The Socialist 9 August 2002

Low Pay, No Way!

WORKERS ARE fed up to the back teeth with a class system, where some top executives have given themselves 600% or more pay rises and huge bonuses, while workers who ask for only 6% get offered peanuts. By Rob Windsor, Socialist Party councillor Coventry More ...

Unison Strike pay deal : No Answer To Poverty Wages

Iraq:

Stop Bush & Blair's War

• Don't let workers pay the price of US war plans.

• Only socialism can guarantee an end to wars and dictatorships.

Union Struggles - The Task Ahead

NEW LABOUR feared they were in for a hot autumn, as the tolerance of working-class people had been stretched to breaking point.

Mass Workers' Action To Defeat Sectarianism

Northern Ireland: HEALTH AND postal workers in Northern Ireland were forced to take industrial action in protest against sectarian death threats from republican and loyalist paramilitaries last week. By Gary Mulcahy, Socialist Party Belfast

Local government pay deal: LOCAL GOVERNMENT workers in UNISON, TGWU and GMB trade unions will be bitterly angry that the proposed strike action on 14 August has been called off; especially when they see the facts and figures of the deal. By Roger Bannister, UNISON National Executive Council (NEC) personal capacity

FIFTEEN YEARS of the extreme right wing controlling the general secretary position of the PCS civil service union ended dramatically in court 16 of the High Court on 31 July. By Ken Smith

GEORGE BUSH'S planned attack on Iraq is looking decidedly frayed at the edges as many of his allies distance themselves from the US president's war option. By Dave Carr

Bosses' Poverty Plans For Retired Workers

"IF PEOPLE want a comfortable retirement they will have to work longer, save more, or a combination of both," says National Association of Pension Funds spokesperson Andy Fleming.

A Guide Through The Pensions Minefield: TO ENSURE an income in retirement, workers must save throughout their working life.

Strike Back At Big Business Pension Holidays: REDUNDANT STEEL workers at Cardiff's Allied Steel and Wire (ASW) plant face having their pensions dramatically cut after big falls on the stock market. By Clive Dunkley, Socialist Party Wales

MPs Look After Number One: THE GOVERNMENT has again shown its absolute contempt for the electorate.

One Law For The Rich...NOT EVERYONE'S suffering. Only 44% of FTSE 100 companies have final salary schemes for staff, but this leaps to 76% for directors.

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Low Pay, No Way!

WORKERS ARE fed up to the back teeth with a class system, where some top executives have given themselves 600% or more pay rises and huge bonuses, while workers who ask for only 6% get offered peanuts.

Rob Windsor, Socialist Party councillor Coventry

These same fat cats are the ones who are ending occupational pension schemes for workers while propelling their own final pension schemes into the million-plus a year bracket.

Little wonder that the Association of British Insurers and Pirc, the corporate governance watchdog, say that the excessive pay for bosses of Britain's top public companies is "discrediting capitalism".

But the fat cats are involved with local councils too. Coventry council's chief executive recently defended pay rises for top officers of between £5,000 and £14,000 a year because in her view they were "worth it".

Here's how Coventry council works these days. The top officers, usually closely allied to Blairite free-market think tanks, propose various cuts in services, jobs and conditions as well as privatisation. The council leader on £39,000 a year and cabinet members on between £15,000 and £18,000 a year, allied to Blair's free-market-loving Labour Party nod in support.

They employ consultants, some on £500 a day to develop their arguments. Finally they sell the whole package to New Labour and Tory back bench councillors, usually afraid to say "boo" for fear of losing their chance to be like their masters.

The people who have to implement all of this and who are expected to deliver 'A' class services with 'Z' class funding are the council workforce. They're often on wages that don't even top £12,000 a year. These are the people who do their best to deliver public services through funding crises, constantly under threat of being handed over to the private sector through Labour's "Best Value" scheme.

But Coventry council workers have been fighting back. 80% supported the last council strike, because they know that they are the ones really worth a decent living pay rise.

New Labour delivers policies that Margaret Thatcher would have been proud of, with a smile rather than a snarl. Yet, they still take the unions' money. That's why we need a new mass workers' party that will really represent the needs of working people.

And that's why, if council workers decided to reject the current pay offer and take further action, myself and socialist councillors Dave Nellist and Karen McKay will be on the picket lines and will donate a day's pay and expenses to the hardship fund and the "Free the Funds" campaign - because the fight for a new workers' party is worth it!.

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GEORGE BUSH'S war plans against Iraq are now well advanced. US arms manufacturers are working round the clock to build up stocks of deadly cruise missiles; oil reserves are being boosted; merchant shipping is being commissioned to transport troops and equipment.

Iraqi dictator Saddam Hussein is hoping that by opening discussions with the United Nations (UN) on readmitting arms inspectors this will delay Bush's war drive by dividing the US president's allies.

But, US secretary of state Colin Powell has reiterated that the American administration's objective remains "regime change".

A US-led invasion and occupation of Iraq to effect Saddam's removal could involve as many as 275,000 US and British troops and result in the death of thousands of Iraqi civilians.

Iraqis already suffer the effects of punitive UN trade sanctions on their country on top of a monstrous dictatorship.

This war has nothing to do with bringing about a democratic Iraq. It's about US imperialism asserting its economic and military dominance in the oil-rich Middle East by removing the rogue dictator and former Western ally, Saddam Hussein.

Afghan chaos

You only have to look at nearby Afghanistan to see what the West has in mind for Iraq. Post-Taliban Afghanistan is headed by a pro-US regime in the capital Kabul which is dependent on Allied troops for its survival.

Outside Kabul ethnic-based warlords fight for control of the regions. Millions of Afghans remain 'displaced', unemployed and dependent on aid for their daily survival.

But if George Bush and his 'poodle' Tony Blair think that this war will create a politically stable region compliant to US demands then these Western leaders have badly miscalculated.

The rotten pro-Western, semi-feudal regimes in the Middle East are already teetering as their impoverished and oppressed masses look to bring about 'regime changes' of their own.

The masses in these countries see their oil-rich repressive rulers collaborating with imperialism - the system that arms and finances Ariel Sharon's Israeli government which is oppressing the Palestinians.

A US-led war could ignite a conflagration of social upheaval in the region with massive counter-productive consequences for Western capitalism.

And it is this system of capitalist exploitation, not only the rotten ruling regimes, that must be changed. That means building mass workers' organisations and parties that can unite the region's impoverished masses to fight for a socialist alternative to the horrors of war, poverty and oppression.

US imperialism and war on Iraq

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Union Struggles - The Task Ahead

NEW LABOUR feared they were in for a hot autumn, as the tolerance of working-class people had been stretched to breaking point.

Union leaders, normally anxious to avoid upsetting New Labour, were lining up to take pot shots at Blair's government because of the huge swell of anger building up in the ranks of the unions and in the workplaces.

Throughout the public sector, but also in many private-sector workplaces, ballots and strike action are an increasing part of everyday working life.

Even right-wing Blairite trade union leaders, like Jack Dromey of the TGWU, were compelled to reflect this anger and distance themselves from New Labour. Anything less at present would see some more of the right-wing union leaders go the way of Ken Jackson of Amicus and Barry Reamsbottom of the PCS, swept aside by members fed up of their years of cosying up to the fat cats and New Labour government.

But it seems this new found assertiveness from some union leaders, while an improvement on their previously prostrate position before the Blair government, will only go so far at present. Their acceptance of a proposed ACAS deal in the local government strike for example, has potentially squandered the growing mood and support there was to take on the government over low pay and has let the Blair government off the hook. (see also page 6)

Activists in local government unions must now campaign for a rejection of the offer in the branch consultations and put the pressure on the leadership to settle for nothing less than the full 6% claim and for strikes to be resumed at the end of September.

The rest of the new union leaders will also be put to the test very soon. A whole wave of strike action is either already in place or planned in the fire service, on the railways, the underground, among postal workers and college lecturers.

The task before Left activists in the unions now is to push the union leaders to generalise this action and bring together the various struggles through a co-ordinated one-day strike action over pay claims - 1 October, the day when Blair makes his Labour conference speech, is being mooted as one possibility.

This needs to go hand in hand with organising a national public-sector demo against New Labour's privatisation mania, on a weekend for as may workers as possible to participate in.

Beyond that a one-day, public-sector strike, which could tap the growing anger against the government, needs to be prepared for.

If this was carried through then it would force New Labour and the bosses to step back, at least temporarily, from their generalised attacks on working-class conditions and living standards; attacks which the bosses are likely to intensify if there is no organised opposition, especially with the US economy seemingly entering a double-dip recession.

Transform the unions

IN UNIONS such as PCS, RMT and Amicus, there is a new generation of left-wing leaders at the top who have a right-wing executive and trade union officialdom underneath, who will do everything possible to try and undermine any effective action to defend members' interests.

There is an urgent need in all unions to rebuild the Broad Left organisations, making them open and democratic in some cases, as a first step to turning the unions into democratic, fighting bodies.

The Left leaders have to capture the mood that is developing and make a clear call for revitalising the trade union movement. There also needs to be a linking together of the best of the Left leaders and activists in the unions to generalise the struggles and raise the consciousness of working-class people about struggling for a new socialist society.

The Left trade union leaders say they are socialists and some were explicitly elected as such. They now need to immediately campaign for a transformation of the trade unions from top to bottom and to build a new mass party of the working class to defend and consolidate any gains made in the day-to-day struggles of the working class.

Capitalism In Crisis

IN JUNE manufacturing output in Britain registered its biggest fall for 23 years. The markets were expecting a decline of 0.8% - in fact production fell by 5.3%, 8.3% down on the previous year.

Commentators are trying to put a gloss on the figures by saying that they are "distorted" by the Jubilee and World Cup. Even if this were true, it doesn't alter the fact that manufacturing industry has been in recession for six consecutive quarters and 10,000 manufacturing jobs are being lost every month.

The service sector, which accounts for two-thirds of economic growth and four fifths of jobs, has been keeping the economy afloat. But for how much longer? Service sector growth slowed in July for the third month running.

Retailers have admitted that the "boom" in consumer spending is over. And now there are fears that falls on the stock markets and the slowing down in the housing market will knock consumer spending even further.

Meanwhile the US economic recovery is looking increasingly shaky. Last year's recession, which some economists tried to say wasn't even a recession at all, was in fact much worse than expected. Growth in 2001 was only 0.3% instead of 1.2%.

The IMF has accused the US of making "optimistic" economic forecasts and damaging global trade, and is about to slash its own forecasts for future growth.

A double-dip recession, where the US economy falls back into recession after a short recovery, is now a very real prospect.

Corporate scandals and declining share prices could seriously undermine consumer spending and investment, raising the possibility of a more severe economic downturn with devastating effects on the jobs and conditions of workers in the US and internationally.

Recently, the Financial Times set up a new section of its website entitled "Capitalism in crisis". This sums up the lack of confidence that the capitalists themselves now have in their own system.

At the same time, workers are growing more confident about fighting for their rights, with strike action on the increase in Britain and elsewhere. In the course of those struggles, many will come to see the need to challenge the capitalist system itself.

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Northern Ireland:

Mass Workers' Action To Defeat Sectarianism

HEALTH AND postal workers in Northern Ireland were forced to take industrial action in protest against sectarian death threats from republican and loyalist paramilitaries last week.

Gary Mulcahy, Socialist Party Belfast

900 workers in North & West Belfast Social Services Trust went on strike on 1 August when one of their colleagues received a bullet with their name on it in the post.

At an emergency branch meeting of NIPSA [Northern Ireland Public Services Association] Branch 705, it was unanimously decided to organise a one-day stoppage and call a public rally in Belfast city centre.

Socialist Party members played a central role in organising the action. As a result, loyalist paramilitaries released a statement denying any involvement with any threats.

Over 400 workers showed up to the rally in Transport House where many workers expressed the importance of workers' unity against all sectarian threats.

Socialist Party member Kevin Lawrenson spoke at the end of the rally congratulating his fellow workmates for taking a principled stand against sectarianism and demanded that the trade union movement should follow up by taking independent action against sectarianism.

Meanwhile, Derry trades council organised a march on Monday 5 August from the spot where David Caldwell, a Protestant construction worker, was killed by a bomb planted by dissident republicans. Over 200 people attended the rally at the Guildhall Square.

Unfortunately, the leadership of the Irish Congress of Trade Unions (ICTU) have different ideas of fighting the sectarian attacks.

Following an approach by the Northern Ireland Committee (NIC) of ICTU, Belfast city council announced the launching of an anti-sectarian campaign, with first Sinn Fein Lord Mayor Alex Maskey at the helm. Yet Maskey, because of his sectarian background, is viewed with deep suspicion by many Protestant workers.

Belfast city council called for a demonstration on Friday 2 August with the support of the churches and the bosses' organisation, the CBI, outside City Hall. Immediately, the hardline Unionist party, the DUP, opposed it for their own sectarian reasons.

Many workers see the politicians as being highly selective in their condemnation of sectarianism. Their role has been to condemn "the other side" for attacking "our community" and to refuse to face up to the reality that sectarianism violence is not a one-way street.

Mistaken tactics

AT THE NIC-ICTU consultation meeting to discuss giving support to the council demonstration, Socialist Party members argued that instead of supporting the right-wing sectarian politicians' so-called 'anti-sectarian demonstration', the trade unions should independently organise mass action. These politicians are the same people who are opposed to council workers receiving a fair wage and who are implementing Blairite policies of privatisation in the Assembly.

Unfortunately, NIC-ICTU rejected the proposal for independent mass action. Less than 2,000 people showed up on the demo as compared to the 80,000 who showed up to the trade union demo on 18 January.

Socialist Party members had a stall emphasising the need for independent action by the trade unions to oppose all sectarian attacks on both communities. We raised over £430 and sold over 700 special bulletins.

Many workers welcomed our initiative, as many found the prospect of seeing the sectarian politicians protesting against sectarianism too much to stomach.

Because of the failure of the ICTU to build for taking mass independent action, thousands of workers are now facing more threats.

Postal workers in Derry went on strike over the weekend against a death threat from loyalists. Health workers in hospitals in Belfast are now under threat from the Catholic Reaction Force and the loyalist Red Hand Defenders. They have now been forced to hold lunchtime stoppages and protests.

Sectarian attacks and rioting are still a nightly occurrence. Unless a socialist alternative is built to challenge all forms of sectarianism, Northern Ireland society will continue on the road to deeper sectarian conflict.

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Local government pay deal

No Answer To Poverty Wages

LOCAL GOVERNMENT workers in UNISON, TGWU and GMB trade unions will be bitterly angry that the proposed strike action on 14 August has been called off; especially when they see the facts and figures of the deal.

Roger Bannister, UNISON National Executive Council (NEC) personal capacity

They will feel that, following the highly successful stoppage on 17 July, the union negotiators have wasted a golden opportunity to strike a real blow against poverty pay.

The unions were asking for 6% or £1,750 a year. The latest proposals from conciliation service ACAS, which are now going out to consultation among the branches, in reality offers way below what members went out on strike for. And for those not on the lowest pay scales it offers only a 0.5% increase this year on what was offered before the strike.

This proposed two-year deal must be rejected and branches should call for strike action to be resumed at the end of September for the full 6% claim.

Although the window dressing of the current offer says that increases for the lowest paid range from 7.7% to 10.9%, the proposals still only increase the lowest paid's wages by 52p an hour over the next two years. At the same time those just above the lowest paid will effectively see their wages driven relatively closer to low pay levels.

Another issue in the proposals from ACAS is for a commission on pay and related issues. In reality this is a coded recognition that the local government Single Status agreement - which Socialist Party supporters always opposed - has not been effective in sorting out pay anomalies.

Even though many workers and branch union activists will now be on holidays, and it could be difficult to recapture the momentum that had been building, a campaign has to be mounted to ensure this offer is rejected.

A growing mood of confidence amongst local authority workers had been evident after last month's successful strike when one million workers took action. As the second strike day approached, an opinion poll published in the Guardian showed that the public-sector strikes enjoyed overwhelming public support. There are clear indicators still that the New Labour government faces major problems ahead, now that the realities of privatisation, poor public services and low pay, are becoming clearer.

The local government employers were playing for time and hoped that the strike would crumble, despite all indications to the contrary. But now it seems the union negotiators are willing to ignore the mood of their own members and offer the employers a reprieve.

Yet, whatever happens with the national dispute, councils could still be facing additional strikes in the Greater London area over the London Weighting dispute. UNISON's national Industrial Action Committee is meeting on 19 August to consider further moves in the London Weighting dispute.

Restart the strike - hit the privatisers!

IF THE national offer is rejected and the dispute resumes in September, it is essential that it is spread beyond the local authorities. Up till now church schools have been exempted, because of their legal status outside the negotiating bodies. This has created confusion and should now be reconsidered.

Even more crucial are the former council workers transferred to private employers by the Tories or New Labour. Pay claims based on the national claim should be submitted to these employers now, so that these workers can be balloted to strike from September onwards.

This will serve two purposes; it will spread the strike, hitting the pockets of big business privatisers. Equally important, it will deny the option of future privatisation as a guarantee against strikes, to the government or councils.

And if the dispute resumes, it should be given a national profile that ordinary strikers can be part of. UNISON and the other unions should organise a national demonstration on a Saturday in September, so that branches can organise as many members as possible to attend.

Let the government and the employers see the anger of council workers at their treatment, and the amount of public support they have.

The local government unions should also approach other public-sector unions with pay disputes, such as the PCS, PROSPECT, the London NUT, RMT and the FBU with a view to co-ordinating a day of action in September when all such groups take strike action together. This will enable workers to appreciate their collective strength, as well as putting pressure on the New Labour government - the paymaster of the public sector - to take action to settle the strikes by putting sufficient funds into the public sector.

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Court Confirms Left Victory

FIFTEEN YEARS of the extreme right wing controlling the general secretary position of the PCS civil service union ended dramatically in court 16 of the High Court on 31 July.

Ken Smith

There, the judge ruled that Mark Serwotka's election by the membership as general secretary of the Public and Commercial Services Union (PCS) was valid and that the extreme right winger who had been general secretary, Barry Reamsbottom, had been wrong to attempt to overturn that election result.

Speaking after the court case Mark Serwotka said: "Today is a fantastic victory for the members of our union and for all those committed to a democratic union run by its membership. Barry Reamsbottom no longer has any standing in our union and as of now I am the general secretary.

"This represents a fantastic achievement for all those in our union who believe that when the members speak, the members' decision must be sacrosanct. This has been an extraordinarily difficult time but now there is a job of work to be done.

"Myself and Janice Godrich are going back to union headquarters to get on with the important work for which we were elected: for national pay bargaining in the civil service; for an end to low pay and discrimination; for an end to privatisation of public-sector jobs and for a strong union that stands up for its members on all the issues that matter.

"We have seen today democracy upheld and now we need to carry out the policies we have to protect our members, which I commit myself to upholding."

PCS President Janice Godrich told The Socialist: "I am absolutely delighted at the court decision which upheld the fundamental issue of union democracy. With Mark, I now want to deliver to the members an end to low pay and privatisation and build confidence in our union."

The newly confirmed national leaders now have to ensure they win the backing of the membership in the battle against this hostile right-wing, who will attempt to obstruct any attempts to deliver on pay, against privatisation and protecting the interests of the union's 280,000 members.

It has been well documented in The Socialist that this group has links with sinister anti-union front organisations of the US State Department.

This is something Mark Serwotka acknowledged when he said after the court hearing: "I now expect all officials to accept and respect the members' decision to elect me PCS general secretary and to work with me to implement conference policy. If anyone cannot, then they should consider their future in PCS. Members would expect nothing less."

No appeal

THE JUDGE further agreed that Reamsbottom would not have leave to appeal and that he no longer had any official connection with the union. Although costs for both sides had been met by the union until this stage, the judge said that any further action Reamsbottom may consider would be as a private individual and that he would have to bear his own costs.

In what will be remembered as a landmark ruling, this confirms the trend for anti-establishment candidates to win election as union general secretaries and the removal of a rotten right-wing leadership in a number of key trade unions. The ruling also upheld the right of PCS President Janice Godrich to declare the union's national executive committee (NEC) meeting held on 23 May 2002 as invalid.

At that meeting the right wing, which has a 20-12 majority after elections held earlier this year, attempted at Reamsbottom's instigation to prevent Mark Serwotka from taking up his post as general secretary on 1 June this year.

That was a date agreed by Reamsbottom, Mark Serwotka and the previous NEC where Reamsbottom would quit as joint general secretary and receive an over-generous compensation package under what is known as the "Compromise Agreement".

The court ruling ends one of the biggest battles in the civil service unions since John Macreadie (then a supporter of Militant, forerunner of the Socialist Party, and now a Socialist Party member) won the general secretary election in the CPSA in 1987.

That ruling was challenged then by the right wing who obtained a High Court ruling to order a re-run of that general secretary election. This was won by the right-wing candidate who mysteriously received 20,000 more votes than he had done in the first election.

Since then, the right wing have implemented a tyrannical regime, carried on into the PCS, where suspicions of improprieties and intimidation by them have been rife. Currently there are investigations into misuse of the union's database in the recent NEC elections. A report commissioned by Mark Serwotka and Janice Godrich is due on that soon.

The PCS and CPSA before it has been described as the 'Beirut' of the trade union movement because of the right wing's 'rule or ruin' tactics, which has greatly benefited the employers. This ruling should signal the beginning of the end of such internal strife.

There will be an interview with Mark Serwotka in a future issue of The Socialist.

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US Imperialism Gambles On Iraq War

GEORGE BUSH'S planned attack on Iraq is looking decidedly frayed at the edges as many of his allies distance themselves from the US president's war option.

Dave Carr

While many in Bush's administration remain gung-ho about effecting a "regime change" in Iraq, others question the wisdom of US imperialism invading a Middle Eastern country, preferring instead a policy of "containment".

Even Bush's European lap dog - Tony Blair - has recently cooled his enthusiasm for war, reassuring the worried Jordanian ruler King Abdullah that a UN resolution would be sought before any military attacks.

Nonetheless, Blair remains adamant that British MPs won't have a vote on pursuing a war against Saddam Hussein. In any event a majority of Labour MPs reportedly support this military option. Yet according to a Daily Mirror poll of 21,884 people, 91% opposed going to war.

Recently leaked Pentagon plans have envisaged a massive invasion force of 250,000 US troops supported by 25,000 British troops. Civilian casualties have been estimated at 11,000 dead.

In the White House, while Bush's propaganda machine continues to pump out unfounded horror stories about the Iraqi dictator's "weapons of mass destruction" and his terrorist links, the consequences of removing Saddam and replacing him with a stooge regime remain troubling for US imperialism.

Political fallout

If surrounding Arab states allow US and allied forces to launch their attacks from their territories, the political fall-out in the region could be counter-productive for imperialism. Even in Turkey, the only predominately Muslim country in NATO, its ailing prime minister, Bulent Ecevit, is urging the US not to use military action.

The ruling regimes in countries such as Jordan and several of the Gulf states enjoy little popular support. And by supporting the US - Israel's main backer - while Ariel Sharon continues to oppress the Palestinians they will further enrage the impoverished masses of the region who could in turn force a "regime change" in their own countries.

Even in Saudi Arabia, whose reactionary and repressive rulers have sought to distance themselves from their US allies, they too could find themselves overthrown by a mass movement of dispossessed Saudis. This could result in a more reactionary, Islamist regime being installed and - ironically for the US - a regime that would be sympathetic to the aims of Osama bin Laden, i.e. the expulsion of Western influences from the region.

But, assuming that these semi-feudal regimes cling to power, would a post-Saddam Iraqi regime produce the stable democracy that George Bush and Tony Blair hope to see emerge?

If the post-Taliban regime in nearby Afghanistan is anything to go by, with assassinations of government ministers and rampaging warlords, then this expressed aim of Western governments will remain unfulfilled.

Indeed, the motley crew of pro-imperialist exiles that make up the Iraqi National Congress and other opposition groups are hopelessly split and remain tainted in the eyes of Iraqis as former members of Saddam's political and military elite.

And the chances of such a disparate band reaching an accord with the equally split pro-capitalist Kurdish nationalist forces in northern Iraq are also utopian. Any pro-Western regime in Baghdad would, therefore, be dependent upon US army troops to remain in power.

Behind the US propaganda about its former ally, Saddam Hussein, lies the strategic aims of imperialism - to maintain its hegemony in the region, secure its oil supplies and to have a non-belligerent regime in power in Iraq.

But if Bush temporarily suspends a military invasion and continues the US policy of "containing" Saddam, this will result in a continuation of the misery and suffering ordinary Iraqis have endured due to the crippling effects of trade sanctions.

The long-suffering masses of the region cannot look to Bush and Blair for an end to their crushing poverty and the overthrow of their oil-rich reactionary rulers.

There is no capitalist escape route for the working class and rural poor in the Middle East out of their plight. Only by creating independent workers' organisations with a socialist economic programme of nationalising industry under democratic workers' control and fighting for an internationalist solution to the problems of nationalities, can the enormous oil wealth be redistributed poverty eliminated and wars banished.

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Pensions crisis

Bosses' Poverty Plans For Retired Workers

PLUMMETING STOCK markets are hitting the private pension companies which have based their projected pension benefits on these markets' performance.

They have exposed individual companies which had raided their pension schemes and suspended payment of contributions in the past. There is a £3 billion shortfall at BT, £600 million at Marks and Spencer and £850 million at Rolls Royce. Inland Revenue figures show that in the 12 years to 2000, employers saved around £19 billion through 'contribution holidays'.

Companies are now desperately trying to limit their pension schemes. A survey of 3,000 companies by the Association of Consulting Actuaries (ACA) found that half of all remaining 'final salary' schemes are expected to be closed to new staff. Frozen food retailer Iceland is getting rid of its final salary scheme for existing employees as well as new ones.

There are huge amounts to be saved. The employer's contribution to a money purchase scheme is 6% compared to 15.4% to a final salary scheme. However, a typical 'money purchase' scheme will generate a pension around 40% lower than a final salary scheme.

Calls to the government to do something about fat cats' pensions are likely to fall on deaf ears however, seeing the deal MPs are getting, which raises the maximum payable to £36,745 after 27 years service (see letter opposite).

New Labour commissioned a report from Alan Pickering, former chairman of the National Association of Pension Funds. He recommends abolishing the link with inflation, ending the obligation to pay benefits to pensioners' widows and reducing regulations.

'Timebomb'

IT'S BEEN dubbed a "demographic time-bomb". In 1951 the average 60-year-old could expect to live into their mid-seventies; by 2030 it will be 82. In addition the proportion of the population over 60 in the richer capitalist countries is growing compared to those of working age.

Faced with a similar crisis, Germany's labour minister Walter Riester tried to deal with the pension gap by introducing a state-subsidised private retirement account. Germans can now put up to 4% of their pay packet (directly or via their employer) into a private pension that attracts tax breaks and subsidies.

After a year on the market and a torrent of advertising by insurance companies and banks hoping to cash in on a hot new product, barely two million of the 30-35 million eligible adults have taken out a private pension.

A survey this June showed that most of those eligible thought that they need not worry about their retirement. 50% said they had made adequate provision and 72% said they didn't intend to sign up for an individual Riester policy.

A similar effect has been seen in Britain, where the government introduced the stakeholder pension. Only about 670,000 have been sold.

The government have to tread carefully in deregulating and privatising pensions. A recent poll of Amicus trade union members gave overwhelming support for strike action to save final salary pension schemes. Almost 90% of union representatives said they would strike if the employer tried to close down the scheme or reduce its contributions.

Workers at two plants owned by steel company Caparo threatened strike action and an overtime ban in June to protect their pension scheme.

Declining state pension

AT THE same time the state pension has steadily declined in value. It's worth about 15% of average male wages, after the Tories removed the link between pensions and pay. A recent Age Concern study, Low Cost but acceptable incomes for older people (LCA), showed the state pension was now completely inadequate.

An assessment of pensioner needs and living costs using 12 'focus groups' across the country, it found that pensioners needed incomes ranging from £99 to £184 for a couple living in a rented property to enable them to avoid poverty.

For those not entitled to income support the gap between the basic pension and the LCA standard ranged from £31 to £80 per week.

Now there are calls to raise the pension age; the Institute for Public Policy Research has proposed 67 and the National Association of Pension Funds, 70. Once the state pension age is raised then company pension schemes will follow.

In 1909 the state pension age was 70, this was reduced to 65 for men in 1925. It would be an enormous step backward for working-class people for the retirement age to be raised again.

New Labour face an intractable problem. Capitalism cannot deliver the growth needed to pay today's pensioners, let alone tomorrow's. The world economic crisis is likely to be prolonged and pension companies may go bankrupt in the next few years if they cannot maintain their funds and meet their liabilities.

If the bosses attack workers' pension rights they could provoke industrial action. The ousting of right-wing trade union leaders like Ken Jackson of Amicus shows that workers want leaders who will fight to defend their terms and conditions.

Workers need a new party that will put forward a socialist programme and fight to achieve a socialist society. Labour or a future government may be forced to nationalise the banks and pension companies. By itself, however, on a capitalist basis this would only be a temporary measure.

Billions are still invested in Britain's pension funds. If workers and pensioners, not capitalists eager for a quick buck, controlled that money, a huge sum could be put to productive use and to provide jobs for all. The government's tax income would rise and real wealth created to provide a decent state pension for us all.

A Guide Through The Pensions Minefield

TO ENSURE an income in retirement, workers must save throughout their working life. The level of income depends on how much they save and the interest earned on those savings.

A pension company generally invests the savings in the stock markets and government bonds and securities. On retirement the fund is used to buy an annuity which gives an annual income.

The pension therefore depends on the level of wages (which affects the amount that can be saved), the stock market's performance over 25 years, the rate of the annuity on retirement and the pension company's competence and honesty. Two individuals paying the same premium could have as much as a 50% difference in how much pension they receive.

According to Will Hutton in The State We're In if you assume that earnings rise by 3% and the stock market rises by 8.5% then £2,080 would have to be saved every year to get a decent pension. Given 12 million pensioners in 25 years' time then cumulative funds at today's prices would be £1,200 billion, or three times what they would be worth today.

Final salary schemes are generally company pension schemes which pay a guaranteed percentage of your final salary. The employee pays a fixed percentage of their salary into the company pension scheme, as does the employer.

The average employer contribution at present is 15.4%. The minimum employee's contribution needed to equal the benefits from a final salary scheme would be 18%-20% of their salary every year.

Money purchase schemes match the worker's contribution with an equal one from the employer; i.e. if the employee puts in 4% then the employer puts in 4%. The fund is then invested on the stock market. Values of these schemes are typically 40% lower than final salary schemes.

The state pension is a benefit dependant on a minimum number of national insurance contributions or credits payable over the working life.

State earnings related pension (SERPS), were introduced by the government in 1978 to provide a second pension to those without company pension schemes. Based on earnings and national insurance contributions it would be, at most, 20% of a worker's average earnings.

Stakeholder pensions, introduced by Gordon Brown in 2001 were intended as an alternative to personal pensions for those earning between £10,000 and £20,000 per year without access to company pension schemes.

"Opting out" was where unscrupulous sales representatives persuaded people to opt out of occupational pension schemes with guaranteed pensions related to final salary and with contributions from their employers.

Instead, they bought pensions dependent solely on the stock market's performance and the size of their own contributions. Up to half a million people were mis-sold pensions. Some of the industry's biggest companies were involved, such as Norwich Union and Legal and General.

Strike Back At Big Business Pension Holidays

REDUNDANT STEEL workers at Cardiff's Allied Steel and Wire (ASW) plant face having their pensions dramatically cut after big falls on the stock market.

Clive Dunkley, Socialist Party Wales

Some workers at ASW have paid into the company pension scheme for over 30 years - this cut represents the bosses stealing the unpaid wages of the workers. 1,200 employees are to lose their jobs when the site closes, they had thought their pensions were safe but this latest move just adds insult to injury.

The capitalists always make the working class pay for their mistakes on the giant roulette wheel they call the stock exchange. This type of action amounts to theft, workers in all sectors need to take action to secure their pensions.

Workers at Caparo plants in Tredegar and Scunthorpe, members of the ISTC union, have already taken strike action to defend their final salary pensions schemes which their company are attempting to end.

The trade union movement needs a campaign of industrial action, in both the private and public sector, to send a clear message to Blair and the bosses that we won't pay for the failure of the system which they worship.

Companies who have taken "pension holidays" should be forced to pay back all the money lost through this blatant abuse of their position in the pension arrangement between workers and bosses.

Workers' pensions should be controlled by the workers themselves, after all it's our money! These measures would go some way to securing pensions for the likes of the ASW workers in Cardiff.

MPs Look After Number One

THE GOVERNMENT has again shown its absolute contempt for the electorate. The bosses want to scrap the link to wages of the pensions of ordinary workers, linking them instead to the volatile stock market - which has lost £873,360 million since December 1999.

Mary Jackson, Doncaster

Millions of workers will be forced to exist on reduced pensions after working and contributing for the majority of their working lives.

MPs, on the other hand, have just approved new rules which mean they will receive a fortieth of their present salary for every year they are in the House of Commons. So for a five-year term they will get a pension of £120 - £170 per week; £240 for ten years and £480 for 20 years.

Compare this to an ordinary worker's state pension of £75.50 per week (£120 for a couple).

It's scandalous! Workers can only dream of receiving an MP's pay of £1,060 per week and are unable to save enough to ensure an adequate private pension. However, we are still expected to subsidise their pensions from our taxes.

One Law For The Rich...

NOT EVERYONE'S suffering. Only 44% of FTSE 100 companies have final salary schemes for staff, but this leaps to 76% for directors. BT chief executive John Condon, who closed his company final salary scheme to new employees, has added two and a half years to his own pension, netting him £146,000 per year plus a lump sum of £439,000

More than 250 bosses in the FTSE-100 are giving themselves huge pension settlements. Most notably GlaxoSmithKline boss Jean-Pierre Garnier (above) has built up an entitlement of at least £833,000 a year when he retires. Other top directors will each receive pensions of over £500,000 a year.

The Socialist 9 August 2002 | Top | Home | News | The Socialist 

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