Osborne to Kill the Minimum Wage


9:02 am - March 17th 2012

by Newswire    


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George Osborne will announce plans to pay lower salaries to public sector workers in poorer parts of the country in his budget next week.

The chancellor will argue that public sector pay should mimic the private sector and be more reflective of local economies. He intends to start the process in three Whitehall departments in the coming financial year, as part of a phased introduction.

Critics say the move will entrench economic divisions between north and south and depress regions of the country already struggling in the economic downturn.

…more at The Guardian

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Reads headline.

Reads story.

Nope, I can’t work out the link either.

2. Disgruntled Gnome

1. IanVisits: The link is called “scaremongering”. And possibly “troll Liberal Democrat readers for teh Lulz.”. And certainly “don’t go giving him ideas!”

“George Osborne will announce plans to pay lower salaries to public sector workers in poorer parts of the country in his budget next week.”

Alternatively:
“George Osborne will announce plans to pay lower salaries to public sector workers in cheaper parts of the country in his budget next week.”

Just read the Guardian article

Osborne claims the move would provide a boost to the private sector in the north and south-west, arguing that employers in these areas cannot afford to recruit staff owing to the relatively high public sector wages in cheaper areas of the country.

If that is what Osborne truly believes then we are all majorly fucked because we have an absolute economic cretin at the helm of the treasury. There’s a big surplus of labour due to the down turn and austerity and yet Georgey boy thinks the private sector gives a flying fuck what the public sector is paying its staff and actually bothers to compete?!

Centrally negotiated pay agreements in the monolithic NHS means that hospitals and other healthcare supply units can’t respond to local labour market conditions.

LSE researchers predicted that the ensuing difficulty of recruiting and retaining nursing staff in regions with strong labour markets would have worse medical outcomes than regions with weak labour markets where it is easier to recruit and retain nurses. And that is just what they found:

“Hospitals in the north gain from a more stable pool of nurses. Southern ones have to lean on temporary agency nurses, who can be paid more but tend to be less experienced, less familiar with the hospital and less productive. Do southern patients suffer as a result?

“The economists look at the proportion of patients aged 55 or more, admitted to hospital after a heart attack, who die within 30 days. They find a strong link between this ratio and local private-sector wages. The higher the private wage, making it harder to get good nurses in the NHS, the higher the death rate: to be precise, if the private wage is 10% higher in one area than another, the death rate is 4-5% higher.”
http://www.economist.com/world/britain/displaystory.cfm?story_id=E1_TDVGGRSS

If true George Osborne is either deliriously out of touch or just outright evil.

@6: “If true George Osborne is either deliriously out of touch or just outright evil.”

Alternatively, perhaps Osborne is paying attention to that reserach at the LSE showing that national pay scales in the NHS can have unintended but harmful medical consequences – as reported by The Economist in that link @5.

The original LSE research is posted here: Can Pay Regulation Kill?
http://www2.lse.ac.uk/ERD/pressAndInformationOffice/PDF/CanPayRegulationKilll.pdf

If people still want to argue that there’s no class war going on then they are in denial.

“If people still want to argue that there’s no class war going on then they are in denial.”

By that LSE research reported @5, patients are the ultimate victims of inflexible national pay rates in the NHS.

10. gastro george

The interesting equivalence here is with Greece and Spain. Greece is to the Eurozone as Wales is to the UK. The neo-liberal solution is the same for both – internal devaluation, localised cuts to the public sector and localised lower wages. The results will be the same. With a smaller local economy – reduced wages will reduce local retail demand, for example – you will get more unemployment and an inevitable death spiral.

@Bob B
Where you have a problem of inequality, the solution is to make things more equal, not to add to inequality.

“Where you have a problem of inequality, the solution is to make things more equal, not to add to inequality.”

Does that prescription relate to equality of inputs or of outcomes?

By the research reported @5, for patients in the south to enjoy the same healthcare outcomes as patients in the north, the relative pay of nurses in the south has to increase so hospitals are able to attract and retain good nursing staff as the hospitals can in the north. Without that, more patients in the south are dying within 30 days of heart attacks. Equal pay rates for nursing staff in the north and south mean higher death rates of patients in the sourh.

@11 Yeah Bob, but Osborne’s solution is to make the healthcare outcomes of the north match up with those of the south. I suppose if Osborne’s aim is increasing death rates that might free up more employment opportunities across the nation however.

Presumably this policy will extend to M.P.s’ staff allowances?
If staff will work for less when not given a choice – why should M.P.s’ staff, wives and children be exempt.
Why not relocate all Civil service departments and offices to low paid areas.
I am sure that there will be lots of competition for job vacancies created by senior officials in the Civil Service who might not relish the opportunity of working in Merthyr Tydfil, Falmouth or maybe Tyneside.
Doesn’t such a policy make real sense, after all there are areas in Britain where jobs are really hard to come by. The South has plenty of work so it would be easy for all these Tax payer funded ‘servants’ to find alternative employment – like M.P.s, we are told we have to pay them high salaries to prevent them migrating to the public sector.
Well, here’s an opportunity for them to show us just how much they can earn elsewhere.

If this report is correct, the logical evolution would be to cut welfare benefits in the north or increase them in the south, this would include child benefit, state pensions, tax-credits and disability allowances and much more.
Of course, the underlying assumption is that public service workers such as nurses prefer to be in the north rather than the south because of the monetary situation, pure Adam Smith economics. Is there any evidence to suggest that income related to the cost of living is the reason for the inequality of numbers and experience.
It is also a myth to believe that all areas in the south are more expensive than all areas in the north.
IMO, if the report is correct, it’s just another way of making healthcare staff pay for the problems they did not create.

15. Mr A James

Bob B @ 7

Hi there Bob, if this is the case then George Osborne should scrap the Universal Credit for the unemployed and make benefit payments reflect upon the areas that they live. For example those in London would receive an higher rate because London is an expensive city to live in, as it is in Manchester and other British cities.

George Osborne will not do this because he is only interested in sucking money where ever he can. George Osborne and others have the life cycle of a parasitic worm. It appears that the lower classes/people doing the right thing (working) are now victims of this Tory Led Coalition’s lying, uncaring ways.

@13: “Why not relocate all Civil service departments and offices to low paid areas.”

That has been going on for decades. It’s a great myth that the civil service is concentrated in London. Only 18pc of the civil service work in London and only 12pc work in central London.

@14: “Is there any evidence to suggest that income related to the cost of living is the reason for the inequality of numbers and experience.”

Try reading the links @5 and @7. Is is possible to check to see whether hospitals in the south are more dependent on hiring agency nurses than in the north and it is possible to check whether the 30-day mortality rate following heart attacks is higher in southern hospitals than in northern hospitals.

I’ve just had another look at the article and another point which may be relevant is that the problem in the south appears to be with the higher numbers of agency nurses. Of course, there is agency nursing in the north, and it does to pay higher than the NHS rates, but clearly, fewer people are choosing the agency route.
This could reflect a cultural difference between the north and south, whereby, nurses in the north are not choosing higher rates of pay. If this is the case, nothing will change the outcome with regard to increasing pay in the south, as agency rates will go up relative to NHS rates.

The headline is not misleading at all.

This is exactly the what will happen next. If you’re going to argue that public sectors should be paid differently due to their area, the next logical step is to argue that a NMW also ‘hurts jobs’ because there are different living standards across the country.

This move is not the only precursor to the scrapping of the minimum wage. The government have also capped benefits and introduced workfare programmes. Both of which will have a downward pressure on wages too.

Surely if we are lowering and restricting benefits, the natural move is to lower wages, thus ensuring the differentials between welfare and wages are to be maintained?

I would not support a cut in the minimum wage, but why would an employer want to pay someone six quid an hour when there are millions of people for whom £4 an hour would represent a serious rise in incomes?

The sooner my Country gets the fuck out of this ‘Union’ the fucking better.

@19. Sunny Hundal

You are right Sunny, and shouldn’t listen to the moaners. At least, if we are talking about a *national* minimum wage, which I think we are. Plans to kill that and replace it with a regional minimum wage are already being drawn up, as the Guardian reports.

http://www.guardian.co.uk/politics/2012/mar/14/statutory-london-living-wage-ed-miliband

“The Labour leader, who made the case for a living wage during the Labour leadership election in 2010, said the proposal, effectively a regionally set minimum wage, had “real potential”.” source: The Guardian.

@19
Oh Sunny, I want to like you, really I do, but you don’t half make it hard sometimes.

24. Chaise Guevara

@ 19 Sunny

“The headline is not misleading at all.”

Except in that it makes a claim that is not even mentioned, let alone substantiated, in the story.

25. Not an economist

“This is exactly the what will happen next.”

Do you find it difficult to open crisp packets? I can’t quite believe that you’re so shamelessly putting words into his mouth, you utter cretin.

@ Bob B

It’s an interesting point about the health outcomes suffering in areas where private sector pay is high relative to nurses’ pay in the NHS, and of course this sort of evidence should feed into policymaking.

But the stated aim of Osborne’s policy is not to help the NHS compete for high-quality staff in areas where private sector pay is relatively high, by raising NHS wages in those areas; it’s to help the private sector compete in areas where public sector pay is relatively high, by limiting public sector pay rises in those areas so that the private sector can catch up.

In other words, this policy is not about levelling up so that (e.g). NHS hospitals in the south can compete with private-sector employers as effectively as NHS hospitals in the north; it’s about levelling down so that the private-sector employers in the north can compete with (e.g.) NHS hospitals as effectively as private-sector employers in the south. On the evidence you cite, that will make things *worse*, not better, in terms of healthcare outcomes. Under the present system, at least public sector wages are competitive enough in *some* areas to recruit and retain quality staff.

@ Bob B,

they can’t say you didn’t try? Well done for that.

Alternatively, perhaps Osborne is paying attention to that reserach at the LSE showing that national pay scales in the NHS can have unintended but harmful medical consequences

**** these comment boxes. BobB, the study provides no support at all for lowering public sector pay outside London. It does provide considerable support for raising nurses’ pay in London; but that’s not what Osborne would want to hear.

@BobB, the study provides zero support for lowering public sector pay outside London,

Well of course. Those nice sleazy corporations licking their lips to undercut public hospitals and schools can’t be profitable for the elites if they have to pay decent wages.

I know, I know, there is nothing the Lie Dems can do. They have signed on to a coalition that means they have no power whatsoever. Clegg is powerless to stop any of it or the tory press will say nasty things about him, and Little Nick does not like that. So he has to bend over and take it. Fuck him , and fuck the horse of the apocalypse he rode in on.

…come to think of it, isn’t it false to begin with that pay is set nationally? What about ‘London weighting’ of salaries? (I’m sure teachers are paid more in London, for instance.) I think we need to be careful to distinguish between the basic principle here – that sometimes it might make sense to have variations in pay between different areas – and the use to which Osborne is putting it (i.e. trying to skew the jobs market in favour of private sector employers).

So, just as a matter of interest, do we think this will apply to the army? Given that your average squaddie is vastly overpaid (in market terms) to begin with, and that overvalue is further compounded when you look at regions that infantry recruitment takes place in, surely there is even an argument for exempting the army from the minimum wage.

Of course, the army will be exempt from this because this plan is simply about the Tories hatred for public servants.

There go all those seats in the Midlands, the North West and Yorkshire, plus a couple in the North East, the failure to win which denied David Cameron an overall majority. The gap in the South West, where the battle between the two Coalition parties has made the difference between a majority Government and a hung Parliament at every General Election for many years, is now so glaring that even the London media and their approved political parties might finally notice that part of the country.

Two Armed Forces personnel of the same rank but based, or with home addresses, in different parts of the country: will they be paid differently? To police officers or two firemen, also putting their lives at risk? How on earth would a school be supposed to recruit the right calibre of head teacher, or a hospital the right calibre of consultant, on this basis? For make no mistake, once this principle had been conceded, then there would be no end to its implementation.

We need a ban on anything paying any of its employees more than 10 times what it paid any of its other employees, with the whole public sector functioning as a single entity for this purpose, and with its median wage fixed at the median wage in the private sector, to which manual jobs would no longer be outsourced. MPs and Ministers would be included in that, and there would be a statutory ban on anything, anywhere in the economy, paying anyone more than the Prime Minister. The trick with the Conservatives is to make them think that it was their idea. Buy the book here.

And an extension to regional, and if possible even local, of the principle of median wage parity between the two sectors? It is certainly worth exploring. The way to tackle low pay in the private sector is to bring it up, not to bring public sector pay pay down. If the private sector had more unions, as it used to have, then it would have far less, if any, of this undeniable problem.

Will MPs for Northern seats have to take a pay cut? With an economy larger than that of may European countries, and with a population considerably larger than that of Scotland, Wales and Northern Ireland combined, the Labour MPs from the three Northern regions are now meeting and acting as a single Group. A sleeping giant is awaking, within the parliamentary system rather than in the form of costly regional assemblies. The North of England already accounts for three quarters of the Parliamentary Labour Party. Ed Miliband is a Doncaster MP. If the Blairite media were to stage their vaunted coup against him, then the beneficiary would not now be his semi-retired brother any more than it was Michael Heseltine, but the Shadow Cabinet member of the moment, who is no carpetbagger in the North.

35. gastro george

I’m just imagining whether there is any businessman in the North or Wales who’s been saying: “what we need is for local public sectors salaries to be lower so that I can poach some of their staff [who are all feckless timewasters according to the bonkers right] instead of employing one of the thousands of unemployed graduates that write to me every day for a job”.

I don’t see how this is about killing the minimum wage of £6.08.
They can’t ever go below that. They will freeze pay rises to those on on near the minimum wage in cheaper parts of the country though whilst allowing an increase for people in the south east of England.
It does kind of suck whichever way you work this around.

In Northern Ireland, the Minister of Finance and Personnel (Sammy Wilson of the DUP) has come out strongly against this proposal. Which is quite significant because he usually just tows the Westminister line without too much question.
Wanting to be seen as a loyal subject of the Crown etc.

Northern Ireland had the highest rate of ownership of BMWs in the UK, twenty and thirty years ago during the Troubles, as even during all the conflict, there were a lot of people doing very well there thanks to generous UK subsidy and the public sector.

The NHS is the biggest employer in the country (and possibly Europe) and the nature of the service means that it employs a large number of highly qualified technical staff. Nurses, for example, are educated to at least diploma level, and now entry to nursing is to study for a degree. To this extent, it is unsurprising that there appears to be a large pay differential between the NHS and the private sector.
The point here is that there is also a large differential within the private sector between jobs which require qualifications and those which do not. So it begs the question of how the government would determine the different pay rates. Also, in nearly all areas of private business, medical and technical healthcare staff are paid more than within the NHS. Daft question, but does anyone believe that salaries will be increased in accordance with this.?

As can be seen by all those non-commenting re-tweets, the sole point of the sidebar stories is to troll for retweets by creating a shouty, attention-seeking headline regardless of whether the story is even tangentially related.

Sunny’s just flashing a bit of leg on the street-corner.

Osborne is going to go down as yet another supremely bad chancellor this country has had the misfortune to have lumbered upon it.

We poor Brits get bad policy driven by potty economic thinking every time.

@36 Don’t be too sure that they can’t go below that. It’s not like there isn’t already people claiming that the minimum wage impacts job creation.

Minimum wage to rise by 11p an hour – http://www.bbc.co.uk/news/business-17429325

Was this article supposed to be about the minimum wage?

Minimum wage due to rise by 11p – http://www.bbc.co.uk/news/business-17429325

Was this article supposed to be about the minimum wage..?


Reactions: Twitter, blogs
  1. Saggydaddy

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  10. Jed Miliband

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  11. Watching You

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  12. Watching You

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  13. artsyhonker (Kthryn)

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  37. RepublycanParty

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  38. JC

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  39. KrustyAllslopp

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  42. Osborne to Kill the Minimum Wage | marylanes19

    […] Source: http://liberalconspiracy.org/2012/03/17/osborne-plans-to-kill-the-minimum-wage/ […]





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