Nick Clegg has today surfaced to distance himself and his party from plans to introduce a regional pay policy within the public sector, a move which has created much furore within the trade unions and their members. The argument for regional pay goes that, because it is more expensive to live in some areas than others, and because in less well off areas private sector companies pay less to employees than they would in more prosperous areas, the government should ensure competitiveness by varying the pay of employees dependent upon the region in which they live.
However, as Clegg has rightly pointed out today this so-called ‘solution’ to the government’s problem of spending too much on wages in the public sector will only serve to create more problems by widening the north-south divide already far too apparent in the UK.
Currently the UK is dominated by the south-east and London in particular and this is a problem that commentators have observed for a number of years, but politicians have done very little about. Whilst very few moves have been made to rectify the anomalies between the north and the south, this proposal will only worsen the divide and therefore must be opposed not only by Labour in opposition, but also by the Liberal Democrats in government, and Nick Clegg’s intervention today appears to be the first sign of them doing so.
Outside of the south-east the UK economy is particularly flagging, with jobs being lost at a rapid rate, and poverty and reliance on benefits increasing. Therefore, the last thing that the rest of the UK needs right now is for the government to cut public sector pay, thus removing further capital from local economies and causing further poverty and further economic stagnation and contraction around the UK. In fact, the government at this point must surely look to step into the gap left by ailing private sector companies and provide local economies with a much needed boost by creating jobs in those areas of the country where growth under the current austerity programme seems unachievable.
Furthermore, if the government was to follow the trend of the private sector and attach high wages to London and the south-east, they would instigate a public sector brain drain away from the poorer areas of the country to the south, thereby giving these ailing regions an even smaller chance of creating future prosperity. This has the potential to leave these regions isolated and with very little prospect for economic prosperity in the future.
Therefore, these current proposals would be a very backward and unhelpful step for the government and the economy. Perhaps, instead of appealing to a regressive, London-centric nature, the government should look at more radical proposals to move higher-paid areas of the public sector out of London and the south-east and relocating them in, for example, the north of England, thus costing the government less in the long-term (when rent prices etc are claculated in) and allowing these areas to exploit the new capital this would pump into their economy. I fear however, that the government would see themselves as turkeys voting for Christmas were they to advocate proposals to move the high-wage earning public sector away from their cushy lives in the capital.