The UK government’s partial public-sector pay freeze will hit workers who are already paid less than their counterparts in private companies, according to new research by the Resolution Foundation. It suggests that the pay squeeze by the chancellor, Rishi Sunak, may not achieve his aim of narrowing the gap between government and private workers.
2.6 million public sector workers whose pay will be frozen, including teachers and police, earn 7.9% less than their private sector counterparts once differences such as experience and location are taken into account, according to the analysis.
Unions said the pay freeze was a “kick in the teeth”, especially for key workers who had played a vital role in fighting the pandemic.
Sunak said that pay rises for public sector workers – apart from NHS workers and the lowest-paid – could not be justified at a time when average earnings in the private sector were falling. “Coronavirus has deepened the disparity between public and private sector wages,” he said.
The government’s austerity pay freezes after the 2008 financial crisis have meant the “pay premium” for the public sector has fallen to zero once factors such as education and age are taken into account, according to the Institute for Fiscal Studies.
Hannah Slaughter, an economist at the Resolution Foundation, said: “The government has justified the coming public sector pay freeze on the basis of the pay premium these workers will experience as a result of the pandemic. But this is a very poor description of the impact of the policy, with the freeze largely falling on those already experiencing pay penalties relative to the private sector. Ministers must be mindful that while public and private sector pay do move in line with each other over the longer term, there are risks in making that adjustment next April, when the economic challenges of the pandemic will still be immense, and consumer confidence needs supporting.”
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