Government’s argument for freezing public sector pay does not stand up to scrutiny
By failing to fund public services properly and freezing pay, ministers are punishing key workers across the board, writes Frances O'Grady. | PA Images
After enduring a decade of lost pay and working around the clock to get the country through the crisis, a pay rise for our public sector key workers is a matter of justice
Last week the chancellor announced a public sector pay freeze, justifying it on the grounds of ‘fairness’. But no matter how you look at it, there’s nothing fair about this freeze.
Pitting private against public sector workers is a divide and rule tactic by government – and it’s nonsense. Many public service care workers have been outsourced, often on low pay and insecure contracts. This is a common story across the sector. This isn’t a case of public vs private pay. By failing to fund public services properly and freezing pay, ministers are punishing key workers across the board.
If this crisis has taught us anything, it’s that we all rely on our key workers. They are getting us through the pandemic, often at great personal risk and with additional responsibilities. These key workers include all those in the public sector like carers, who have been looking after some of the most vulnerable and putting themselves at risk to do so. Firefighters, who have taken on vital additional tasks like driving ambulances, delivering PPE and delivering food supplies to vulnerable people. And refuse collectors, who have been keeping our streets clear, often in conditions that don’t allow for social distancing.
Holding down public sector pay is no way to reward their service.
Frozen pay, low morale, high vacancies and crippling staff shortages damage our public services – and that hurts all of us
Between 2010 and 2018, public sector wages were subject to a mixture of freezes and caps. Some workers saw the real value of their pay fall by over £3000 a year. The impact of this is still being felt. Lots of these workers are worse off in real terms than they were ten years ago.
Take firefighters, who, according to new TUC analysis have taken a £2500 hit to their pay packet compared to 2010.
It’s not just on take home pay that public sector workers are losing out. The government recently announced its intention to press ahead with plans to cap exit payments. After enduring a decade of lost pay and working around the clock to get the country through the crisis, a pay rise for our public sector key workers is a matter of justice.
As well as being unjust, the arguments for a freeze are based on flawed comparisons between the private and public sector. The chancellor talked about ensuring ‘parity’ between the sectors – suggesting that public sector wages are streets ahead. But this claim doesn’t stand up to scrutiny.
The IFS found that once you adjust for employee characteristics, such as education and age, the public sector pay premium disappears.
And while public sector wages have risen more quickly this year, this reflected the extent of furloughing in each sector and the gap had significantly closed by September. As NIESR has shown, furloughing has a strong, negative correlation with wage growth.
Like for like comparisons in these exceptional circumstances make no sense. And crucially, private sector pay is forecast to bounce back above inflation next year.
A public sector pay freeze while the private sector gets back up and running will do nothing but hinder public services.
Despite claims to the contrary, this pay freeze will not help private sector workers. Over the last decade, job losses and high levels of vacancies have become the norm in our over-stretched and under-funded public services.
Public sector staff have worked tirelessly to compensate. But the fact remains that frozen pay, low morale, high vacancies and crippling staff shortages damage our public services – and that hurts all of us.
A freeze also makes little economic sense – now is not the time to suck demand out of the economy. More money in the pockets of public sector workers would mean more spend on our struggling high streets.
For all the talk of wanting to level up the country, by hitting key worker pay the government will level down Britain.
Warm words and applause are not enough. All of our key workers in the public sector need a pay rise.
Frances O'Grady is the General Secretary of the British Trades Union Congress.