Unison are considering strike action at Kent County Council over the offer of a 1% pay rise and 2500 job losses. The local press is full of angry comments from people claiming that the KCC staff are greedy and should be thankful for a job in the recession. I think they are half right...
Inflation has fallen to 3.1% (Consumer Price Index - the figure the government likes to use) for December 2008. A 1% pay rise therefore equates to a 2.1% pay cut, so the discussion should be whether staff at KCC should take a reduction in pay or not.
The country is in a recession and it is going to get worse, of that there is little doubt. Our economic system that relied on private banks providing 97% of the money supply was a ponzi scheme waiting to collapse. The banks are with holding credit (i.e. money) and the economy crashes. There seem to be two ways of increasing the money supply and therefore getting money back into circulation.
Firstly the banks can start lending again. This is unlikely and despite all the government pressure as major shareholders in our high st banks, they continue to be panicking over their toxic debts.
Secondly, the government can spend more money, either through creating it itself or borrowing it (I prefer the first option as long as there are accompanying monetary controls).
Kent County Council are our middle tier of local government, they have the ability to borrow, spend and save. Spending money, which means paying staff, injects money into the economy and if the money is spent on KCC staff, the money goes straight into Kent's economy. KCC therefore have some influence of the economy and by spending more on staff they can help to ease the biting recession.
Where could they get the money from? If they hadn't lost £50m investing taxpayer's money in Iceland it would have helped! KCC continue to use the invstment company that failed to warn them adequately about Iceland, they would be better off reading the newspapers.
All that is in the past and now KCC need to bit the bullet and borrow money in the short term to inject it into our economy in the form of wages. I suspect some redundancies and severed contracts are required - for instance, Kent TV is a waste of money as it the Tory promoting newsletter that KCC produce.
I suggest that the economy needs stimulus in the form of money being spent and one key way of doing this is by paying staff a little more, not cutting their salaries.