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The economic impact of local and regional pay in the public sector

A report by the New Economics Foundation (nef) for the Trades Union Congress (TUC)

This report, conducted by the New Economics Foundation for the Trades Union Congress, examines the Government's arguments for localising public sector pay and the potential economic impact of the policy. It finds that these arguments are not supported by the evidence, and that the policy would have a significant negative impact on the economy which could reach almost £10 billion.

Overall, our research indicates that the evidence does not support measures to make public-sector pay more 'market-facing', and shows that the costs to the economy could be substantial. This negative economic impact is the case even if there were some benefits in terms of private sector job creation - an outcome that our analysis shows is highly uncertain.

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Briefing document (200 words) issued 16 Jul 2012