THE PUBLIC SECTOR AND THE PRIVATE SECTOR
In England changes have occurred that mirror what has happened in the U.S. People who work for the government often are better off than those who work in the private sector. A dramatic example is in retirement benefits: Pensions or defined benefit plans still are dominant in the public sector and with unions such as GM's, but those working in the private sector mostly must save for themselves with no guaranties from anyone.
Boris Johnson, the new mayor of London, at the far end of the political spectrum from his communist predecessor Kenneth "Red" Livingstone, comments on the way it is today. The similarities to conditions in the U.S. are eerie:
As the recession deepens, so does the divide between those who are paid by private companies, and those who are paid by the state, and nowhere is the division starker than in the matter of pensions. A decade or so ago, . . people went to work in the public sector on the understanding that they would probably be paid less than their counterparts in the private sector. But they were fortified by the knowledge that they were serving their country or their community, and that their jobs and pensions were more secure.[T]hose assumptions, and that essential symmetry, have been abolished...There has been a complete transformation in the relationship between private and public sector reward.
[M]ost private sector employees are finding their retirement looking ever leaner, while the state sector has been miraculously insulated.
It is incredible but true that the average public sector wage is now higher than the average private sector wage; and public sector pensioners can still generally expect a final salary pension scheme – and these can be very generous indeed. In local government, for instance....
With firms now laying off staff in their thousands, with unemployment apparently set to hit three million for the first time since the 1980s, it is simply too much to expect council-tax payers to scrimp and save to pay for the pensions of local government's colossal clerisy, when those pensions are so much more comfortable than anything they could afford themselves.
And the second, and more serious, reason for believing the position to be unsustainable is that these public sector pensions are now, frankly, unaffordable.
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