Unions urge Chancellor to give all public sector workers a pay rise

• Public sector unions and the TUC write to the Chancellor to make the case for pay rise after reports of public sector pay restraint 

• Pay rise “a matter of justice” for public sector key workers who got country through the crisis and have suffered a decade of lost pay 

• NEW ANALYSIS: increasing public sector pay boosts GDP and tax take, significantly reducing net cost to the Exchequer 

Senior leaders of the TUC and 18 unions representing public sector workers have called on the Chancellor to give all public sector workers a pay rise as a reward for their efforts in helping the country through the coronavirus crisis. 

The call comes as reports suggest next year’s public sector pay settlements – to be announced on Wednesday in the spending review – will be based on pay restraint, except for NHS workers. 

Setting out their case in a letter to the Treasury today (Monday), the unions say a pay rise is a “matter of justice” for firefighters, teaching assistants, care workers, refuse collectors and all the public sector key workers who have worked around the clock to get the country through the crisis.  

They point out that over the last ten years, some public sector workers have seen the real value of their pay fall by over £3000 a year.  

The unions say that too many public sector workers were left out of recent pay awards in July, including care workers and lower paid civil servants. And for those who did benefit, the rise fell far short of making up for a decade of lost pay.  

Recruitment crisis 

Rejecting the proposal of pay restraint, the unions say that pay awards in 2020/21 should be based on a “fair and sustainable settlement for all public sector workers” which would result in a pay rise. 

The unions add that fair pay increases are “essential” if the country is to avoid potentially crippling staff shortages in parts of the public sector, suggesting that freezing pay will make filling vacancies harder. 

Boost to GDP 

In making the case for a pay rise, the unions highlight new analysis commissioned by the TUC, undertaken by NEF, which demonstrates the marked boost to GDP and increased tax take achieved by increasing public sector pay. 

The estimates find: 

• ensuring all public sector workers are paid a real Living Wage and increasing public sector pay by 2%, for instance, would boost GDP by between £1.1 and £2.1 billion, with an increased tax take of between £370 million and £700 million; 

• while ensuring all public sector workers are paid a real Living Wage and increasing public sector pay by 5% would deliver a boost to GDP of between £2.4bn and £4.6bn, with an increased tax take of between £800 million and £1.54 billion 

As a result of the boost to GDP and tax take, the net cost to the Exchequer would essentially halve to between £1.34 and £1.67 billion for a 2% increase, and to between £2.94 billion and £3.66 billion for a 5% increase. 

TUC General Secretary Frances O’Grady said:   

“All public sector workers are key workers. Care workers, teaching assistants, refuse collectors firefighters and all our dedicated public servants are the ones getting us through this crisis – often at great personal risk.  

“Holding down their pay is no way to reward their service. Public sector workers have already endured a decade of pay restraint. 

“And it makes little economic sense. Freezing pay will give workers less money to spend on their local high street.  

“If the government is serious about levelling up Britain, it shouldn’t be levelling down public sector pay.” 

Lydia Prieg, Head of Economics at the New Economics Foundation, said: 

"Key workers play a vital role in our communities and have held our economy together throughout this crisis. But still, when we’ve come to rely on our community health workers, teachers and carers now more than ever, they continue to be underpaid and undervalued.  

“Our analysis shows that public sector pay rises are not only a just reward for the workers protecting us on the frontline, but they will also boost demand and strengthen the economy in a time of recession.  

"It should be a no-brainer for government. Paying our public sector workers properly can help us through this crisis and support our economic recovery on the other side. But it is vital that this is new money, and not making further demands on stretched departmental budgets."