Pay Cuts for the Producers

Anyone who insists we no longer live in a class society would have some difficulty in explaining what we have just witnessed this year. It began last March when public sector workers, after three years of below inflation pay rises (i.e. pay cuts), were again slapped in the face by Gordon Brown.

The Government’s own pay review body had recommended an ungenerous rise of 2.5%, but Brown (at the time still Chancellor of the Exchequer), personally stepped in to stagger this increase over two years so that this year the average pay rise will be 1.9%. His argument was that wages rises were threatening to fuel inflation and this would upset Government inflation targets. This was a barefaced lie.

The Consumer Price Index at the time was 2.7% and the Retail Price Index (which used to be the measure of inflation and includes mortgage payments and rents) was 4.2%. It is not wage rises which cause inflation but the fact that the Government prints money to finance its own deficits. Workers simply demand wage rises to keep up with the inflation created by the Government. Incomes Data Services recently published a report which concluded that rising housing, food and fuel prices were the motors of inflation and that “very little” was down to wage increases.

The fact is that the pay cuts are part of a package of measures Brown has introduced to claw back a £20 billion deficit in the public finances. By staggering public sector pay, Brown will immediately save £200 millions this year (and, with some public pay settlements, he will save more in subsequent years as some civil servants will be entitled to even lower rises - some will not get any - next year). His real savings, though, will be in cuts in jobs in the public sector. Already 44 000 jobs have gone in the public sector and another 70 000 full-time equivalent jobs will go next year. This is estimated to save £21 billion so, abracadabra, the budget deficit will vanish. In the meantime, workers in the public sector will be facing lower living standards and greater debt. Britain has already got one of the highest indebtedness ratios in the world. Household gross financial liabilities as a percentage of GDP has risen from just over 100% to 150% in the last twelve years. And, as we all know, the real cost of living on basic necessities actually hits the working class harder, this is a situation which will only get worse.

Payments to the Parasites

Contrast this with the Government’s treatment of the chiefs of public sector bodies. Their pay has risen by over six times the rate of inflation in the last year. 300 of them took home an average pay of £237 564, whilst the top 17 were given half a million pounds or more. Heading the list is that all time successful manager Adam Crozier, the Chief Executive of Royal Mail, who took home £1.256 million (of which just under £300 000 was a bonus, presumably for the fine job he had been doing!).

Compare, too, the Government’s treatment of the gangsters who gambled with their savers’ money in the US sub prime market, and basically lost it. Although the Governor of the Bank of England tried to argue that this was what capitalism was like (it was he said an investor’s “moral hazard”), he was overruled by his political masters, who saw the queues outside Northern Rock being repeated at every high street lender. The new Chancellor of the Exchequer, Alistair Darling, not only intervened to guarantee savers’ money at Northern Rock, but stated that he would do the same for other banks if the situation arose. The Bank of England has now made £40 billion available to Northern Rock (£24 billion in loans, the rest in insurance cover) and it seems will continue to support “the Rock” for a number of years. Northern Rock’s directors have now all resigned but will be paid their handsome salaries until January. It is not yet clear whether Adam Applegarth, the architect of this scam, will get his exhorbitant severance pay package. Should Branson, or any of the other vultures currently circling around Northern Rock, get their hands on it, they will be supported by taxpayers’ money. The biggest group of taxpayers in the economy are... the workers in the public sector, whose generosity will be extended to the salvation and support of these financial parasites.

In previous epochs this alone would be enough to raise the barricades. There is no doubt that there is much bitterness and anger amongst wide swathes of public sector workers who have experienced declining working conditions for years. Government cuts and the target-setting agenda which distorts the aim of the services have led to a declining sense that their job is worthwhile (see the letter from a nurse in our correspondence section). We might, however, have expected that the issue of a pay cut would have provoked a real concerted fight back but this has not happened. By offering different schemes for different groups, by letting nurses settle for a better deal in Scotland, etc., the Government has ensured that there has been no concerted response.

The Unions - Whose Side Are They On?

And then there are the unions. At the TUC Congress on September 11th (a 9/11 for the working class?) the delegates solemnly voted for united action by all the public sector workers’ unions. Predictably nothing of the sort has happened. Divided between a series of unions, the workers have looked for leadership but found only confusion. Amongst local authority workers, two unions (Unite and the GMB) have accepted an “improved” offer (of less than half a percent) and so put that in a ballot to the membership, while a third union, Unison, called a strike ballot. This turned out to be a manoeuvre. Not only did the ballot paper come with propaganda from the Executive about the problems of striking, but they were sent out during the postal workers strike, so that many did not receive their ballot papers on time. Even then, a narrow majority for strike action (51.6%) was achieved but the Unison Executive decided that this was not enough to call a strike since only about a quarter of the membership had managed to return their ballot papers. It’s a wonderful thing democracy. No British Government is ever elected with the support of more than 30% of voters but nobody decides to call that a negative vote.

Civil servants are not only faced with the worst of these derisory pay offers, but they will bear the major burden of the Brown cuts, as around 100 000 jobs are planned (30 000 have already gone). Here the union has played a game of divide and rule. The Executive of the Public and Commercial Services union (PCS), headed by the one-time Trotskyist, Mark Serwotka, have developed the tactic of holding separate ballots for every different sector of this huge group of workers (280 000). They already have a mandate from a ballot last January which gave a 68% majority in favour of strike action but have insisted since November 5th that no more strikes will be called pending “further negotiations”. Do they seriously believe that this will change anything? How can you “negotiate” about an outright attack on the workers? The first thing should be to mobilise everyone against the attack. All this reveals yet again the real nature of the trades unions today. And it is not just in the PCS. In the NHS and in education the response of the unions has also been to delay and delay real concerted action.

Not surprisingly, there are many who are questioning why they pay union dues.

Indeed. When unions were formed in the nineteenth century they were both mutual insurance clubs and saved money to support strikes. Then as now the aim was to stop the bosses driving down the cost of labour power. Then it was a fight against straight wages cuts (but then prices were more stable). It was usually a fight until the funds were exhausted, and even, if the strike was brutally lost, the temporary eclipse of the union, but it was a fighting organisation. In today’s post-Keynesian world wage cuts come via below-inflation wage rises. Keynes actually stated that these would be easier for the capitalist class to get away with. But what has happened to the unions? In the epoch of monopolies and state capitalism they have become bloated bureaucracies themselves. They have millions of pounds in their coffers, but not for supporting workers’ strikes. Most of the union’s funds are invested in the pension funds of those who work full time for the union. It is not, therefore, surprising that the aim of the union leadership is not to mobilise the collective strength of the membership for the membership’s needs but to use the threat of that mobilisation as a bargaining lever in smoke-filled rooms with the employers. And it has been clear since 1914 that the unions everywhere identify with the national interest (i.e., the bosses’ interest), since they supported recruitment for imperialist war and called off strikes for its duration.

Fighting Back

Today, some ordinary union members have begun to understand that the union’s sectional interest itself is actually an impediment to a united fight. Postal workers from the CWU, local government and health workers from Unison, civil servants from the PCS and teachers from the NUT have been trying to set up local rank and file committees. However, many of these are local representatives of unions themselves and are often influenced by Trotskyist ideas. As the Trotskyists are still calling only for a rank and file movement to put pressure on the union leaders they, so far, have had only modest success. What we need to recognise is that the rank and file have to take the whole initiative and organise an entirely different kind of struggle. This means setting up strike committees in every area which are responsible to a mass meeting in that area and given the task of uniting action. They could announce a national one-day strike of all the workers involved and the participation in it would be the best ballot of the real mood of all the workers. This would certainly move the management and the union leadership. They will close ranks against the movement and make fake concessions, just as Royal Mail have made to the postal workers and have got the CWU leadership to accept it.

Fortunately, many postal workers are not buying into it but are fighting back. There have been wildcat strikes against the CWU deal in Glasgow, Edinburgh, Newcastle, London, Liverpool and Luton as well as other places. These strikes have arisen over rejection of the Royal Mail and CWU calls for them to accept not only a feeble wage rise but also a total implementation of all the Labour Government’s plans for “modernisation” (i.e. reducing the service). These postal workers cannot win against this combination on their own, but only as part of a united fight of all public sector workers, which not only rejects pay cuts, but ultimately questions a system which is trying to impose them.