How long can the public-sector gravy train stay on the rails?


Over the past seven years, the government has raised salaries and strengthened the terms, conditions and pension rights of Britain's public sector employees to a level that would be the envy of most private sector workers, writes Gabriel Rozenberg in the Times today.

Public sector wages rose by 5.6 per cent over the year to June, well above the 4.5 per cent level that the Bank of England sees as non-inflationary and also above the average rate for the private sector.

But there are real fears that such largesse is not sustainable:

Andrew Haldenby, director of Reform, a think-tank that monitors the public sector, said: "The growth in public sector employment is part of . . . a massive transfer of resources from the high-productivity private sector to the low-productivity public sector. This has an effect of depressing productivity overall and so reducing prosperity.

"This is more than just a statistical curiosity. It has genuine implications for economic performance and it demands a change of approach."

He said that the Government needed to take a lesson from the private sector about linking risk and reward, letting managers vary their teams' working practices and making better use of fixed-term rather than permanent contracts.

The Times | Lure of the public sector: a job for life with a fat pay rise