Tuesday, March 28, 2006

Workers In The Vineyard

Thrusting young investment bankers of my acquaintance like to amuse themselves by calculating what they're being paid. Not how much, you understand, but how little.

It goes like this. Straight out of college your novice banker can expect a base salary of £35-40 grand. Plus a bonus after 12 months of maybe another £30 grand. Not bad you say. But what they say is that, to get the job, they've literally had to kill and eat a thousand other applicants. What's more, once signed they discover they're expected to work 100 hour weeks, chained in semi darkness to the oars of everlasting number-crunching and pitch-books. And they only get the bonus in the unlikely event they're still alive after 12 months (see the hilarious Monkey Business for full details).

So £35,000 pa is £673 pw. On an hourly basis that works out at just £6.73, only just above the minimum wage. Is you heart bleeding?

I thought of this today as I listened to a public sector union chief explaining why today's strike over pension rights was justified. He recognised that most private sector pension schemes don't give nearly such good benefits as those public sector schemes providing index-linked final salary pensions at 60. But he said that was recompense for much lower public sector pay.


The facts are different. According to the Office for National Statistics (see here) full-time median gross annual earnings in 2005 were £24,344 in the public sector and only £22,247 in the private- a gap of almost 10%. And in terms of hourly rates, the gap is even bigger, at 25%. That's because full-time public sector workers put in about 3 hours a week less than private sector- 37 rather than 40. And the median public sector rate per hour is £12.48- way more than those knackered investment bankers.

We've blogged about the public sector pension crisis before. We taxpayers simply cannot afford the current arrangements, whatever the unions say. It is wildly unfair for private sector workers- whose own deficit laden final salary pension schemes are busy slashing entitlements- to be forced to work til they drop in order to pay for continued public sector largesse.

Of course, the government has already flunked the challenge with centrally employed civil servants, so we'd better not hold our breaths.


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