In Britain, Government Pays Out, While Private Pay Shrinks

The recession is hitting hard in Britain. Unemployment has hit a 13 year high, at 2.2 million, and the last quarter saw the biggest rise in 28 years, so the bottom is nowhere in sight. But what’s particularly galling is that even those with jobs are worse off: over the past year, private sector pay fell by 1.9 percent, the first decline since 1964. And deflation’s nowhere in sight in Britain: consumer prices are up almost 3 percent over the last year.

But one sector’s doing very nicely, thank you. In the U.S., as we reported this morning, the private sector lost 611,000 jobs in the last quarter, but government added 72,000 employees. In Britain, while private sector pay is falling and prices are rising, public sector wages increased by 3.6%, more than the rate of inflation.

An average worker in the British public sector now makes 5% more than their average private sector counterpart, while at the same time enjoying considerably more job security, better pensions, and, in many cases, better working conditions – all paid for by the always hard pressed, and now shrinking, private sector.

During good times, the public sector grows because ‘we can afford it’; during bad times, it grows because ‘we need it.’ According to the public sector’s defenders, there’s never a time when we don’t need more of it. And that’s why both the U.S. and Britain are forecast to run unprecedented budget deficits in the years to come.