.

    Then take away all the low-paid jobs that used to be done by public sector employees which have been outsourced (wrongly, in my view, but that’s another argument) – cleaners, maintenance staff, security guards etc.

    Once you take all this into account it’s hardly surprising that public sector employees earn more on average than private sector. But the real point is that comparing overall means like this is deeply misleading, since you’re comparing apples and oranges.

    The only sane comparisons are like to like across specific job types. What does an economist at the Bank of England or Treasury earn in comparison with one working in the City? What does a secondary school teacher earn compared with one who works at a private school?

    This will be complicated by the fact that many public sector jobs have no private sector analogues (e.g. social workers, for now at least). And I’m not sure that public sector would always come off worse. But this surely this is the only proper way to do it?

  3. jak — on 16th September, 2010 at 12:56 pm  

    “Since there is no intrinsic reason why degree-educated people and those with professional qualifications should receive higher pay than those without, the only justification could be snobbery and a sense of entitlement.”

    How about the fact that they spent at least 3 years studying hard to gain the degree and that a knowledge based economy is the only way forward for the UK since manual labour jobs etc are all moving to the much cheaper overseas markets? If you dont pay people more for having more qualifications what would be the motivation for ANYONE to study? Why not just close down all universities?

  4. Arif — on 16th September, 2010 at 12:59 pm  

    I’d be interested in the report’s methodology. In the sectors I know most about, public sector workers are not paid anywhere near what they would earn in the private sector, but are better off than in the voluntary sector. (did the report conflate the private and third sectors?)

    But for Rumbold’s point about professionalism. I’d guess that the spokesperson was grabbing any argument without thinking through its implications as Rumbold has done. But I think it actually does stumble towards something I think is relevant.

    Professionalism in the public sector typically means something different from that in the private sector. It includes an ethic of public service which requires a high degree of patience and democratic working (at least as ideals, and particularly in local government). It includes political pressures and accountability of a very different kind from the private sector, although on the other hand, it also lacks the sales pressures.

    I think it is important for public service workers to embody a spirit of public service which is totally different from that of a profit-seeking company. Providing service on the basis of need rather than ability to pay (or indeed status and contacts). Intervening in society for the public good. Regulating the behaviour of profit-seekers, making sure it too does not undermine public wellbeing. All the while having to justify or explain the criteria of public good, while it shifts according to political pressures.

    It is – or should be – very different from working in the private sector, where you can have more creative freedom as well as a narrower focus (eg on achieving market share rather than also social, environmental and political goals)

  5. earwicga — on 16th September, 2010 at 1:10 pm  

    ‘If you dont pay people more for having more qualifications what would be the motivation for ANYONE to study?’

    3 years of piss-ups?

  6. Don — on 16th September, 2010 at 1:22 pm  

    I think AcidBen’s point is well made – the outsourcing of much of the less-skilled and lower-paid workers to agencies will surely make a difference.

  7. Sunny — on 16th September, 2010 at 1:25 pm  

    This is terribly reactionary.

    I haven’t read through the methodology, so can’t comment on any flaws or caveats.

    And this is why this post is terribly reactionary.

    From the TUC:
    http://www.touchstoneblog.org.uk/2010/09/its-public-v-private-pay-again/

    First let’s look at the pay element. The public sector employs a much more skilled workforce than the private sector, with a much higher share of graduate and profesional workers than the private sector. While some people in the public sector are on low pay, it is largely free of the minimum wage, maximum exploitation jobs that disfigure the private sector.

    Second let’s examine the pension part of the reward package. There is of course a huge gap between pensions provision in the private and public sector. As the TUC often says, there has been an astonishing collapse in private sector pension provision in the private sector. Two out of three private sector staff get no pension contributions from their employer.

    As jobs are not identical in the two sectors, it is impossible to say in which sector someone doing a particular job would be better paid. That is why we have looked at pay rates for different skills. For example graduate staff in the public sector are paid less than those in the private sector (3.4 per cent in 2009).

  8. MaidMarian — on 16th September, 2010 at 2:04 pm  

    AcidBen – I’d strongly agree with that. Comparisons like this report are often misleading. I would however add three caveats.

    1) Bankers got paid vast sums, but it was the bonus culture, not pay that was the problem. The sense of entitlement did not relate to qualifications, but to bonus. It may well be that a banker earned high pay.

    2) The elephant in the room (I hate that phrase) is housing. Low wages may not be a bad thing in and of itself, but it is a LIVING wage that should matter. High house prices are a real problem.

    3) I have a suspicion, that’s all it is – suspicion and anecdote – no evidence, that immigrants who used to work in the low-paid jobs and were willing to live 10 to a 4 bed BTL are moving back to Poland. Whether or not that is having an effect I don’t know, but it would be interesting to know if there is any research on how immigrants affected the public and private sectors’ wages.

  9. boyo — on 16th September, 2010 at 3:56 pm  

    Honestly, I think you’ve strecthed your point so far its snapped.

    NO value in a degree?!

    TUC man is plainly correct – there simply must be many, many more on minimum wage than in the public sector because there are more unskilled jobs.

    Time to have a lay down mate.

  10. Refresh — on 16th September, 2010 at 4:27 pm  

    Rumbold,

    Pay freezes by definition cannot apply within a free market.

    On the whole we should not let these types of surveys cloud the real agenda. And that it will be used to turn opinion against public sector employees in anticipation of a robust response from the Unions to the coalition cuts.

  11. Don — on 16th September, 2010 at 5:04 pm  

    Refresh,

    That sounds entirely plausible to me.

  12. Don — on 16th September, 2010 at 6:58 pm  

    I have to say, Rumbold, economic ignoramus that I am, that I think you got this one wrong.

    Clearly educational attainment alone doesn’t mean anything in terms of earning power, but it does strongly correlate with high level skills. Which are generally more marketable than low level skills.

    It may also be relevant that the public sector tends to have a system of significant pay increments for attaining more skills and specialist expertise.

    Apparently the NHS is one of the largest employers in the world (after the Chinese Army, the Indian railway system and Walmart)and pay is directly related to the ability to engage with continuous high level training, which is difficult to access without an underlying sound education.

    That doesn’t seem snobbish to me.

  13. Rumbold — on 16th September, 2010 at 8:41 pm  

    So, no actual explanation why a degree should be intrinsically more valuable, just staunch defenders of the market setting the wages. I look forward to quoting this in the future when people complain about high/low pay, since everyone above accepts that the market should detemine wages. It is nice to see so many free marketers out there.

  14. earwicga — on 16th September, 2010 at 8:45 pm  

    The subject matter of a degree dictates it’s worth. My builder brother with no degree earns more than my teacher sister with a degree.

  15. Rumbold — on 16th September, 2010 at 8:46 pm  

    Just to clarify my point, yo ucan either argue that the market should set the wages, or something else. If you think that the market alone shouldn’t determine wages, that is fine, but you can’t then use the market to hide behind (as the TUC have) when a report like this is published. Not that TUC grandees are affected by low wages.

    http://www.taxpayersalliance.com/TradeUnionRichList.pdf

  16. dave bones — on 17th September, 2010 at 2:19 am  

    Yeah I have not been a big fan of Bob Crow, as part of the “old left” but I must admit I agreed with everything he said on Sunday, and thought it was good to hear at breakfast time.

    I don’t know whether the media are going to “Arthur Scargill” him this time, or if more people are going to be able to articulate this successfully and actually change something.

    I think in 2010 a world wide wake up of this kind has more of a chance of working than a national one.

  17. Arif — on 17th September, 2010 at 7:33 am  

    Rumbold – since this seems such a key issue for you, I’ll add that I don’t think the “market” can or should determine wages. For example I believe the minimum wage is a good thing and a maximum wage would be too.

    Can you clarify what you think counts as a market or non-market factor in determining wages?

    Women being paid less than men for the same work – is that down to the market, or some other construction of meit?

    Bankers getting enormous bonuses – is that down to the market, or some other factors in corporate politics?

    Requiring social workers to have various qualifications – is that down to the market or an artificial barrier to the market?

    Teacher training – is that a barrier to entry to a section of the labour market, and if so is it legitimate or not?

    I think that the market as a mechanism for setting wages is a very abstract concept which has its place in economic modelling or as a heuristic device, but for our work to be really commoditised like that would go against various real world assumptions and ideals we have for how we value our work and each other’s work.

    I am very critical as well about how “merit” is constructed, but I wonder if leaving it to the market is no different from saying leaving it to the prejudice of employers in the hope that in the long run (when we are all dead) some wonderful equilibrium will be reached where all those whose idea of merit were too generous go out of business and those who can most powerfully undermine the esteem of job applicants flourish.

  18. boyo — on 17th September, 2010 at 11:04 am  

    I suppose it depends whether you think learning anything has value Rumbold.

    You may or may not have a degree, but you seem bright enough to me. Which is why i do not understand your seemingly inverted snobbery. You’re sounding a bit Burchill-esque to be frank.

  19. cjcjc — on 17th September, 2010 at 11:12 am  

    Of course learning something may have a great deal of value.

    However that doesn’t mean that you are somehow entitled to higher pay.

    There’s nothing invertedly snobbish about pointing that out.

  20. Rumbold — on 17th September, 2010 at 12:36 pm  

    Arif:

    I support a minimum wage (providing it isn’t too high, which reduces jobs), but I don’t see the point in a maximum wage, as people would spend more money trying to avoid tax; the top 1% of taxpayers contribute 24% of incokme tax.

    For all its faults (and the bankers are a good example of an employee-controlled industry), the market is still the least worst way to allocate pay. After all, a qualification only means something if people are willing to pay for it. A welfare state then helps to temper the market through redistribution via a state education and healthcare system plus benefits.

    Boyo:

    I am not anti- degree (having several myself). What I was trying to do was highlight the TUC’s odd stance, attacking the market over low pay, then defending higher pay in the public sector my citing the market.

  21. Arif — on 17th September, 2010 at 2:42 pm  

    Rumbold, regardless of our views on the consequences of maximum wages, you ignored my questions on what you mean when you say “the market is still the best way to allocate pay”.

    I mean, if the market is just what you can get for what you offer, then you should have no problem with degree earners or public sector workers earning more than others. And also no problem with unions campaigning, blackmailing or doing whatever else to increase the pay of their members.

    If you are saying that the market is what you get when you remove distortions, then be clearer about what constitutes distortion, what makes it illegitimate and how it should be removed.

    If unions, or those who buy their arguments, cause distortions because without them people would resign themselves to having less pay, then so, in different ways, do bonuses, share options, minimum wages (which you say you support), laws on migration (whether open or restricted), expensive or time-consuming professional qualifications (which constitute barriers to entry in labour markets), equal pay legislation, the right to strike, etc.

    So when you or the unions talk about “the market”, are you talking about the same things? In one case the market might be defined as the structural outcome of political and cultural decisions on what constitutes a fair price. In another case you might define the market as your ideal mode of distribution such that it should take precedence over political, social or other definitions of distributional justice.

    Those are very different things, aren’t they?

  22. soru — on 17th September, 2010 at 11:55 pm  

    Firstly, it could suggest that the TUC supports a free market in employment, which means they will no longer be campaigning against pay freezes.

    Sorry, but how does that even start to make sense? It’s like saying ‘so, Mister Sainsbury, you think the free market should determine cabbage prices? So how come you are sending your researchers round to check what Tesco are selling them for?’.

    Unions, just like corporations, limited liability, employment law and minimum wages, are part of the mechanism by which a free market mixed economy works.

    If for some reason you wanted to stop them, then you would need authoritarian measures (probably state-backed), ranging from police on horseback to the good old bullet in the head.

    If that’s the version of the free market you would prefer, you are free to go move to China.

  23. persephone — on 18th September, 2010 at 12:38 am  

    I’ve worked across both sectors and the actual pay is not whats at play here. The same functions in each sector had different salaries (private higher than public) but:

    - if you calculate the nos of hours worked for each, the fact is that the private sector hours are much longer than the public and so the private sector salary works out to be less than that the public. Plus teams are larger across the same function in the public sector than the private but with less productivity so again the private salary proved better value for money and yes more pressure on the employee to be high achieving.

  24. Rumbold — on 18th September, 2010 at 10:05 am  

    Arif:

    Sorry, I will try and explain myself better. Why is the market the best option? Because it is not a monolith, but rather a vast network of individuals and firms. What market wages represent (excluding areas where employees control pay, like banks), is the intersection between supply and demand. I don’t have a problem per se with public sector workers earning more. What I have a problem with is the hypocrisy of the TUC and other using the market when it suits them. For example, if wages were frozen for the next three years in the public sector, would people stop applying to join it? No. Yet would the TUC support this? No.

    And your point about market distortions is well made. There will be government legislation and other things which have an external impact on the market. I believe that these things should be kept to a minimum, and each intervention should be justified.

    And yes, the union bosses are just acting in what they call their member’s interests, because it is the best way to protect their own very generous perks (like the ‘communist’ Bob Crow who employees his partner and receives a massive salary).

    Soru:

    If for some reason you wanted to stop them, then you would need authoritarian measures (probably state-backed), ranging from police on horseback to the good old bullet in the head.

    If that’s the version of the free market you would prefer, you are free to go move to China.

    I wouldn’t ban unions (though there are arguments for more restrictions on them where their members hold a natural monopoly- the tube- on competition grounds). And as Arif and yourself point out, all they are doing is representing their own narrow sectional interests. Perhaps expecting consistency is too much from them, as that is not their fundamental purpose.

  25. Arif — on 18th September, 2010 at 8:34 pm  

    Rumbold, thanks for the reply, and I’ll agree that unions indulging in this kind of political posturing don’t seem to have any consistent political purpose in mind.

    I think, though, the reductionism in your argument worries me far more than the hypocrisy of union arguments.

    I don’t want to be treated like a commodity (whether by unions, employers of governments). If I have to justify measures for social justice in terms of mitigating market failures, then I have to reduce my value of human beings to how necessary they happen to be to as inputs to a particular industrial formation at a particular time.

    I understand that is a game unions play, because one starting point is often that workers are exploited in having their value to production being underestimated.

    I also share with unions a perspective which you deny: that there are non-market factors (eg culture, political power) which determine wages whether or not unions exist. I also don’t think that unions deny that there are also market factors, so maybe that’s why I don’t think it is always wrong of them to mention them when they think they should be taken into account.

    I understand that you think unions should take market factors into account differently (ie by seeing the necessity of pay freezes and reductions), and so interpret their selective attention as hypocritical.

    I am more interested in what they are trying to achieve politically and culturally (concepts like dignity at work and fair wages, which I would not characterise as “narrow, sectional interests”).

    In this light their argument still seems unprincipled and defensive to me (why not focus on the dignity and fairness being denied to private sector workers instead?) But I would not call them hypocritical for using an argument that public sector professionals would be able to earn as much in the more market-oriented private sector than they do in public services.

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