UK
How the pay rise for public sector workers compares to people in the private sector
Connor Parker
Fri, July 14, 2023
Junior doctors have been striking for a pay rise in recent days. (PA)
Millions of public sector workers were this week offered pay rises of between 5-7% in the coming months.
Teachers have been offered an increase of 6.5%, junior doctors, consultants and dentists 6% and police and prison officers 7%.
These awards apply to those working in England and Wales, with devolved administrations making separate offers to their staff.
Senior civil servants will receive 5.5%, while military personnel are in line for an increase of 5-6%, which will apply UK-wide.
Read more: What the public sector pay rises announced by Government mean for strikes, budgets and inflation
Teachers will be given a 6.5% pay rise. (PA)
The government has ruled out paying for the pay rises with more borrowing or taxes, saying it will be funded from current budgets.
The government hopes the offers will put an end to the wave of strikes that have plagued the public sector for the past year, with several unions already indicating they will accept the offer.
How does it compare to the private sector?
Rishi Sunak has described the pay award as the government's final offer.
However, workers' new pay increase will still be way below the current inflation level of 8.7% - meaning despite the new offer everyone will still be getting a real terms pay cut.
Plus, if the average public sector pay works out at an average of 6.5%, it will still be behind the average for the whole economy.
Charlie McCurdy, economist at the Resolution Foundation, told Yahoo News UK: "Pay growth in the private sector has outstripped the public sector for several years, and we're seeing the effects of this as schools and hospitals struggle to recruit and retain staff."
The latest figures by the Office for National Statistics showed average wage growth was 7.3% between March and May 2023.
This was driven by 7.7% growth in the private sector and just 5.8% in the public sector.
Public sector wage growth before the new pay rise if factored in. (Resolution Foundation)
This data does not factor in the most recent offer, which will not be applied until the start of the financial year - but it doesn't seem like it will be enough to close the gap.
As McCurdy pointed out: "The latest pay settlement will help to address this imbalance – as well as reducing industrial action – though huge questions remain about the future funding of public services and public servants."
Last month, the Resolution Foundation noted that, since January 2022, wages in the private sector have been consistently increasing from around £550 a week to £600 in April 2023.
But in the public sector wage growth has plateaued, it rose steadily from January 2022 to the middle of the year before rising sharply in the final six months of 2022.
Public sector wages are now in line for another sharp growth, but it is yet to be seen if this will catch up with the private sector.
Connor Parker
Fri, July 14, 2023
Junior doctors have been striking for a pay rise in recent days. (PA)
Millions of public sector workers were this week offered pay rises of between 5-7% in the coming months.
Teachers have been offered an increase of 6.5%, junior doctors, consultants and dentists 6% and police and prison officers 7%.
These awards apply to those working in England and Wales, with devolved administrations making separate offers to their staff.
Senior civil servants will receive 5.5%, while military personnel are in line for an increase of 5-6%, which will apply UK-wide.
Read more: What the public sector pay rises announced by Government mean for strikes, budgets and inflation
Teachers will be given a 6.5% pay rise. (PA)
The government has ruled out paying for the pay rises with more borrowing or taxes, saying it will be funded from current budgets.
The government hopes the offers will put an end to the wave of strikes that have plagued the public sector for the past year, with several unions already indicating they will accept the offer.
How does it compare to the private sector?
Rishi Sunak has described the pay award as the government's final offer.
However, workers' new pay increase will still be way below the current inflation level of 8.7% - meaning despite the new offer everyone will still be getting a real terms pay cut.
Plus, if the average public sector pay works out at an average of 6.5%, it will still be behind the average for the whole economy.
Charlie McCurdy, economist at the Resolution Foundation, told Yahoo News UK: "Pay growth in the private sector has outstripped the public sector for several years, and we're seeing the effects of this as schools and hospitals struggle to recruit and retain staff."
The latest figures by the Office for National Statistics showed average wage growth was 7.3% between March and May 2023.
This was driven by 7.7% growth in the private sector and just 5.8% in the public sector.
Public sector wage growth before the new pay rise if factored in. (Resolution Foundation)
This data does not factor in the most recent offer, which will not be applied until the start of the financial year - but it doesn't seem like it will be enough to close the gap.
As McCurdy pointed out: "The latest pay settlement will help to address this imbalance – as well as reducing industrial action – though huge questions remain about the future funding of public services and public servants."
Last month, the Resolution Foundation noted that, since January 2022, wages in the private sector have been consistently increasing from around £550 a week to £600 in April 2023.
But in the public sector wage growth has plateaued, it rose steadily from January 2022 to the middle of the year before rising sharply in the final six months of 2022.
Public sector wages are now in line for another sharp growth, but it is yet to be seen if this will catch up with the private sector.
Teachers poised to end strikes as Rishi Sunak unveils public sector pay rise – but doctors dig in
Kate Devlin and Jon Stone
Thu, July 13, 2023
Teachers are poised to end months of strikes after Rishi Sunak announced pay rises of up to 7 per cent for millions of public sector workers – but doctors show no sign of calling off their action.
Teachers have been offered a 6.5 per cent rise and junior doctors 6 per cent, plus an additional £1,250.
But the British Medical Association (BMA) said the below-inflation offer was “exactly why so many doctors (feel) they have no option but to take industrial action”.
As the longest walkout in NHS history got underway, the prime minister told all unions his offer was final and implored doctors to “do the right thing and know when to say yes”.
Downing Street said it would not borrow more money or increase taxes to fund the more than £2bn needed this year to fund the pay rises.
Mr Sunak said more than £1bn would be found by “significantly” raising fees for migrants’ visa applications and access to the NHS.
But roughly the same amount will be found through “reprioritisation” – raising the prospect of cuts. However, it is understood this will be cross-government, removing pressure on individual departments, like education, to find the money for pay rises for teachers.
For her part, education secretary Gillian Keegan promised there would be no cuts to frontline education services.
Ben Zaranko, senior research economist at the Institute for Fiscal Studies, warned that wage increases would eventually require cuts to public budgets; that prompted the BMA to accuse the government of making “ordinary people sicker and poorer”.
Unite union general secretary Sharon Graham said the pay offer would place staff under new pressure and predicted: “I think we’ll be seeing a new wave of industrial action.”
Speaking at a press conference, Mr Sunak said he would accept the recommendations of all the government’s independent pay review bodies; other rises include 7 per cent for police and prison officers, 6 per cent for dentists and NHS consultants, and 5 per cent for members of the armed forces.
He admitted that his announcement would “cost all of you as taxpayers more than we had budgeted for”.
He added: “That’s why the decision has been difficult, and why it has taken time to decide the right course of action. I can confirm today that we are accepting the headline recommendations of the pay review bodies in full, but we will not fund them by borrowing more or increasing your taxes.”
Ministers are struggling to fight persistent high inflation at the same time as bringing to an end to industrial action by groups including doctors.
But BMA chair of council Professor Phil Banfield said the government “missed a huge opportunity to put a credible proposal on the table to end strikes”.
He said consultants “remain willing to talk” but the offer means “they are likely to continue to take industrial action”.
Treasury minister John Glen told the Commons the pay award for teachers “will be fully funded”. As part of reprioritising budgets, the Ministry of Defence will recruit fewer civil servants.
But unions said the decision to fund some of the rises by drawing on departmental budgets was the wrong approach.
Mike Clancy, general secretary of civil service union Prospect, said: “For a prime minister and chancellor who came into office promising economic stability, the chaotic handling of this process will inspire little confidence in workers worried about their futures during the worst cost-of-living crisis in a generation.
“The fact that they are taking a knife to public services to pay for these pay rises signals that they have learned nothing from the austerity years.”
Experts warned the education and health budgets could still face cuts worth billions of pounds, even with frontline services protected.
Mr Zaranko said: “At this point, we can’t say with any certainty where the funding for higher pay rises will come from, although Rishi Sunak has made clear that it will not come from increased borrowing or higher taxes. In the short-term, some could come from under-spends in other parts of the budget, but that’s not a permanent solution.”
He said extra revenue through higher charges for visa applications and for non-British nationals using the NHS would be “unlikely to cover all of the additional cost”. Without rises in borrowing or tax the move will “eventually require either a smaller public sector workforce, or cuts to some other aspect of public service budgets”.
Praxis, which supports migrants and refugees, said that raising “already eye-wateringly high” visa fees risks seeing people fall “deeper into poverty and insecurity”. Josephine Whitaker-Yilmaz, policy and public affairs manager, said migrants in the UK pay some of the highest costs in Europe.
Mr Sunak has promised to halve inflation – to 5 per cent – this year. But the CPI inflation is running at 8.7 per cent, amid fears pay increases are fuelling a wage-price spiral. Official figures released just hours before the announcement also showed the UK economy contracted in May. Ministers hope the decision not to borrow to fund the pay rises will minimise the impact of the decision on inflation.
Kate Devlin and Jon Stone
Thu, July 13, 2023
Teachers are poised to end months of strikes after Rishi Sunak announced pay rises of up to 7 per cent for millions of public sector workers – but doctors show no sign of calling off their action.
Teachers have been offered a 6.5 per cent rise and junior doctors 6 per cent, plus an additional £1,250.
But the British Medical Association (BMA) said the below-inflation offer was “exactly why so many doctors (feel) they have no option but to take industrial action”.
As the longest walkout in NHS history got underway, the prime minister told all unions his offer was final and implored doctors to “do the right thing and know when to say yes”.
Downing Street said it would not borrow more money or increase taxes to fund the more than £2bn needed this year to fund the pay rises.
Mr Sunak said more than £1bn would be found by “significantly” raising fees for migrants’ visa applications and access to the NHS.
But roughly the same amount will be found through “reprioritisation” – raising the prospect of cuts. However, it is understood this will be cross-government, removing pressure on individual departments, like education, to find the money for pay rises for teachers.
For her part, education secretary Gillian Keegan promised there would be no cuts to frontline education services.
Ben Zaranko, senior research economist at the Institute for Fiscal Studies, warned that wage increases would eventually require cuts to public budgets; that prompted the BMA to accuse the government of making “ordinary people sicker and poorer”.
Unite union general secretary Sharon Graham said the pay offer would place staff under new pressure and predicted: “I think we’ll be seeing a new wave of industrial action.”
Speaking at a press conference, Mr Sunak said he would accept the recommendations of all the government’s independent pay review bodies; other rises include 7 per cent for police and prison officers, 6 per cent for dentists and NHS consultants, and 5 per cent for members of the armed forces.
He admitted that his announcement would “cost all of you as taxpayers more than we had budgeted for”.
He added: “That’s why the decision has been difficult, and why it has taken time to decide the right course of action. I can confirm today that we are accepting the headline recommendations of the pay review bodies in full, but we will not fund them by borrowing more or increasing your taxes.”
Ministers are struggling to fight persistent high inflation at the same time as bringing to an end to industrial action by groups including doctors.
But BMA chair of council Professor Phil Banfield said the government “missed a huge opportunity to put a credible proposal on the table to end strikes”.
He said consultants “remain willing to talk” but the offer means “they are likely to continue to take industrial action”.
Treasury minister John Glen told the Commons the pay award for teachers “will be fully funded”. As part of reprioritising budgets, the Ministry of Defence will recruit fewer civil servants.
But unions said the decision to fund some of the rises by drawing on departmental budgets was the wrong approach.
Mike Clancy, general secretary of civil service union Prospect, said: “For a prime minister and chancellor who came into office promising economic stability, the chaotic handling of this process will inspire little confidence in workers worried about their futures during the worst cost-of-living crisis in a generation.
“The fact that they are taking a knife to public services to pay for these pay rises signals that they have learned nothing from the austerity years.”
Experts warned the education and health budgets could still face cuts worth billions of pounds, even with frontline services protected.
Mr Zaranko said: “At this point, we can’t say with any certainty where the funding for higher pay rises will come from, although Rishi Sunak has made clear that it will not come from increased borrowing or higher taxes. In the short-term, some could come from under-spends in other parts of the budget, but that’s not a permanent solution.”
He said extra revenue through higher charges for visa applications and for non-British nationals using the NHS would be “unlikely to cover all of the additional cost”. Without rises in borrowing or tax the move will “eventually require either a smaller public sector workforce, or cuts to some other aspect of public service budgets”.
Praxis, which supports migrants and refugees, said that raising “already eye-wateringly high” visa fees risks seeing people fall “deeper into poverty and insecurity”. Josephine Whitaker-Yilmaz, policy and public affairs manager, said migrants in the UK pay some of the highest costs in Europe.
Mr Sunak has promised to halve inflation – to 5 per cent – this year. But the CPI inflation is running at 8.7 per cent, amid fears pay increases are fuelling a wage-price spiral. Official figures released just hours before the announcement also showed the UK economy contracted in May. Ministers hope the decision not to borrow to fund the pay rises will minimise the impact of the decision on inflation.
Teachers rally in Alloa, Clackmannanshire, Scotland
Updated Thu, July 13, 2023
By Muvija M and William James
LONDON (Reuters) -British Prime Minister Rishi Sunak sought on Thursday to end months of crippling public sector strikes by offering teachers, doctors and other workers pay increases of 6% and above, but warned it would cost billions that could mean cuts elsewhere.
Sunak faces an election in the next 18 months against a backdrop of the highest inflation of any major economy, a near-stagnant economy and a legacy of scandals and missteps from his Conservative Party's 13 years in power. Opinion polls put the Conservatives far behind the opposition Labour Party.
The prime minister said he had accepted the recommendations of independent pay review boards on wage rises for public sector workers, stressing that it was a final offer intended to end months of industrial action.
"This is a significant pay award, it's one of the most significant we've had in decades, and it is costing billions of pounds more than the government had budgeted for and that has consequences," Sunak said.
The package will mean finding an additional 5 billion pounds ($6.55 billion) - 2 billion this year and 3 billion next year - from existing departmental budgets.
"Today's offer is final. We will not negotiate again on this year's settlements and no amount of strikes will change our decision," Sunak said.
Education unions immediately said they would call off planned strikes and recommend accepting the deal. But two unions representing doctors said the offer was unlikely to end strikes.
The pay increases are below Britain's current 8.7% inflation rate but are aimed at bridging the gap following the country's worst bout of industrial unrest in more than 30 years.
Junior doctors will now get a 6% pay uplift and a lump-sum pay increase of 1,250 pounds, while teachers would get a 6.5% raise. Police and the military will get similar settlements.
After more than a year of elevated inflation - which at its peak hit more than 11% - the government is struggling to balance the need to end strikes with rising public debt levels.
It has little room for more spending on wages without either hiking taxes, cutting other public services or missing its self-imposed targets to reduce borrowing.
NO NEW BORROWING
Sunak said the pay rises would not push up inflation because there would be no new borrowing or spending to fund the increases. Teachers' pay rises would be funded by a reallocation of the existing department budget.
Explaining how he would fund the higher salaries, Sunak said measures would include raising a fee paid by international workers to access the country's health service and the cost of securing a visa to enter Britain would also increase.
Other sources of new funding are likely to be closely scrutinised by trade unions, who have said budgets for public sector services such as hospitals are already very tight.
"The government is putting its departments between a rock and hard place," said Unite union General Secretary Sharon Graham. "They now have to choose between paying workers a half-decent salary or cutting services in already underfunded public services."
The British Medical Association, which represents about 45,000 junior doctors in England, said the government's offer was still a pay cut in real terms.
"Today, it missed a huge opportunity to put a credible proposal on the table to end strikes," BMA Chair of Council Phil Banfield said. He added that junior doctors, who are in the middle of a 5-day strike, were likely to continue to take further industrial action.
Ministers have repeatedly stressed the danger that increasing wages too far would undermine its inflation-cutting goal and could entrench rising prices.
However, the Bank of England has been more focused on pay in the private sector, which has risen faster than public-sector pay and has a more immediate impact on the prices of goods and services used to calculate consumer price inflation.
Britain's total debt is just over 100% of GDP, slightly below the average among advanced economies.
($1 = 0.7634 pounds)
(Additional reporting by Kylie MacLellan, David Milliken, Suban Abdulla, Paul Sandle, Farouq Suleiman and Alistair SmoutWriting by William JamesEditing by Kate Holton, Alex Richardson and Frances Kerry)
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