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Welsh wages and regional variation

Source: Public Sector Executive Mar/Apr 12

Plaid Cymru’s Lindsay Whittle AM explains why implementing regional pay in the public sector would have serious consequences for Wales.

Chancellor George Osborne’s recent proposal to introduce regional variation in public sector pay to better reflect local private sector wages has been criticised by unions and businesses alike, particularly for its effects in poorer parts of the UK, such as Wales.

Osborne stated: “We should see what we can do to make our public services more responsive and help our private sector to grow and create jobs in all parts of the country.”

The median annual income for public sector workers was £21,258 last year – 19% more than the private sector figure of £17,177, according to the Office for National Statistics (ONS).

The Government believes that the move would create a more equal system that would develop employment opportunities in the private sector, especially supporting the recruitment of highly skilled workers. Pay review bodies are currently examining the proposals to determine how a nationally-imposed policy of regional pay would affect both sectors.

But Plaid Cymru AM Lindsay Whittle, speaking to PSE, said of the proposals: “We don’t think they would help one iota; it would lead to a downward spiral and wouldn’t help what is already a lowwage economy. If the public sector were to be on low wages that would affect the private sector because there would be less disposable income for the economy here in Wales, so it doesn’t have our support at all.”

Bridging the gap

ONS figures suggest that wages in Wales are the lowest in the UK, but according to the Institute for Fiscal Studies, Wales also has the biggest pay gap between public and private sectors. However, Whittle suggested that this did not reflect the average salary, and was due to a minority of higher earners.

He said: “The actual fact of the matter is that two-thirds of the public sector in Wales are women and are usually on not very high wage-scales. I think the balance is tipped by perhaps those who are on a higher scheme in the public sector, and that doesn’t reflect what is on average in Wales, it really doesn’t.

“Most workers are not on high salaries and many public sector workers are going through real terms pay cuts because their wages have been frozen for some years. Recruitment is also very limited,” he said.

In contrast to Government claims that the current system is unfair to other areas of the country, Whittle argued that the introduction of regional pay would not deliver advantage to anyone.

“I don’t think it’ll benefit any part of the rest of Britain. All of this comparison between public and private sector is very negative and damaging; it’s a dividing tactic and there are no winners in that sort of comparison. It’s a rift towards low-pay and poor conditions.”

The Federation of Small Businesses has publicly declared its opposition to the proposals; something Plaid Cymru believes demonstrates that local pay would also be detrimental to the private sector.

Unfair settlement

In terms of action to campaign against this move, Plaid Cymru believes it is another example of why Wales needs to make more of its own decisions.

Whittle said: “Some of these lasting policies are going to be forced upon us by the London Government; that’s why we want devolution. We think pay has to be treated as a fair settlement and this is not fair. Local pay doesn’t give us any more control over our own affairs.”

He stated that in the event of localised public sector pay being implemented, the Welsh Government would have to examine its powers to see if it could counteract the legislation.

He said: “There are a lot of ‘ifs’ and ‘buts’. I don’t know yet whether this is going to get through the London Government, let alone the Welsh Government. This isn’t going to get through the Welsh Government; I’ll tell you that now.”

As PSE went to press, the Welsh Assembly was debating this very issue. “I hope we send a clear message to the public and the private sector that this is too damaging,” Whittle said, “and in fact there is a better way for us here in Wales. That’s something we will be emphasising.”

Plaid Cymru aims to stimulate the economy to benefit both public and private sector workers through increased capital investment, he concluded – “Without taking any more money out of the pockets of the public sector workers.”

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