Detailed analysis by UNISON, the UK’s largest union, has revealed the shocking true cost of making one public sector worker redundant. Based on calculations for a council worker earning £20,000, the analysis shows that whilst employed, the worker pays in £4,999 to the government in taxes and national insurance but costs £11,022 in lost revenue and benefits, if they are made redundant.
The union is calling on the Government to think again about making more cuts, because heavy public sector job losses are hitting vital services and damaging the country’s chances of economic recovery.
Dave Prentis, UNISON General Secretary, said:
“Sacking public sector workers makes no sense at all – the figures don’t stack up. The government might make short-term savings by cutting jobs, but they soon lose out in the longer term. Communities too pay dearly, as services they rely on vanish, and as demand in local shops and businesses plummets, hitting economic recovery.
“With 2011 looming, the government should reflect on the real cost of its drive to cut public spending. Up and down the country, hardworking families are paying with their jobs for a recession they did nothing to cause. Meanwhile, the financial institutions that caused the downturn, get off with rap on the knuckles over their bonuses, which many simply ignored.
“The notion that the private sector will come to the rescue, is just another government pipedream. It is suffering too, and is set to haemorrhage jobs in the New Year, as spending cuts bite deeper.
“The government’s austerity measures threaten to drag our country to the brink, increasing the gap between the rich and the poor, pricing people out of further education, and hitting people’s life chances. The new year presents an opportunity for the government to learn from experience and think again.”
Our public sector worker, Gloria, is a single mother, earning £20,000
– She pays £4,160 a year in rent (£80 a week), and her Council Tax is £700 a year.
– She pays £4276 in income tax and national insurance to the government, and her employer pays £1,828, making up a total of £6,104
– Gloria gets Child Benefit – £1,056 a year, and Child Tax Credit of £2,161
– After paying her rent (£4,160) and Council Tax (£700) she has £14,081 left to spend
– Assume that she pays 15% of that in VAT, petrol duty, alcohol duty, car tax etc, which means another £2,112 that is paid to the government, bringing up a total of £4,999 net income to the government.
BUT if Gloria is made redundant, then she costs the government the following:
– Job Seekers Allowance (£64.30/week) – £3,344/year, housing benefit to pay her rent £4,160/year, and council tax benefit of £700/year
– She still gets child benefit £20.30/week – £1,055.60/year
– She gets a Child Tax Credit of £2,851
– Her housing benefit is paid to the landlord, and her council tax benefit is paid to the council so she has £7,250 left for herself and her child to live on
– Assume that she pays 15 per cent of that in VAT, petrol duty, alcohol duty, car tax etc – so £1,087 is paid to the Government)
– The net cost to the government is £11,022
ENDS