Sunday, January 11, 2009

Job Losses, Pay cuts, or reduction in services

We need to reduce the amount of money that is spent by the state. If the choice in reducing public spending is to be either one of job cuts, a reduction in services or pay cuts across the board then the latter seems the more equitable choice.

What if we were to ensure no cutbacks in pay for those under 30K, but a 3% cut for those between 30 and 50K and 7% for those between 50K and 80K and 10% cut for those over 80K. This would be an across the board pay cut. Overnight everyone in the public service would be taking home less money. See the same thing may well happen but it will involve job losses and as a consequence as loss of services.

People will argue that this will suppress demand, but so too would job cuts. Which is worse for the economy: fewer people working for the same money who are in fear of losing their jobs and so afraid to spend or more people working for less money but who are confident that they will have jobs next year and so can spend on the domestic economy? Not all aspects of living have gone up in the last while, the cost of servicing mortgages has dropped in the last 12 months, so people won't have quite. True there will be those in negative equity but the value of your house doesn't matter in the short term if you don't have to sell and you would be more likely to be selling because you lost your job not because your take home pay went down by 3%.

In combination with this, the state should actually step in to reduce the costs borne by the public by actually delivering the services it is suppose to instead of the public having to source those services privately or even having to contribute cash to themselves. Imagine an education system where parents didn't have to organise money to pay for the upkeep of the school, ho

And we should push hard for reforms in those areas of services where bottlenecks exists and in which costs spiralled out of control over the last decade. Solicitors for example, and isn't it odd that the auctioneering business allows the same person to act for the buyer and the seller? I mean whose interest is the priority there I wonder?

If some of the burden was lifted from the working public then we could all live on a few quid less.

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