Public sector pay rises will fall behind those in the private sector if Labour or the Conservatives carry out their planned pay freezes after the election, an independent report warned this week.
Incomes Data Services found that millions of workers in the state sector face real-terms pay cuts this year as retail price inflation is expected to hit four per cent next month. The TUC have welcomed the report, saying it proves that “populist attacks on public sector pay are misinformed”.
The report also found that the Government’s equal pay drive seems to be failing, with the pay gap between men and women rising in the public sector.
“In the rush to freeze or cap pay rises, politicians have shown little regard for longer-term issues of public sector pay determination, the effects on the independent review body process or the role of comparability with private sector pay”, the report said. “It seems almost inevitable that such short-termism will produce catch-up pay pressures over the next few years.”
As Chancellor Alistair Darling confirmed in his Budget speech this week, Labour is committed to limiting new public sector pay rises to one per cent until 2013, except for the armed forces. Police, police support staff and the National Health Service will be unaffected due to multi-year pay deals. But the remaining 3.4 million workers are likely to suffer below-inflation pay rises.
“Increasingly the Treasury has seen the review body system as an extension of Government policy rather than an independent form of evidence-based pay setting”, the report commented.
The authors also expressed concern about Tory plans to freeze public sector pay for all those earning at least £18,000, which it says would exclude about one-fifth of civil servants and just under half of local government workers.
“There is some evidence to show that the experience of inflation for lower-paid workers is different to that of employees on higher incomes, with rising inflation making for a higher cost of living for lower-paid workers”, they said. “Will the Government take the cost of living into account when it comes to pay reviews for those on less than £18,000?”
The report found that the gender pay gap among full-time public sector workers rose from 13.9 per cent to 14.6 per cent in 2009, despite the public sector generally having a better track record.
A Government Equalities Office spokesperson said that the gender pay gap had fallen significantly since 1997 and was still lower in the public than the private sector.
