Gordon Clown .Com

Desperate to save as much money as possible to balance the books, Gordon has announced that public sector wages will increase by an average of 1.9% in this years pay round. Given that RPI, the traditional measure of inflation used when calculating pay increases, is currently running at 4.2%, this makes a real terms wage cut of 2.3% for the public sector, or £38 a month for a civil servant earning £20,000 a year. Gordon is truly stuck between a rock and a hard place this time around - he is potentially throwing away the votes of over 6 million public sector workers - votes he cannot afford to lose if recent polls are anything to go by. On the other hand, he is currently about 20 billion pounds in the hole with public sector finances, so every pound saved is vital. The third aspect to the conundrum is the spectre of wage inflation that faces Gordon head-on. If wage inflation spirals out of control as some say it might, interest rates will eventually have to be risen to match, which would permanently destroy any remaining reputation of Gordon as a steady hand on the economic tiller. The only direct influence he can bring to bear on wage inflation is by setting the wages of his own 6 million employees, and praying the private sector does likewise. Some hope.

Trouble is already kicking off over this, and strike action may threaten at some point, as reported in the Guardian today:

Some union officials warned that the increase might trigger calls for industrial action in the NHS. Amicus said it understood the health sector’s pay review body had recommended a rise of 2.5%, but the Treasury had decided that the rise should be staged.

Health minister Lord Hunt, asked what he thought about possible industrial action by nurses, said: “I certainly hope that would not be contemplated, I do not see this as a pay cut at all.”

He added of the unions: “They may be disappointed about the staging decision, but the important thing to remember is that we have accepted the pay review bodies’ recommendations in full.”

His lordship’s comments about the unions must be like red rag to a bull. Implying they no longer have any power to influence decisions on wage bargaining may be something he later lives to regret.

The situation must be fairly serious for nurses and the NHS, as apparently they now have to rely on charitable donations from footballers, a few of whom have agreed to give a days wages to effectively help subsidise the NHS:

West Ham United captain Nigel Reo-Coker is one of several soccer stars to have signed up to the Mayday for Nurses campaign and agreed to donate their wages for May 13 to help nurses.

The campaign’s founder, Noreena Hertz, said she was hoping to sign up all 556 Premiership players, as well as managers, commentators and others in the football community. Any money raised will go towards a hardship fund for nurses who get into financial difficulties in the first few years of their career.

The campaign is also calling on the government to raise nurses’ wages to bring them in line with comparable public-sector workers such as social workers and police officers.

So there we go, not just the NHS but whole swathes of the civil service to be bailed out by the football industry. I wonder if this is what Gordon had in mind when sculpting the “miracle economy” we now bask in. The votes appear to have been cast, as witnessed by the number of sign-ups to the may day campaign.

Meanwhile, the economic miracle has been stuttering fairly severely in the city this week, with massive losses hitting the FTSE. Things seem to be turning fairly serious fairly quickly for good old Gordon.