Latest Public Sector News

19.05.17

IFS: Tory public sector pay cap plan will ‘seriously exacerbate’ recruitment issues

The Conservative Party’s plan to only increase public sector pay by 1% for the next two years is at risk of “seriously exacerbating” existing recruitment problems, economists have said.

In analysis published today, the Institute for Fiscal Studies (IFS) looked at what each of the main political parties were planning to do with public sector pay and what the implication of these decisions would be.

It found that the Conservatives will press on with plans to increase pay on average by 1% each year, up to and including 2019-20 – which is the same rate that pay has increased by since 2011-12.

The two other large political parties have announced better deals for public sector workers, as Labour will delegate public sector pay setting to Pay Review Bodies and the Liberal Democrats will increase pay in line with inflation.

It was found that a Labour government would need to provide £9.2bn per year to fund the higher costs of employing public sector workers, while the Lib Dems’ plan would require an extra £5.3bn a year.

In March, the IFS had stated that the gap between private and public sector pay had now fallen back to “pre-crisis level”.

Because of this, the institute warned that public sector wages would need to go up to ensure that skilled workers were enticed to work in the public sphere, rather than moving to private sector jobs.

Jonathan Cribb, senior research economist at the IFS and the author of the report, said: “Recruitment and retention problems are beginning to emerge in the public sector following successive years of public pay restraint.

“The Conservatives’ plan of 1% increases for the next two years risks exacerbating recruitment problems – and ultimately reducing the quality of public services – as public pay growth would fall markedly behind growth in private sector pay.”

Cribb added that Labour’s plans to return to the recommendations of Pay Review Bodies would boost public sector pay, but require significant extra resources from government departments to pay for the higher wage costs – unless savings were found elsewhere.

“The Liberal Democrats’ plans imply public pay increases larger than the under the Conservatives and smaller than under Labour,” he concluded.

The Tory pay rise freeze has been at the heart of much debate recently, with the Royal College of Nursing threatening to go on the first strike of its 100-year history if the policy isn’t scrapped in the next Parliament.

Last week, the GMB union also branded the pay squeeze “cruel and unnecessary”, arguing that it would cost the UK economy around £16bn in lost wages by 2020.

Have you got a story to tell? Would you like to become a PSE columnist? If so, click here 

Comments

There are no comments. Why not be the first?

Add your comment

 

related

public sector executive tv

more videos >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the open more > more last word articles >

public sector focus

View all News

comment

Introducing the Facilities Management Marketplace

14/12/2017Introducing the Facilities Management Marketplace

The new Facilities Management (FM) Marketplace will be an opportunity to st... more >
Meet Pepper, the social care robot

14/12/2017Meet Pepper, the social care robot

Southend-on-Sea Borough Council has become the country’s first local ... more >

interviews

Are we taking a risk on education?

14/12/2017Are we taking a risk on education?

Adrian Prandle, director of economic strategy and negotiations at the Natio... more >

the raven's daily blog

Whole of government must act together to fulfil the ambition of the Industrial Strategy

11/12/2017Whole of government must act together to fulfil the ambition of the Industrial Strategy

Jen Rae, head of innovation policy at Nesta, says the aims in the government’s new Industrial Strategy are ambitious, but will require a shift in policymaking in order t... more >
read more blog posts from 'the raven' >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this feeling of imminent change than the article James Palmer, mayor of Cambridgeshire and Peterborough, has penned for us on p28. In it, he highlights... read more >