As millions of people walk out in today’s public sector pension strikes, wide-scale disruption seems inevitable. The government claims that the walkouts will cost the economy up to £500 million and the army is on standby to handle passport control at Heathrow. Repercussions will also be felt on campus, with university lecturers joining care-workers, teachers and fire-fighters on the picket lines. The backlash has begun already, with David Cameron denouncing the action as “the height of irresponsibility”.
In reality, those walking out today do so reluctantly; they have no other choice. Strikes are always a last resort, and the decision to lose a day’s pay is never an easy one, especially in the current economic climate. Negotiations have dragged on for months, but the government is seemingly unwilling to compromise on any of the core issues. Hours of talks have produced nothing, and time is running out.
Most public sector workers survive on fairly modest salaries. As the cost of living soars, many will see their pension contributions double whilst being forced to work longer and still receive a smaller pension when they retire. According to the TUC workers will be £3 billion worse off as a result of the government’s plans, when each year tax relief amounting to £10 billion goes to the richest 1% in the country. Ministers claim that these changes are necessary to make the pensions system more sustainable when people are living much longer than they used to. However they also admit that the billions raised by the move will go not towards directly improving the future viability of pension schemes, but will instead be spent on reducing the budget deficit.
According to Lord Hutton’s recent report, the cost of public sector pensions is actually set to fall as a proportion of national income, which makes one question the necessity of reform. As a result of changes negotiated between the unions and the last Labour government funding was capped and individual contributions increased. Most pension schemes are now on track; the NHS pension pot now has a £1.8 billion surplus. The real danger is that the current government’s proposals will leave pension provision so inadequate, and contributions so high, that many will simply opt out, leading to the kind of collapse that has decimated private sector schemes.
Whilst public sector pensions are currently adequate compared those in the private sector, they are certainly not “gold-plated”. If private schemes are so terrible, and by any account they are, why inflict them on everyone? Many households are made up of people working in both sectors; a public sector pension will often support those with an inadequate private pension. If anything, the loss of decent pensions in the public sector may well make real private sector pension reform more distant. A race to the bottom benefits no one but the super-rich.
Retirement may seem like a distant prospect to the average university student and we could all do without the inconvenience of strikes, but if fair sustainable pension reform is not achieved soon the consequences will be dire for everyone. Unless all pensioners are guaranteed a decent standard of living, the cost of their welfare and health care provision may rise. We will pay the price for our parents’ pensions, and will be left struggling in retirement ourselves. We should support the strikers, they are fighting for our future too.