American commentators, like Michael Barone, are starting to focus on the fact that, while the recession has hurt the private sector, it’s helping the public one. A Rasmussen poll found that 46 percent of government employees say the economy is getting better while just 31 percent say it’s getting worse. In the private sector, those proportions are reversed. While the private sector economy has lost millions of jobs, the public sector one has been stable.
But anything the U.S. can do, Britain, in this context, can do worse. The Sunday Times notes that in 2009, 21.1% of all U.K. labor was employed by the state, and that – measured by hours on the job, rate of wage inflation, or salary – it is almost always better to be paid by the government than by a private employer. Even in the highest paid job, the private sector pays better salaries, but the government offers a much larger pension. Britain has hired over 300,000 new civil servants since September 2007.
Given the state of British finances, that kind of hiring makes about as much sense as the captain of the Titanic deciding that what he really needs is more ice in his drink. But what’s even more curious is what happens when, as has supposedly happened in the Ministry of Defense over the past twelve years, headcount drops. Miraculously, pay keeps right on rising. In Defense, the number of workers in the lowest two pay grades has fallen by about 19,000 since 1997. Since 2004, total employment has fallen by 21%. Yet total civilian pay has risen by 13% over the same period.
This is probably in part because, while it’s been letting office workers go, the Ministry has hired 2,000 additional managers. By contrast, the total strength of the armed forces has fallen by 9%, while pay has increased by 12%, and the officer corps has shrunk in proportion to the forces as a whole. It’s striking that a larger decline in civilian employment generates nothing but a larger increase in pay and more managerial hires.
One possible further explanation for the discrepancy between a declining headcount and a rising wage bill is that the headcount hasn’t really declined. Given the Labour government’s track record of dodgy contracting out arrangements, this explanation is all too plausible. But as the question has not received the attention it deserves from the House of Commons, or – needless to say – the government, it remains a mystery that the next government will have to investigate. True, reducing the top-heaviness of the Ministry, as Shadow Defense Secretary Liam Fox proposes, won’t completely close the funding gap in British defense spending. But it’s an excellent place to start.