UK public sector workers are bearing the brunt of the cost of living crisis, according to official figures that show the gap between public and private sector pay growth is at its widest on record.
Annual growth in pay, excluding bonuses, was 6.6 per cent in the private sector in the three months to September, compared with just 2.2 per cent for the public sector, figures from the Office for National Statistics showed on Tuesday.
Across the economy, pay growth accelerated to 5.7 per cent in the same period as workers sought to cover rising living costs and employers struggled to hire in a tight labour market. Total pay, including bonuses, was up 6 per cent — the fastest pace outside the pandemic period since records began in 2001.
But wage growth has not kept pace with inflation, which reached 10.1 per cent in September, leading to growing industrial unrest.
The ONS data showed that 205,000 working days were lost to strike action in September, almost as many as the total for the whole of 2019. In the four months to September, almost 700,000 working days were lost, more than the cumulative 12-month total at any point since 2015.
So far, strikes have largely affected local authorities, transport services and private sector employers. But the latest ONS figures show the pay squeeze has been far worse for teachers, NHS staff and other public sector workers who are only now starting to vote on industrial action.
Jeremy Hunt, UK chancellor, said the pay data showed that inflation was an “insidious tax that is eating into pay cheques and savings”. Tackling inflation was now an “absolute priority” that would guide the difficult decisions on tax and spending he was set to announce on Thursday, he added.
Economists warned that pay growth remained too high for the Bank of England to tolerate, with further interest rate rises likely as the central bank seeks to curb high inflation. But they also said the data showed the chancellor would struggle to impose a further squeeze on public sector pay as it would either precipitate strikes or worsen strains on staffing.
“Whereas the government is banking on public sector wage restraint . . . the challenges this poses for real incomes of public sector workers are evident, which could make threatened public sector strike action difficult to avert,” said Sandra Horsfield, economist at Investec.
Louise Murphy, economist at the Resolution Foundation think-tank, said there was now a “huge wedge” between private and public sector pay, creating severe difficulties for public sector recruitment and retention.
The number of vacancies across the UK economy has fallen in recent months, and the ONS said increasing numbers of employers were pausing recruitment because of economic pressures. But there were still 1,225,000 unfilled posts in the three months to October — close to historic highs — with some biggest pressures in health and social care.
Despite the slowdown in hiring, the UK’s jobs market has so far held steady, even as the economy slides towards recession — suggesting employers who have recently struggled to hire are keen to hang on to staff where possible.
The latest ONS figures showed the employment rate unchanged in the quarter at 75.5 per cent. Unemployment edged up slightly from 3.5 per cent to 3.6 per cent but remained near a 40-year low.
There was no sign yet of cost of living pressures pulling more people back into the workforce, which remains smaller than it was before the pandemic, with the inactivity rate stubbornly high at 21.6 per cent and record numbers saying they were not working or job-seeking because of ill health.
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2022-11-15 14:37:29Z
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