Public sector pay decline 'set to accelerate'

PAY in the public sector is falling and the pace of decline is set to accelerate as inflation picks up, according to a new report.

The study by the Resolution Foundation said that, based on current projections, average pay for over five million public sector workers will be £1,700 lower in 2019-20 compared with 2009-10.

Average real pay for workers in public administration, education and health and social care is likely to be lower in 2019-20 than 2004-05, meaning 15 years of lost pay growth, it added.

While real annual pay growth for the private sector was one per cent in January, it fell to 0.1 per cent for the public sector, the first negative figure since September 2014.

Pay was frozen for most public sector workers in 2011-12 and 2012-13, followed by average rises capped at one per cent from 2013-14 to 2015-16. Rises will be capped at one per cent for the next four years.

"In public sector education, real pay in 2016 was already lower than in 2003 and is now set to fall further, while health and social work could face a further six per cent real fall by 2019-20," said Resolution Foundation economic analyst Adam Corlett.

"Whatever the other pros and cons of the current public sector pay policy, these wage falls will have a direct impact on living standards. For some workers they will be part of a double whammy alongside working-age welfare cuts.

"Pay cuts could also be expected to make it harder to recruit new workers in the public sector. Where this pressure comes alongside rising demand and uncertainty over migrant worker policy - such as in healthcare - the impact may be compounded. For these reasons, the ongoing impact of public sector pay policy should be monitored carefully in the coming years."