Can anyone explain how...

[Viking_UK]

..cutting civil service jobs is actually going to save money for the government?

I get that it might save money in the long term, but in the short term, they're going to have to make redundancy payments - some adding up to years' worth of salary for those they're getting rid of - plus they're going to have to pay benefits to those people if they don't find other work in the medium-long term, not to mention the loss of revenue from their taxes, and if that weren't enough, the remaining staff will have to take over their workload, which means extra overtime and various other bills. Another option for them is to contract out the additional work to the private sector, ie the same staff they've just made redundant who will either work freelance or under contract through another employer, thus being paid twice over for doing the same job they were doing anyway!

Wouldn't it be more cost-effective to just carry on as usual, because if these redundancy payments come out of already-reduced budgets, there will be even less money in the pot to pay for the services the departments are supposed to provide, or, if the money is coming from another source, why don't they invest it in ways that will actually increase revenues instead?

I don't have an economics degree, so maybe I'm missing something, but it just doesn't seem to make sense to raise unemployment levels and effectively pay people to sit at home doing nothing when the country needs all the revenue it can get.

 

[freyasworld]

..cutting civil service jobs is actually going to save money for the government?

I get that it might save money in the long term, but in the short term, they're going to have to make redundancy payments - some adding up to years' worth of salary for those they're getting rid of - plus they're going to have to pay benefits to those people if they don't find other work in the medium-long term, not to mention the loss of revenue from their taxes, and if that weren't enough, the remaining staff will have to take over their workload, which means extra overtime and various other bills. Another option for them is to contract out the additional work to the private sector, ie the same staff they've just made redundant who will either work freelance or under contract through another employer, thus being paid twice over for doing the same job they were doing anyway!

Wouldn't it be more cost-effective to just carry on as usual, because if these redundancy payments come out of already-reduced budgets, there will be even less money in the pot to pay for the services the departments are supposed to provide, or, if the money is coming from another source, why don't they invest it in ways that will actually increase revenues instead?

I don't have an economics degree, so maybe I'm missing something, but it just doesn't seem to make sense to raise unemployment levels and effectively pay people to sit at home doing nothing when the country needs all the revenue it can get.

An excellent point and yes what you said is true, it makes no sense whatsoever to lose tax revenue and increase unemployment benefit payments as well as make redundancy payouts.

But I do think, it is not unreasonable to expect department heads to find cost savings, not necessarily to axe workers, but this is politics afterall! In the private sectors, especially manufacturing, this has been the norm for several years, simple ideas saves a lot of money, it is a case of educating people. A factory where my partner works, during break times, the lights are automatically switched off, similarly at lunch times, why can't schools, government buildings do something similar? Walk past any government offices at night the lights are all on! My partners building used to have a printer at each work station, now there is 1 and it is in a different room on a different floor, the workers have to get off their arses and walk up a flight of stairs.... reduction in consumables of 80%!

Salaries/wages are a company's/department biggest expense, by reducing the head count, it is the quickest and easiest way of reducing costs. It is typical of government departmental thinking, afterall redundancy payments is the problem of a different department not mine, mentality!

Maybe all avenues have been exhausted, I doubt it very much, in which case jobs will need to be lost, but what is wrong with natural waste, retirement, sackings etc. There is always a turnover of staff, just don't replace them.

Then there are decisions to be made, is it absolutely necessary to have this or that post, or is it necessary, or is it nice to have or even disirable!

Why can't office workers clean their own office? afterall they made the mess, why employ outside contractors to clean up your shit! Cost savings, and big cost saving are easily made, it just needs a different way of thinking and mentality. My partner is a managing director, he has to clean his own damn office, water his plants, make his own coffee! I asked the question, why do you need a secretary, you not capable of answering the phone or printing a letter? Do you need one 5 days a week? why not get someone else to do it for an hour or two a day, put them on a rota, but only when you are not available and only if you can't answer a phone, read a text or send an e-mail!

To me there is just too much waste within the public sector and it has to be reduced, the simple thing like installing a timer for lighting in a school, knock the classroom power off during breaks will save over 10% of the electricty used per day! Oh and it does not impact on anybody, nobody has to physically switch off lights or unplug anything! Government buildings the same, 5.00pm in darkness until 9.00am the next day! Don't need cleaners, use their own staff, gardners same, afterall they have to clean their own homes and do their own gardens, so why not at their place of work!

 

[Jason]

I rather like the Irish saying "if you want to get to there, don't start from here".

The private sector has been making economy cuts year on year for about three decades, while at the same time increasing quality, customer service and the like. The public sector - broadly - has not. Costs went up substantially year on year through the Labour years - and indeed went up under Thatcher/Major. This culture has to change. We are in an absurd position where the public sector is smothering the economy by imposing costs we can't afford. In the end every bit of created wealth comes from the private sector, and we have to nurture the private sector. I rather think the time has come when we just have to act.

Many of the staffing reductions will be by a recruitment freeze and therefore through natural wastage. Doubtless there will be some big redunancy pay outs, but even here probably not quite as numerous or big as the predictions suggest. Of course it is messy, but it has to happen.

Using the public sector as a job-creation scheme is hard to accept as it distorts the labour market. Better is to create a labour market where there is relatively full employment. In a crude, capitalist model the ONLY reason for unemployment is that wages are higher than the economy can support. However nice it would be to pay people more the market is the king. The 1980s saw high unemployment in part because there were inflexibilities in the Labour market. It may be that our decade will escape unemployment at this level because we have a more flexible market. If we can manage a year or two of below-inflation wage increases we are looking at getting wages down and producing more jobs. However harsh it is, there really isn't any alternative.

 

[dandelion]

I rather like the Irish saying "if you want to get to there, don't start from here".

The private sector has been making economy cuts year on year for about three decades, while at the same time increasing quality, customer service and the like. The public sector - broadly - has not. Costs went up substantially year on year through the Labour years - and indeed went up under Thatcher/Major. This culture has to change. We are in an absurd position where the public sector is smothering the economy by imposing costs we can't afford. In the end every bit of created wealth comes from the private sector, and we have to nurture the private sector. I rather think the time has come when we just have to act.

Many of the staffing reductions will be by a recruitment freeze and therefore through natural wastage. Doubtless there will be some big redunancy pay outs, but even here probably not quite as numerous or big as the predictions suggest. Of course it is messy, but it has to happen.

Using the public sector as a job-creation scheme is hard to accept as it distorts the labour market. Better is to create a labour market where there is relatively full employment. In a crude, capitalist model the ONLY reason for unemployment is that wages are higher than the economy can support. However nice it would be to pay people more the market is the king. The 1980s saw high unemployment in part because there were inflexibilities in the Labour market. It may be that our decade will escape unemployment at this level because we have a more flexible market. If we can manage a year or two of below-inflation wage increases we are looking at getting wages down and producing more jobs. However harsh it is, there really isn't any alternative.

It all rather depends which economic theory you believe in. It seems to me increasingly that modern society is living on debt in a wholly unsustainable way. This has been done on a truly grand scale with pretty much the whole of the last century relying on increasing valuations of possessions to finance an ever expanding lifestyle. Much of our improved standard of living has been funded by real technological development and increased productivity, but an ever expanding section has been predicated on the theory that valuations of just about everything we own will go up, salaries will rise endlessly. The current British government professes itself horrified by the budget deficit it has inherited, yet its solution to deal with the largest part of this deficit is to....wait for economic growth to increase tax take and deal with it.

Pretty much the whole financial system relies on wealth being generate out of thin air, not from actual production of goods, which we do very inefficiently. Bearing that in mind, why not keep more people busy rushing round working for the government doing, er, something? Its a bit like global warming. Everyone agrees it is a bad thing. There is a solution. The solution will not work unless everyone cooperates and goes along with the solution. Anyone who on their own steps out of line and institutes the cuts everyone would have to accept to fix this problem will suffer in a big way, and make no difference to the world problem .So bearing that in mind, maybe just keep borrowing until the whole system falls to pieces. Enjot it while we can and hope it sees us out. All the bankers are.

 

[Jason]

Pretty much the whole financial system relies on wealth being generate out of thin air, not from actual production of goods, which we do very inefficiently.

There's a grain of truth in this, but only a grain. Capitalist economics sees four sources of wealth:

Land, ie raw materials (farmland, mineral wealth, fisheries)
Labour, ie a hard day's work
Capital, ie investment, using money to seed new schemes and create wealth
Entrepreneurship, basically the business skills to seize the moment and make it all work.

The rewards of the first three are rent, wages and interest. The fourth is the odd one out. It is the genius of an entrepreneur in spotting a market for X and selling it. Strictly it is profit, but many cases don't really fit. It is the obscene salaries of top footballers and pop stars - which cannot be regarded as wages as they are so out of step with the effort expended. It is the government's windfall from selling frequencies to mobile phone companies. And it is this source of wealth that can most easily be abused. The process of creating paper wealth out of nothing is just such an abuse. It is a south-sea bubble. And inevitably it will come to an end with horrble consequencies.

The banking crisis and the sovereign debt problems have created an environment where we cannot continue with creating unreal profits. We have to live in the real world. In UK terms we absolutely have to have a reduction in costs and an increase in tax (the balance can be argued about) in order to get things right. We might just possibly be able to pull out of the hat a miracle soution around more oil and gas (North Atlantic or Falkland), but basically our raw materials and labour are constants (indeed we are not good at manufacturing anymore). We absolutely need capital investment to take things forward - basically the City of London and private business. Now the government cannot raise extra capital so it has to be private capital. And to maximise that we have to get tax down.

We're into TINA economics (There Is No Alternative). We just have to get tax down. And that means government expenditure has to fall. And it is going to hurt far more than most people imagine. But we still have to do it. We shouldn't be in a position where this is needed. But after 13 years of abysmal economic management it has to be done so that maybe by 2020 we can get back to the sort of strengths the economy had in 1997 Indeed this is a lost generation, but that's the legacy of socialism.

 

[TomCat84]

I don't know if the situations are similar in the US as they are in the UK- but the trend now is for municpal governments to cut workers and privatize- at least cut and privatize the frontline, grunt jobs (you know, the clerks, social workers, bus drivers, etc), yet the higher ups and middle managers get to keep their jobs.

 

[Viking_UK]

There's a grain of truth in this, but only a grain. Capitalist economics sees four sources of wealth:

Land, ie raw materials (farmland, mineral wealth, fisheries)
Labour, ie a hard day's work
Capital, ie investment, using money to seed new schemes and create wealth
Entrepreneurship, basically the business skills to seize the moment and make it all work.

The rewards of the first three are rent, wages and interest. The fourth is the odd one out. It is the genius of an entrepreneur in spotting a market for X and selling it. Strictly it is profit, but many cases don't really fit. It is the obscene salaries of top footballers and pop stars - which cannot be regarded as wages as they are so out of step with the effort expended. It is the government's windfall from selling frequencies to mobile phone companies. And it is this source of wealth that can most easily be abused. The process of creating paper wealth out of nothing is just such an abuse. It is a south-sea bubble. And inevitably it will come to an end with horrble consequencies.

The banking crisis and the sovereign debt problems have created an environment where we cannot continue with creating unreal profits. We have to live in the real world. In UK terms we absolutely have to have a reduction in costs and an increase in tax (the balance can be argued about) in order to get things right. We might just possibly be able to pull out of the hat a miracle soution around more oil and gas (North Atlantic or Falkland), but basically our raw materials and labour are constants (indeed we are not good at manufacturing anymore). We absolutely need capital investment to take things forward - basically the City of London and private business. Now the government cannot raise extra capital so it has to be private capital. And to maximise that we have to get tax down.

We're into TINA economics (There Is No Alternative). We just have to get tax down. And that means government expenditure has to fall. And it is going to hurt far more than most people imagine. But we still have to do it. We shouldn't be in a position where this is needed. But after 13 years of abysmal economic management it has to be done so that maybe by 2020 we can get back to the sort of strengths the economy had in 1997 Indeed this is a lost generation, but that's the legacy of socialism.

I don't think you can lay the blame squarely at the feet of a socialist government being in power for the last 13 years. The country's manufacturing capabilites were pretty much destroyed under the previous Tory government, which also deregulated the banking sector, and we all know what that led to. Saying that, we can't even blame Thatcher for screwing manufacturing in this country, because a lot of the companies which were here transferred their production overseas due to cheaper labour costs and tax benefits.

However, that's all in the past. The problem now is how are we going to get out of the state we're in? The present administration's cuts seem to be stifling what little growth there is, because the banks are reluctant to lend money and people and companies are reluctant to borrow because everyone's worried about whether or not they'll be able to make the repayments. Personally, I think this is the time for the goverment to actually invest in the economy and get things moving, encourage manufacturing and give companies incentives to increase employment. Then, once that's in place and starting to show a return, that's the time to start cutting back and/or increase taxes.

 

[Jason]

I don't think you can lay the blame squarely at the feet of a socialist government being in power for the last 13 years.

I can, I can! I can even blame Labour for the rain!

Right now we have run out of options. It is not possible for the government to invest more money - we've got a higher rate of sovereign debt than we've had since 1945, and if we take out any more its pretty much certain the ratings agencies would move against us and we would be in a Greek-style meltdown. Labour's present mantra that they would cut later/slower is disingenuous - the governor of the Bank of England and the ratings agencies have put their support behind cuts now. Perversely cuts now might still not work - but it is the best chance we have. The banks are a problem. They are still very fragile (the demands to tax/screw the bankers are just silly - we would be back to bailing out the banks). No they are not lending enough. But they are also lending with too much risk denting their stress test performance. We want them at the same time to lend more but only to safer borrowers.