dittologica

Ever since the public sector workers’ strike last week, the British media have been playing up supposed gaps and divides in public opinion about pensions. Participation in the strike was massive, with an estimated two million public employees taking part, and there was evidence of high levels of public support on the day. The BBC, however, has been running interviews, and even whole programs, devoted to ‘exploring’ what they say is a fissure between public and private sector workers. Their story is that private sector workers resent ‘gold-plated’ public sector retirement plans, which are said to be paid for by their taxes, while they themselves can look forward to having little or nothing to fall back upon in their retirement. The proposed solution to the gap is to bring down public pensions, not to improve private sector pensions. And the justification is, of course, the financial crisis and the ‘tough times’ we are in.

This Government and business-allied media offensive occurs in the context of a shocking information gap among members of the public. In a poll conducted by market research firm TNS-BMRB, only one in 20 private sector workers said they understood what the pension strike was about.

David Cameron’s coalition government is praised by conservative journalists and reactionary bloggers for their multi-pronged attack on public sector pensions, in which they are pushing to increase employee contributions, make employees work up to the age of 67 or 68, change the basis for calculating cost of living increases to a lower inflation index, and base pensions on career average earnings rather than final salaries. This comes on top of pension reductions that were agreed with the unions three years ago, and it sends the signal that public workers are fair game for take-backs whenever and as often as deemed necessary by the reigning political party. As for bargaining in good faith, after months of stalling in negotiations with public sector unions, the Cameron government made a pre-strike offer calculated to split working people further by offering to preserve pension arrangements for older employees while cutting them for younger employees. This attempt to divide older and younger public workers was rejected by the unions.

Race to the Bottom
Cameron was already touting his party’s plans to cut public sector pensions in November 2007 – before he became prime minister and just as the financial crisis was unfolding.  By the time the crisis came, most private sector employers had already divested themselves of any responsibility to provide decent pensions, leaving workers’ futures at the mercy of risky individual pension schemes based on the performance of the stock market. When the crisis came, private sector pensions fell like tenpins in the wake of the stock market crash and banking defaults, and conservatives saw their chance to realise a cherished objective. They availed themselves of the collapse of private pension schemes to put out the message that it was unfair for pubic workers to have more security in retirement than their now ruined private sector counterparts. The race to the bottom was on.

Next to nothing was done to reign in the banks and large corporations which caused the crash and which quickly emerged from the crisis more profitable than ever. In fact, many were, and continue to be, the recipients of huge transfusions of government welfare via ‘quantitative easing’ and interest-free handouts from central banks. At the same time, the evaporation of credit available to small businesses, home owners, and local governments led to severe reductions in public services, huge increases in unemployment, and widespread personal defaults and bankruptcy. Governments in Europe and North America responded to the perilous financial situation of vast swathes of their populations with plans to impose further ‘austerity’ on their citizens, cutting living standards and quality of life even more.

Shock Doctrine
Ignoring the lessons of previous economic crises, the dominant neoliberal establishment saw this situation as the perfect opportunity to make good on their longstanding intention to slash the public sector through defunding and privatization. In her book “The Shock Doctrine“, Canadian writer Naomi Klein shows how policies which favor multinational corporations have been propagated around the world by exploiting the vulnerabilities of people and nations in crisis. She uses the term ‘disaster capitalism’ to characterize the use of war, civil unrest, natural disasters, and economic insecurity as opportunities to further neoliberal agendas. In post-communist Eastern Europe and in Latin America, programs sponsored by Western governments and international banks to rapidly achieve the transfer of public property and revenue to the private sector were overtly referred to by Western policy makers and businessmen as ‘shock therapy’ and were touted by such luminaries as Milton Friedman and Jeffrey Sachs. In all cases, economic shock therapy has benefitted the multinationals and local oligarchs, while it has resulted in immiseration of the general population.

The financial crisis which began in 2007 and continues today has been seized upon by the neoliberal establishment as one of the biggest opportunities yet to impose a new round of shock treatment. The credit crisis, which has now mutated into the sovereign debt crisis, has allowed bankers, corporate CEOs and their fellow travellers in government to hasten their agenda of eliminating jobs on a massive scale, curtailing public services and transferring them over to profit-making businesses. They rely upon disinformation and public confusion about the causes of, and the remedies for, the economic crisis to achieve public acceptance of their plans.

Sowing Confusion
Much like the ‘debate’ on climate change, government speakers and the establishment media have created a ‘debate’ on the public pensions issue, and the value of the public sector generally, which has little basis in fact. In classic ‘big lie’ fashion, they saturate the media with myths about the underfunding of public pension schemes (for an antidote to this disinformation campaign, see Dean Baker, Public Pensions 101 ).

Like the myth of the ‘welfare queens’, created by the Reagan regime in the 1980s in order to turn public sentiment against welfare benefits for the unemployed, today’s leaders have created an image of public sector workers as a privileged class of people apart from the general population. When they refer to the ‘bloated’ pensions of public sector workers, the examples they give are invariably of higher-paid professional employees (though never of department heads and cabinet members!). They never talk about rubbish collectors, janitors, hospital care assistants or school lunch makers – the kind of workers who make up the majority of the public sector workforce, doing crucial jobs for society at low wages and with little to look forward to in the way of pensions.

The average annual public sector pension in Britain is around £7,000 per year. That average figure hides the fact that the majority of workers will get less – and women employees far less. The poverty level in Britain is currently about £11,000 per year for a couple with no dependents. In the US, the average public pension is $19,000 per year, while the poverty level for a couple with no dependents is about $15,000. It is obvious from these figures that in neither country are public sector workers looking forward to anything like a ‘gold-plated’ retirement. If they are lucky, a couple will have two small pensions to fall back on between them. But in the wake of the economic crisis, this may not be the case. And with up to half of all job seekers between the ages of 16 and 25 unable to find work in the developed countries retirees often continue to have responsibility for supporting younger members of the family.

Real Solutions
It would be far better for the majority of people and for the economy if the supposed gap between private and public sector pensions was used as a rallying point to demand improvements in the situation for the private sector, rather than engaging in a race to see who can get less. At the same time, we should insist that the bankers, brokers and corporate CEOs, ante up their fair share via financial transaction taxes, the ending of off-shore tax evasion and closing the myriads of other tax loopholes which result in the rich paying proportionately lower taxes than the average working person.

For thirty years the wages of working people have been declining in real terms while the profits of corporations have gone through the roof. Now working people are being asked to shoulder the blame for the economic crisis and accept that they – not the bankers and brokers – need to tighten their belts further and live lives of austerity. Through their attempts to divide public and private employees, the lords of the economy are trying to use one segment of the working population to police the other. How convenient for them – we shouldn’t fall for it!