Limiting Pay in the Public Sector

One of today’s Jeremy Vine News pieces was about pay caps in the public sector.

Annual pay rise is said to be capped at 1% of something or other; I wasn’t paying much attention. I live in an employment bubble; I’m self employed and my earnings vary year on year. My “salary” is less than all those in the public sector who I heard airing their grievances, in particular a librarian who earns a grand a month, but I live on my own with no kids to feed (I don’t know about them).

While I’d like to be paid to sit in a room full of books I enjoy my working life. I have built it for myself and I feel very blessed that I find enough work coming my way month on month to pay my bills, buy food, and set a little aside for retirement. I don’t have to beg, steal, or borrow to make ends meet. I cycle to each client and I feel my efforts are well received and appreciated; it’s all to easy to link success with pay though. I feel like I live a simple life; nothing too lavish, I watch carefully what I spend my money on, and I don’t borrow money in any form.

Some people phoning into the show were in support of those public sector working, agreeing that they deserve to be paid more, and paid an amount that reflects the service they provide. Theresa May’s response is that extra money doesn’t grow on a magic tree. I have two conflicting issues here, 1) “live within your means” 2) limiting public pay is somewhat counter-productive and here’s why:

When public pay is limited to this degree, you limit how much money such worker have to put back into the economy: they have less money to spend/waste in shops and on services, and then those shops and services earn less, and then they pay less tax, and thus less money finds its way back into the public pay pot. Where do people think money comes from, if not from a magic tree?


  1. I completely agree. It’s all to do with oiling the wheels of the economy which, as you’ve pointed out, depends on encouraging people to spend spend spend – e.g. the other day I noticed a new kitchen being fitted in a house built less than two years ago. The magic money tree is the same one that produced £435 billion of quantitative easing to save the financial firms caught out in the 2008 crash, which did little good except to create asset price inflation. It might have been better if they had simply given £7,000 to each person in the country to spend or save as they wished. From that perspective, paying public employees more does not seem so bad.

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