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24 July 2018updated 06 Aug 2021 2:51pm

Why the government’s public sector pay rise is not what it seems

One million workers will get a salary increase – but in reality, it’s just a smaller pay cut.

By Anoosh Chakelian

Finally, it’s the end of the public sector pay cap. According to headlines, at least.

The government is increasing the salaries of over one million workers, departing from the public sector pay cap implemented by former chancellor George Osborne. This capped public sector pay rises at one per cent since 2013, after state pay freezes since 2010.

Following Theresa May’s announcement last year that this cap would be lifted – resulting in new pay deals for prison staff, police and some NHS workers – the government has indicated that more money will soon be paid to the armed forces, teachers and doctors.

But before we herald the “end of austerity” and applaud the government for throwing out the pay cap, let’s have a look at what these pay rises really mean.

It’s not a pay rise – it’s just a smaller pay cut

Since Osborne imposed austerity on the UK when the Conservatives came into government with the Lib Dems in 2010, the public sector has seen its wages tightened.

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A pay freeze announced in 2010’s emergency budget (which came in the following year) preceded 2013’s public sector pay cap, and only last year did May begin to exceed the one per cent ceiling on pay increases.

This means state workers have had a pay restriction for seven years now.

The changes set to be announced by the government won’t make up for this. While we haven’t had the official announcement, the story trailed in the Sun says the average pay increase will be two per cent – with the upper limit being 3.5 per cent.

Neither of these are enough to make up for the years of restricted pay workers have endured.

It’s below inflation

Union representatives argue for a five per cent rise to make up for the years of pay cuts in real terms. The Labour leader Jeremy Corbyn supports this proposed increase, saying his party would fund it with tax rises.

The expected two per cent average rise is still below the level of inflation (2.4 per cent), which means it simply spells less of a pay cut rather than a pay rise.

The money comes from more cuts

The pay increases are not expected to be funded by the Treasury, according to the BBC. This means that individual government departments are going to have to make their own cuts to find the money to fund them.

As no new funds are being made available, this means services will suffer at the expense of the pay rises, as my colleague Patrick explains.

So it’s not really providing extra money for workers – it’s moving cuts around. This signals that the government’s attitude towards the public sector hasn’t changed at all.

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