UK public sector pension negotiations – what’s the strategy, guys?

So on Wednesday the UK Government side offered major concessions to the public sector Trade Unions in terms of public sector pension changes, including protecting anyone with less than 10 years to go before retirement. Some commentators have estimated that the cost of these concessions is up to £50 billion.

Yet the new offer was greeted by the unions without much enthusiasm, and the proposed strike on November 31st looks like it is still going ahead.

Which all led me to wonder two things.

1. What exactly is the Government's negotiation strategy here, assuming they have one?

2. Have the Government negotiators had any training or coaching (or for that matter, real life experience) in the subject?

We've said before, that we suspect everyone - well every male anyway - thinks they are a great negotiator. Personally, I reckon I know enough about the topic to know that I'm not - yet I suspect I've certainly had more experience and have a better understanding of the principles than 90% of the people who think they are!

And in terms of the strategy, I am a little surprised at this latest move. The Unions have conceded nothing so far in the process, and yet the Government has just offered up a huge concession.

Looking at it with my CPO hat on, it appears that the strategy may be -

1. Go in with a really low offer (i.e. big cuts in pensions in this case) ,

2. Let it lie for a while

3. Than make a much more reasonable offer, probably better than the other side expected, hoping they'll go "that's surprisingly good, we can just about live with that, let's take it before they change their minds".

4. Threaten to withdraw the offer if the other party insist on further negotiations.

And there is a political dimension here we don't get in most negotiations  - being seen by the public to be reasonable has big benefits for the Government beyond the pure negotiating aspect.

But of course this strategy has a big downside as I'm sure many procurement professionals reading this will have spotted. The alternate response (internal discussion I mean) from the Union side might be this.

"Right, they've conceded £50 billion and we haven't even had to do anything yet. Not even a limited strike. If we can get that much out of them so easily, how much more do you think we might get when things get a little tougher? They're weak, and they've exposed their weakness - hold firm and there's billions more to go for."

We'll see. My view is that the Unions won't accept this, although it is conceivable that their members might like it, so there may be some divide and rule opportunity for the Government side. But it feels like a very high risk, as well as high cost, negotiating strategy from the Government.

And in terms of the Government negotiators? Francis Maude had a business career before politics and looks like a pretty sharp guy - although how familiar is he dealing with the situation where his opponents say "no"? Danny Alexander doesn't have that background, so I wonder if he's had any real experience - or training - in this area? It's billions of pounds of taxpayers money at stake here - and of course people's pensions - so you would like to think there was some decent expertise in play!

Voices (4)

  1. John Viner-Smith:

    In negotiation, parties only value concessions that they have had to work for. If you make a large first concession, the natural response is “Well, that was easy – let’s see what else we can get”.

    In negotiation, generosity engenders greed.

  2. bitter and twisted:

    But, the governments BATNA is:

    Ok, strike: the reasonableness of our offer means the public will hate you and we will break you.

    1. life:

      Granted, but if disruption is great enough this might prove to be another issue the government could do without. There’s quite a lot of the public employed in the public sector (although they are all supposed to be labour voters). The thrust of the comments is spot on, and training / preparation for ministers in the round is woeful and their rotation frequent, with relevant experience seldom being a criteria for “promotion” even early on in a Government (Maude being an exception?), but I think the specifics and thinking on this one will probably only come out in the biographies of those involved, and will be as random and event driven as you like (see Chris Mullin et al). Whatever happened to managerialst thinking?

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