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Over 100,000 jobs at risk from regional pay – nef

Local pay for the public sector could cost jobs and billions of pounds, a new report suggests.

Research by the New Economics Foundation (nef) indicates that the best case scenario would see 11,000 jobs created at a cost of £2.7bn to the taxpayer, but the worst case would be a fall in job numbers by 110,000 acrossEnglandandWales, with a £9.7bn loss in national income.

The report was commissioned by the TUC, which has been campaigning against regional pay since Chancellor George Osborne proposed the idea last year. The Government has argued that “the public sector pays more than is necessary to recruit, retain and motivate staff in some areas”. 

Helen Kersley, of nef, said: "The research finds no economic case for regional pay variations. Our research finds the Government's proposals are based on flawed assumptions that are not borne out in reality. Cutting the wages of public sector workers is a high-stakes gamble from which there will be no winners.”

TUC general secretary Brendan Barber said: “Quite apart from the huge hit that public sector workers would have to take in their pockets if pay in parts of the UK is held down to 'allow' the private sector to catch up, this report shows that the move would also prove hugely damaging to local economies.

“Despite the concerns being voiced by MPs in the parts of the UK most likely to be affected by the introduction of local pay rates, the Government has so far refused to rule out this move that would hit public sector workers and their families – who are already feeling the financial pinch as they suffer the effects of a lengthy pay freeze – very hard.”

Independent pay review bodies are set to report on how local variations could be implemented this week.

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