Thursday, September 30, 2010

Healthy recovery, echo of weaker pound, or 1970s wage-price spiral?

Pay rises averaging 2% - research

Fewer firms are freezing their workers' pay and more are paying rises of between 2% and 3%, according to research. A study of 300 companies by IDSPay.co.uk showed that settlements have averaged 2% this year, with half of employers not freezing pay. IDS said the number was similar to last year, suggesting that pay freezes were never as widespread as initially portrayed. Higher pay rises of at least 3% were recorded in both the private services and manufacturing sectors, reflecting the continuing recovery of both, but settlements were lower in the public sector.

Posted by drewster @ 09:56 AM (2034 views)
Please complete the required fields.



49 thoughts on “Healthy recovery, echo of weaker pound, or 1970s wage-price spiral?

  • Oh no this isn’t what our leaders wished for. Pay restraint!

    Reply
    Please complete the required fields.



  • 2% wage inflation isn’t enough to keep pace with rising food, gas, electricity, petrol prices etc.

    Reply
    Please complete the required fields.



  • little professor says:

    … settlements were lower in the public sector.

    Maybe that will shut up all the regular posters who keep carping on about the public sector having it easy. Most public sector workers have had pay settlements well below 2% this year – personally mine has been less than 1%.

    Reply
    Please complete the required fields.



  • 2% payrise + 3% inflation = a pay cut…

    But more realistic and hopefully more likely…

    0.5% payrise + 5% inflation = riots

    Reply
    Please complete the required fields.



  • little professor, one small payrise will not be enough to rebalance public sector costs.

    Reply
    Please complete the required fields.



  • little prof,

    Without getting into the public/private sector debate, just look at the mathematics. If a public-sector worker earns e.g. 10% more than a private-sector worker, then even if the former gets a 1% pay rise and the latter gets a 3% pay rise, that still leaves an 8% gap (rounded). So one would still be justified in carping if the original premise (the 10% gap) is true.

    Reply
    Please complete the required fields.



  • drewster, I quite agree.

    Reply
    Please complete the required fields.



  • “Healthy recovery, echo of weaker pound, or 1970s wage-price spiral?“
    None of the above. The UK economy is growing at a slow pace (the aggregate world economy is growing quite vigorously) and unemployment is relatively low. Some wage inflation is therefore inevitable. In the 70’s wage inflation led price inflation. Now it is the other way around and of course wage inflation is less than price inflation, so it is a fairly benign situation

    Reply
    Please complete the required fields.



  • drewster, also without getting into the public/private debate… 🙂
    If a nurse, who is responsible for the health of a patient, earns 20K, and a teacher, who is responsible for the education of our kids and the future prosperity of country, earns 25K, yet a Management Consultant who tells companies how to make more money, or a banker, who just makes money, earns 5 or 10 times that amount, then it’s time to stop quibbling over who gets 1 or 2% and start thinking about what’s f***ing important.
    I agree that there are those in the public sector that earn stupid amounts and need firing, but that is also VERY true of the private sector.

    Reply
    Please complete the required fields.



  • 3. little professor

    Always thought you worked for the other side.

    It shows in your denial of my past truth bearing intelligents.

    Are you feeling the effects now? You will not be saved.

    Reply
    Please complete the required fields.



  • 8. flashman

    You really have your work cut out now.

    If you like a challenge, stick around.

    Reply
    Please complete the required fields.



  • little professor says:

    Drewster – If a public-sector worker earns e.g. 10% more than a private-sector worker, then even if the former gets a 1% pay rise and the latter gets a 3% pay rise, that still leaves an 8% gap (rounded). So one would still be justified in carping if the original premise (the 10% gap) is true.

    But it’s not true. I work for the NHS – in a fully privatised healthcare system (without wage competition from NHS, the major employer forcing pay down) I could easily earn double or treble what I earn here. For nurses, the average starting salary in the UK for a qualified nurse is £20,710. In the private sector in the USA the starting salary is well over £30k.

    Reply
    Please complete the required fields.



  • timmy t,

    I see your point, but….

    If the management consultant shows a company how to save £10m over a year, and demands a 10% fee, is that an unfair reward? If a pop star persuades tens of thousands of fans to pay £100 a ticket for a sell-out tour at Wembley Arena, and hence earns squillions per year, is that unfair? (Ok so I can’t think of a suitable example with bankers.) Even with Swedish-style taxation (top tax rate 56.7%) they’re still laughing all the way to the bank. Yet the people who paid them – the company, the fans – were quite willing to pay the price.

    That’s the whole point of the private sector. Individuals and businesses are quite willing to pay the prices charged. In the public sector you don’t get a direct say; instead people just spout their annoyance in the blogosphere.

    Reply
    Please complete the required fields.



  • drewster… my point exactly!!!

    Your examples are all about paying people a lot of money for making a lot of money. No that’s not unfair. But nurses and teachers save lives and educate children and get paid a pittance. That is unfair, and it just reflects the fact that as a society, all we really value is money. We don’t care enough about the things that really matter and the people who do those jobs are not rewarded fairly.
    £20,710 a year for saving lives vs a million quid for singing for a couple of hours.

    Reply
    Please complete the required fields.



  • little prof,

    Firstly, we can’t directly compare salaries in the UK vs the USA. There are too many conflicting factors – more student debt, different tax rates, different benefits – and “starting salaries” in themselves aren’t as meaningful as average salaries later in the career.

    Secondly, when people say “I could quite easily earn x times more in the private sector”, the obvious retort is “so why don’t you?”.

    The answers are mixed. Some people like the stability (“It’s a safe job”); women in particular like the flexible working arrangements (“I can work a four-day week to spend more time with my children, and I can leave early on Tuesdays”). The final-salary pension appeals to many (“I’ve been here 30 years, I can retire soon”); and for some it’s the accrued benefits (“I earn a day’s extra holiday for every three years in the job, and I’ve been here a long time”).

    In some cases it’s definitely the pay (e.g. teachers in private schools earn considerably less than in state schools). In some cases it’s because the workload is lighter in the public sector – there isn’t a penny-pinching time-manager watching your every move to improve efficiency.

    The only way we can tell if the public-sector is overpaid vs the private sector is by looking at the flow of staff. Are public-sector teachers spending every spare minute sending off their CVs to private schools? Or are non-NHS nurses eagerly submitting applications to the NHS? I don’t have these figures.

    Reply
    Please complete the required fields.



  • little professor says:

    Firstly, we can’t directly compare salaries in the UK vs the USA. ….when people say “I could quite easily earn x times more in the private sector”, the obvious retort is “so why don’t you?”….
    The only way we can tell if the public-sector is overpaid vs the private sector is by looking at the flow of staff. Are public-sector teachers spending every spare minute sending off their CVs to private schools?

    I can only speak directly from my knowledge of the healthcare system- the market is grossly skewed by the presence of the behemoth of the NHS as the major employer and healthcare provider, which in turn keeps private sector demand and wages down in this country. Because the vast majority of people work within the NHS, the private sector only has to offer a little more than the NHS in wages to attract enough workers to meet the demands of a very small private healthcare sector. Thus the comparisons with the US to discover the true market value of labour in an international market that it is not skewed by heavy public-sector involvement. The argument of ‘why don’t you just go there’ is redundant, UK medical degrees and postgrad memberships are not recognised in the USA, and therefore there is no potential free flow of labour

    Reply
    Please complete the required fields.



  • timmy,

    Teachers and nurses are not paid “a pittance”; and I know quite a few of them. Although thanks to recent subsidies for nursing degrees, there are a lot more trained nurses and if anything that might push down wages.

    As for the social challenge of changing people’s priorities, good luck with that. It’s rather hard to argue the case for it. (“Would you like an iPhone4 or more pay for nurses?”)

    Reply
    Please complete the required fields.



  • little prof,

    The NHS probably isn’t the best example to use then. Nevertheless there is still intense competition for places on medical degrees at universities, which implies that plenty of people want to enter the profession. It’s true that a few years ago we did have a problem with too few nurses; higher pay and subsidised degrees have fixed that problem.

    Looking at other parts of the public sector, top brass at MI5 / MI6 have recently complained that they can’t pay enough to recruit the best spies. Decades ago they could have their pick of Oxbridge graduates; nowadays with starting salaries in the mid £20s, for a graduate job in central London, they simply aren’t attracting the talent that they used to. So there’s clearly a case for higher salaries there.

    I’m not a public-servant basher. I’m just looking at the numbers and the jobs market. Students with quadruple-A grades at A-level are applying in droves to medical schools. Doctors are coming into the UK from other parts of Europe. That suggests doctors’ pay is too high. By contrast local councils complain that they can’t recruit enough social workers; that suggests the pay is too low. I don’t believe that there is an overall problem of overpay/underpay in the public sector (though I would like to see the playing field levelled especially in terms of pensions).

    Reply
    Please complete the required fields.



  • drewster – 10 years ago I’d have gone for the iPhone, but I think my priorities have changed and I’d now go for nurses pay. As for the social challenge – unfortunately I think you are right; many would definitely go for the iPhone, but they’d probably be the same whinging [email protected] that would moan if they had to wait to see a nurse, and whine because the school doesn’t bring their kids up properly for them.

    Reply
    Please complete the required fields.



  • @timmy t – Thursday, September 30, 2010 12:28PM

    “nurses and teachers save lives and educate children and get paid a pittance” – I have several family members and friends who are nurses/teachers (in some instances a nurse married to a teacher) and also regularly advise this group of people on a professional basis – when you factor in other benefits particularly Pension scheme benefits believe me they are not on a pittance !

    Reply
    Please complete the required fields.



  • Maybe pittance is a bad word but you understand my point I’m sure; that is that as a rule, people are paid a lot more for making money than they are for doing arguably the most important jobs that exist. And the system is self-perpetuating. If you make a lot of money, you send your kids to a private school where teachers are paid more, so your kids can get good jobs which, yes, earn a lot of money. If you’re a teacher, your kids probably go to state school, are statistically less well educated, and get less well paid jobs. The fact is that nurses and teachers are not thought of in the same light as Consultants and Bankers. They are less well paid, yet their jobs are more important.

    Reply
    Please complete the required fields.



  • timmy,

    Parents don’t all agree that more teachers = better life chances. How many parents choose to pay their own money towards extra tuition for their kids? A few middle-class parents around exam-time; but hardly anybody else. Given the choice between two weeks in Tenerife or two hours per week tutoring for their child, most parents choose the holiday.

    Reply
    Please complete the required fields.



  • drewster – so is your gripe that we have too many or the ones we have are paid too much? Call me old fashioned, but I believe that a great education is everybody’s right and shouldn’t be the preserve of those that can afford it. Maybe if we paid teachers more, it would be a career choice and would attract higher calibre people to the profession, so extra tuition around exam times wouldn’t be needed. I remember all my teachers (just). It was a state school but every one of them was very highly thought of and well repsected, but in and out of school. Now my kids are at school and some of the teachers are just kids themselves. I know I sound like a grumpy old man but the system has deteriorated beyond belief over a generation.

    Reply
    Please complete the required fields.



  • little professor, take the example of education, the private sector educates to a much higher standard than the state system. Maybe the same applies to the NHS, do not be so cocksure about it’s superiority and your own evident self worth. As drewster says, if you can earn so much more in the private sector, then do so, but are you good enough?

    Reply
    Please complete the required fields.



  • timmy,
    Part of the reason why teachers were better 30-40 years ago is because back then, there were fewer job opportunities for women. If you were a well-educated, intelligent woman, who wanted a family-friendly job, then teaching was practically the only option. These days there are greater career opportunities for intelligent women, so the ones who choose teaching today aren’t of the same calibre.

    My gripe is that it’s incorrect to say teachers are worth more than management consultants. As it happens, I am in favour of smaller class sizes in primary schools (which means hiring more teachers).

    Bankers, management consultants, CEOs, and pop stars are all examples of how people at the top of their professions have gained massively from globalisation. The following link explains it better than I can.

    Harry Potter and the Mystery of Inequality

    [The great Greek storyteller] Homer told great stories but he could earn no more in a night than say 50 people might pay for an evening’s entertainment. Shakespeare did a little better. The Globe theatre could hold 3000 and unlike Homer, Shakespeare didn’t have to be at the theatre to earn. Shakespeare’s words were leveraged.

    Tolkien’s words were leveraged further. By selling books Tolkien could sell to hundreds of thousands, even millions of buyers in a year – more than have ever seen a Shakespeare play in 400 years. And books were cheaper to produce than actors which meant that Tolkien could earn a greater share of the revenues than did Shakespeare.

    Harry Potter author J.K. Rowling has the leverage of the book but also the movie, the video game, and the toy. And globalization, both economic and cultural, means that Rowling’s words, images, and products are translated, transmitted and transported everywhere – this is the real magic.

    Rowling’s success brings with it inequality. Time is limited and people want to read the same books that their friends are reading so book publishing has a winner-take all component. Thus, greater leverage brings greater inequality. The average writer’s income hasn’t gone up much in the past thirty years but today, for the first time ever, a handful of writers can be multi-millionaires and even billionaires. The top pulls away from the median.

    Reply
    Please complete the required fields.



  • (that’s just an extract – it’s worth reading the linked article fully)

    Reply
    Please complete the required fields.



  • Tolkien’s estate also had the benefit of some mildly popular films n’es pas?

    Reply
    Please complete the required fields.



  • drewster – if you surveyed the population of this country as follows…

    If you think the standard of education has dropped in this country because teachers aren’t paid enough so the best people don’t want to do it, go and stand in a room with timmy.

    If you think the standard of education has dropped in this country because big companies have improved their diversity policies, go and stand in a room with drewster.

    … I’d need a room the size of Yorkshire and you’d need a dining room.

    Reply
    Please complete the required fields.



  • timmy,

    I don’t agree that teachers need more pay. What’s needed is smaller class sizes, especially in primary schools. Private schools actually pay their teachers less than state schools; but they have much smaller classes.

    It’s not about “diversity policies”, it’s about how society’s attitudes to working women have changed. Back in the 1960s if a man and an equally-qualified woman applied for a job at a big law firm, the man would go onto the lawyer fast-track whereas the woman would be offered a job as a legal secretary. (“What’s the point in investing in her? She’ll only leave to start a family in a few years anyway.”) In that climate, teaching was a much better career opportunity.

    You’re correct that if you put it to a democratic vote, you’d probably win. But the most popular answer isn’t always the correct one.

    Reply
    Please complete the required fields.



  • Drewster,

    Googled Private School Teacher pay and the first thing I looked at said that Private school teachers are paid more. Not much but they are.
    “What’s the point in investing in her? She’ll only leave to start a family in a few years anyway.” is exactly what diversity policies are all about.
    “You’re correct that if you put it to a democratic vote, you’d probably win. But the most popular answer isn’t always the correct one.” No but sometimes it is.

    Think we’ll just need to agree to disagree on this one. I need to do some work!

    Reply
    Please complete the required fields.



  • In the 1960s, classroom teachers at the top of their salary scale received approximately 90% of the salary of a GP. Today, their salary is a third of the average GP. There was no need for educated people to lower themselves to working for law firms a few decades ago.

    Reply
    Please complete the required fields.



  • Agreed – I need to do some work too!

    Reply
    Please complete the required fields.



  • @timmy t (Thursday, September 30, 2010 11:16AM) said…”yet a Management Consultant who tells companies how to make more money, or a banker, who just makes money, earns 5 or 10 times that amount”

    How ironic – Northumberland Council pays consultant £1,110 a day. A CASH strapped council has been shelling out more than £1,110 a day for the work of one man, The Journal can reveal. Northumberland County Council has been paying £1,175 for every day that consultant Keith Ireland has worked for it over the last eight months.The council is currently faced with having to make savings of £56m over two years and is likely to have to axe 1,000 workers.

    Full story @ http://www.journallive.co.uk/north-east-news/todays-news/2010/09/30/northumberland-council-pays-consultant-1-110-a-day-61634-27369190/

    Reply
    Please complete the required fields.



  • GP’s salaries were massively increased by the last set of idiot politicians, and very little extra work was expected of them. Another example of public sector inefficiency.

    NHS, education, police – all should have rather large pay cuts, or at the minimum pay freezes for the next 5 years, or until they are paid in line with what they were before Labour came to power.

    Reply
    Please complete the required fields.



  • alan – brilliant idea – the savings could either fund a cut in corporation tax for financial services companies, or a cut in income tax for their employees…

    Reply
    Please complete the required fields.



  • That’s a damn good idea timothy! Make mine a double!

    Reply
    Please complete the required fields.



  • Alan – You’re right about GPs. Disagree on the rest though, their pay seems about right to me. Before Labour came into power there were shortages of nurses, and maths & physics teachers kept quitting to go work in the city instead.

    jackc,

    It’s quite common in both the private and public sector to bring in “hired guns” to do the dirty work of making cuts. Managers don’t want the blame and guilt; and it’s easier for outsiders to make the difficult decisions, since they aren’t clouded by the emotion of having worked with those people for years.

    £1,175/day is probably £1,000/day + VAT. The chances are he’s not local to Northumberland (Gatenby Sanderson consultants have a listed office in Leeds), so he either has a long commute or he’s paying for a hotel or a flat nearby, away from family on weekdays. It’s very much a niche job – how many of us have the skills and experience to not only review the council’s management structure, but also “cover the vacant posts of deputy chief executive and corporate director of local services”?

    Let’s assume he works as many days as a teacher – up to 195 days a year – that’s £195,000 per year. A teacher earns £21.5k-36.5k basic pay (they can earn more by taking on extra responsibilities). Taking a straight average, that’s £29k. So our chief executioner is worth 6.7x more than a standard teacher.

    However he’s not just an average person. He’s near the top of his profession, so let’s compare him with a headteacher. National pay scales show head teachers earn £42-105k. Assuming close to the upper figure, our management consultant is worth just twice as much as a headmaster.

    The headmaster has a guaranteed job near to where he lives; a final salary pension, and (for anybody who joined the profession before 2007) the right to retire at the age of 60. The management consultant has none of those; and he also suffers naming & shaming in newspaper articles like this one.

    It’s not nearly as clear-cut as the article first implies.

    Reply
    Please complete the required fields.



  • Maybe more sensibly though, the savings could be used to reduce the structural deficit the UK seems to have accumulated under Labour?

    Reply
    Please complete the required fields.



  • Maybe yet more sensibly, the money required to repay the structural deficit accumulated under labour could be retrieved from those that labour let loose to cause it, rather than those that are either:

    1. Trying to save peoples lives
    2. Trying to educate our children so our economy is more sustainable in future
    3. Going to protect us when the riots start as a result of the cuts required

    Just a thought!

    Reply
    Please complete the required fields.



  • So you’re saying 1) doctors are paid to heal people, 2) teachers are paid to teach, 3) police are paid to preserve law and order.

    Give that man an award for stating the obvious.

    You purposely avoid arguing whether you think the public sector costs too much or is value for money.

    Budgets for health and education increased massively under Labour, but now that they’ve mismanaged the economy the country can’t afford it any more so cuts are needed. It’s all well and good saying that the banks should foot the bill, but like it or not, it’s the taxpayer that has bailed them out, so it’s spending cuts and higher taxes all round. You may not like it, neither do any of us, but that’s the reality of the situation.

    So your “just a thought!” amounts to no thought at all on your part.

    Just a thought!

    Reply
    Please complete the required fields.



  • 1) Doctors & nurses
    2) Teachers
    3) Police officers

    Are those really the three most important tasks in the country? What about (tenant) farmers who grow food for our children, yet they earn a pittance? What about vegetable pickers, who also earn a pittance? Think of those poor Polish immigrants working in food processing plants in Lincolnshire, on low wages.

    While we’re at it, the fine people at the local water company deserve lots more pay. Every day they provide us and our children with clean safe drinking water; we don’t even give it a moment’s thought. Let’s double their salaries. Also I’m fairly sure the London Underground was less crowded 30 years ago; paying tube drivers more will fix that.

    Did I mention the cleaners at your school or hospital or police station? The work is probably contracted out to the cheapest local cleaning company. Yet they provide clean toilet seats for our children, they deserve more money.

    Your children’s school uniforms and the shoes on their feet were made by poor underpaid workers in some foreign country. Yet these hard-working people provide comfortable clothes and dependable footwear. They deserve to be paid more!

    In fact everybody deserves more money, except for bankers, management consultants, and anybody else who can’t make a clear connection between their job and how it makes the world a better place.

    Reply
    Please complete the required fields.



  • What’s your point drewster?

    Reply
    Please complete the required fields.



  • I’ll rephrase that, sorry.

    The point I’m making is that public sector spending needs to be reduced across the board and taxes increased in order to balance the countries finances.

    Everyone employed by the government will therefore be effected regardless of their job or how deserving they are.

    Reply
    Please complete the required fields.



  • Alan,

    My point is that everyone in society is a “key worker”, not just nurses and teachers.

    Reply
    Please complete the required fields.



  • Alan – I agree, we need both spending cuts and tax rises. Nobody’s job is essential, and nobody deserves more pay just because their job is perceived by some as more worthy.

    Reply
    Please complete the required fields.



  • I agree.

    Many in the private sector have already suffered pay freezes (myself included) and now the public sector are having to take some of the pain. You don’t hear supermarket workers complaining about pay and conditions yet at the first hint of trouble public sector workers are bleating “How dare they restrict our pay rises” etc. and claim that the work they do is so important etc.

    I think we’re kinda making the same point.

    Reply
    Please complete the required fields.



  • Like drewster I get fed up with people trying to pin a value on ‘key workers’. What about the civil engineer that builds the offices you work in and bridge you drive your car over? I assume that you assume it wont all collapse and kill you?

    But somehow because your GP is legally allowed to supply you with an opiate derivative to ease your pain whenever you come crying he/she is somehow a hero deserved of a high salary? I suggest you get a real illness and go and find out for yourself how useful your GP is. Your only hope lies with the pharmaceutical companies and charities and that is all it is – hope.

    GPs are overpaid because labour decided to give them a massive pay rise, but for what reason? I’ve been completely baffled by it for years now.

    However, nurses are underpaid. Many earn not much more than the minimum wage and yet put so much effort in their work. Also they have to witness as much suffering as GPs do.

    Reply
    Please complete the required fields.



  • 45. drewster said…Alan – “I agree, we need both spending cuts and tax rises. Nobody’s job is essential, and nobody deserves more pay just because their job is perceived by some as more worthy.”

    I can’t believe you said that drewster. Nor will you in the daylight of morning, when that finally comes.

    Reply
    Please complete the required fields.



  • I’ve thoroughly enjoyed reading this thread. It has been mild mannered and reasonable by our usual standards. Not much to add apart from “you’re all right but a little bit wrong”. The truth lies somewhere in the middle and it is probably exactly what we imagine it to be, all of us having gone to school, been in hospital etc. none of this is particularly mysterious.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>