Keeping the squeeze on - Telegraph As Christmas approaches, the mood in the public sector is far from merry. An ongoing pay freeze will be followed by two years of significant wage restraint. A new pension deal that requires greater individual contributions appears ready to go through, despite the recalcitrance of many unions. There are warnings that the military and prison services will find it difficult to cope with the impact of budgetary tightening. In short, resentment - and an increasing militancy - are starting to spread beyond their traditional redoubts in the trade union movement. It is easy to sympathise: no one enjoys taking money away from others. Yet if our economy is to return to prosperity, we need not just to pay down the debt, but to alter the balance between the public and private sectors. Under Labour, the state wage bill rose by a third between 2002 and 2009 alone, three times the increase in the private sector. As the think tank Policy Exchange points out, the result is that the average public sector worker gets paid nine per cent more than their private sector equivalent - on top of which, they receive a pension that is colossally more generous. George Osborne's decision in his Autumn Statement to restrict public pay after the current freeze ends must, therefore, be part of a wider strategy. The private sector makes money; the public sector spends it. For the country to prosper, we need more people doing the former, and fewer doing the latter. That means - as the Chancellor has argued - eliminating national pay bargaining, to make private work attractive in regions that are now satrapies of the state. It also means returning to the days when state employees accepted lower salaries in exchange for their greater job security and higher pensions. This will not be a pleasant or uncontentious process. But it remains vitally necessary.