As someone who works in the NHS, I can only but agree with that. I suppose the otherside of the coin is that when things go well, the salaries do not go up much either!

Nonetheless, the point is valid and important. It is part of human nature to work for reward. If the reward comes whether or not you work hard, then it is easy to sit back.

But you can only take this argument so far. The NHS is not a real economy. It is a tightly controlled government monopoly supplier. If you want doctors and nurses salaries to be to some extent tied to results then you must first give them the autonomy to alter and improve the service. Whatever you may think about doctor's pay rates, no one would argue that nurses are well paid.

The reductio ad absurdum of this point it that you would cut the pay of all nurses in hospitals with MRSA.

Hmmmm..........

Posted by: Dr John Crippen at January 23, 2006 02:32 PM

A very good example here :

http://www.eveningnews24.co.uk/content/News/story.aspx?brand=ENOnline&category=News&tBrand=enonline&tCategory=news&itemid=NOED23%20Jan%202006%2011%3A52%3A02%3A893

A lot of local charities going to the wall for the want of a few thousand quid a year.

http://new.edp24.co.uk/search/story.aspx?brand=EDPOnline&category=News&itemid=NOED13%20Jan%202006%2020:10:21:993&tBrand=EDPOnline&tCategory=search

Same Local Authority. A former Director of Education and Efficiency officer are being made redundant. Pay off of £250k each.

The Council Leader says "If your job disappears you are entitled to a redundancy payment". Yes, and that entitlement is about £15,000 ....

Posted by: Paul at January 23, 2006 04:06 PM

"no one would argue that nurses are well paid."

I would. As reported in the Times recently, nurses in the UK are the best paid in the world after the US and Australia.

'Underpaid nurses' is one of those truisms we hear regularly even when the person saying it has no idea what a nurse is paid. So let's consider the facts. You need just 5 GCSEs to be accepted onto nurse training - not a particularly high educational standard. You are paid whilst training (no student loan required). Only a small proportion (around 10%) of nurses have degrees in nursing even in these days of lax entry standards onto degree courses. You retire at 60 on an index-linked pension, You have complete job security.

According to the Dept. of Health web site, in 2004, the average nurse's earnings was £26,400. The national average salary in the UK according to the ONS was £22,411 in 2005. If we assume that nurses' earnings increased by just 3% between 2004 and 2005, then they are paid around 21% above the national average withour even accounting for the value of pensions.

I'd say that this is comparatively well paid, as are most public sector salaries comapred to private sector

Posted by: HJHJ at January 23, 2006 10:24 PM

Hello HJHJ

Are you related to HJ?

Nurses are well paid? Hmmmm.

Suggestion. A intensive care nurse working on the Cardiac Unit at a London Teaching Hospital should be able to afford to buy a house in reasonable distance of the hospital and run a car.

Not possible. Is that right?

You will be telling me that teachers are well paid next.

One of the many downsides of the current welfare state is that it can only be sustained on the back of the goodwill of the people working within the system for dreadful wages. Unfortunately, goodwill and vocatinal committment do not pay London mortgages.

John

Posted by: Dr John Crippen at January 24, 2006 11:14 PM

There's a major problem with this 26% figure which makes it misleading. Council tax accounts for only a small proportion of local government spending - 26% (coincidentally) last year. So the pensions bill as a proportion of local government spending is their product, which is about 6-7%.

Just looking at it in terms of council tax is obviously wrong. Any change in the level of central government provision will change that figure (as with Norman Lamont's VAT hike in 1991). It is quite easy to find local government spending that is more than 100% of council tax!

Posted by: Matthew at January 25, 2006 08:46 AM

Well John - I say blame the unions for insisting on nationally-negotiated wage rates (the only exception being London weighting) and resisting local market-base wage rates. Yes, public sector workers are underpaid compared to the private sector in some parts of the South East. But in the rest of the country, the public sector is significantly overpaid comapred to the private sector - and you can live very well indeed.

There are many highly qalified private sector workers that can't afford houses in central London. Quite a few even have student loans to pay back. That's why so many people commute. Your point was?

All the figures show that if the public sector is sustained by low wage rates, then the private sector is sustained by even lower wage rates, on the average. Are you advocating pay rises all round? Of course, the public sector are deemed more important hence ridiculous schemes like key worker housing. How come the only key workers are in the public sector?

Of course certain sectors of the public sector are more powerful than others - that's why GPs have to scrape along on £100k. If you feel so strongly about nurse wages how about giving up your next wage increase so that they can have more?

There is no great shortage of teachers, hence pay rates must be acceptable. Generally only maths and sciences (not soft sciences such as Biology) have any shortages and these are rapidly being rectified as science and engineering graduates are now flooding into teaching - due to the collapse of the industries that used to employ them (thanks to the high costs in the UK). It's a fool's paradise, of course, because at this rate there won't be much private sector left to pay for the public sector.

Posted by: HJHJ at January 25, 2006 10:37 PM

HJ
I am not an economist but, despite the occasional rant I am actually fair minded, so I put the question to Wat Tyler who is an old friend and very much is an economist and he said:

Hi John

I'm afraid I agree with his main point- union driven nationally negotiated pay scales are not good for those in London and the SouthEast. The weightings do not properly reflect the differences in living costs. £3550 for inner London, and £2800 for outer. See here for current scales- http://www.nhscareers.nhs.uk/nhs-knowledge_base/data/11.html

The consequence is clear in the vacancy patterns. Nurse vacancies are 1.9% nationally, but 3.8% in London (and that's without allowing for the quality differences which almost certainly exist among the nurses in post). and in the jobless, lowpay North East, vacancies are only 0.7%.- For more data see here http://www.dh.gov.uk/PublicationsAndStatistics/Statistics/StatisticalWorkAreas/StatisticalWorkforce/StatisticalWorkforceArticle/fs/en?CONTENT_ID=4087110&chk=1m8J3Q

So yes- nurses in London look underpaid, but nationally, much less clear. FYI, the Dept of Health survey he refers to is here: with qualified nurses/madwives on £26,400 in Aug 2004. http://www.dh.gov.uk/assetRoot/04/11/83/11/04118311.pdf

A fairer London weighting would reflect differences in overall market pay levels- in April 2005, median full-time earnings in London were c£28,900, compared to a national average of £22,400.(see http://www.statistics.gov.uk/articles/nojournal/ASHE_Patterns_pay_2005.pdf ). That would suggest a fair London weighting would be in the region of £6-7,000.

Bottom line, nurses now doing pretty well outside London region, much less so in London.

So I guess what I was saying was an emotional call rather than one based on sound economics. But for all that, I know that nurses and teachers cannot afford to live properly in central London, and somehow I feel that is wrong. Maybe I should get my box of Kleenex and move on!

JOhn

Posted by: Dr John Crippen at January 26, 2006 07:22 PM

John, my point really was that working in the public sector it's very easy to think that everything is rosier inthe private sector and that you're underpaid - as you say, an emotional call. But the public sector and private sector closed shops (e.g. law) are entirely protected from international competition.

I've worked almost my whole career in the electronics/semiconductor industry - a very fast moving industry populated by extremely bright and highly educated people and a generator of mind-blowing technology. So people in this industry -officially the most productive in the world measured by output per person - and with not a restrictive practice in sight, should be doing well, right? Especially as this is a very high skill and highly innovative industry that should be well placed to cope with low cost competition?

Wrong. It has been the most terrible five years. Output plummeting, jobs going overseas, taxes rising to pay for the public sector. I would say that 75% of the people I know have been made redundant in the last 4 years. Only about half have got new work in the industry. In December the entire engineering team of my old employer were made redundant - these are guys who develop some of the most complex chips in the world (20 million gates, embedded microprocessors, you name it) - and get it right first time. Just incredibly talented - now out of work and very little prospect of new employment. Why, because the government taxed 3G licences so heavily that most of the development work was shut down. Because you can employ an engineer in India and give him the same standard of living at 1/3 of the salary. Because engineers have to pay taxes to pay the public sector far higher than world prices, but the public sector can buy electronics at world prices - hence the engineer is out of a job.

At this rate we will be left with just a public sector paid at way above world rates - and nobody else left to pay for them.

Posted by: HJHJ at January 26, 2006 11:34 PM

The above analysis cannot be correct. The rise in taxation under this government has been a few % points of GDP. The difference in wage rates between the UK and India is in the order of hundreds of % points.

On the 3G licences, some of the world's largest companies, advised by the world's largest and most thought-of investment banks, took place in a competitive auction, designed so their bids reflected their own valuations. The market agreed they had paid a fair price - their share prices tended to rise in the months before the auction, and afterwards.

Posted by: Matthew at January 27, 2006 11:33 AM