There used to be no safer career path that landing a government post. Sure, you might be able to pull in a bigger salary in the private sector, but it was hard to beat the benefits, or the job security. Public sector labor unions are often politically influential and fiercely protective of the perquisites of the civil servant. In times of economic stress, when employees in private firms faced pink slips, government paychecks often kept coming, taken from the tax revenues raised from those under greater risk of unemployment.
However, those halcyon days for the government worker may be coming to an end. Around the world, public sector employees are beginning to feel the bite from austerity measures aimed at reducing government debt and deficits, putting their pay, benefits and jobs at risk. The trend could have major consequences not just for the welfare of millions of civil servants, but the performance of the economies of the West.
The evidence is everywhere. Andrew Cuomo, the new governor of the state of New York, is starting his first term in office with a plan to freeze the salaries of government workers. Portugal, Spain and Greece have all slashed public sector wages. The U.K. is looking at possibly hundreds of thousands of government job losses in coming years due to Prime Minister David Cameron’s aggressive budget cuts. Even the labor rights of state employees are at risk. Several U.S. states are looking into legislation to limit the power of unions, especially those in the public sector. As policymakers in the West face the gargantuan task of closing giant budget deficits, there is every reason to believe we’re just at the beginning of the retrenchment of the public sector workforce and the taxpayer money allocated to it.
The result will likely be heightened political conflict throughout the Western democracies. As elected politicians strive to fix broken budgets, unions will fight ferociously to defend the jobs and benefits of public sector workers. This is just part of the wider battle the West is facing over how to allocate shrinking government resources in an era of austerity. We’ve already seen public sector strikes and protests in Greece, Spain and France over reforms in pay and pensions. Or take a look at the vicious battle between Chris Christie, the budget-cutting governor of the state of New Jersey, and the head of the powerful teachers’ union. Christie once called the union chief a “greedy thug.”
Yet it is inevitable that the government worker will have to pay the price for yawning budget deficits and rising national debts. If taxpayers are facing bigger tax bills and reduced government services, it’s only fair that the government employee share in the pain as well. It’s hard to argue with the logic expressed by new Wisconsin governor Scott Walker: “We can no longer live in a society where the public employees are the haves and the taxpayers footing the bills are the have-nots.”
Yet there will be wider consequences for the overall economies of the West. Public sector workers are facing job losses while unemployment is still agonizingly high in many parts of the West, which could strain the job market even further. That already seems to be happening in the U.K. and the U.S. And public sector job and pay cuts mean lower spending power among the middle class, a factor that will drag on economic growth. Even though a decline in welfare and security for the public sector worker may be inevitable – and perhaps even a bit emotionally satisfying for some – it’s yet another hurdle in the way of a true recovery from the Great Recession, and one that could have economic fallout for years to come. So as government workers suffer, we’ll all suffer with them.