Wage stagnation will hit public sector workers, says think-tank

12 Apr 17

Public sector workers will be among the worst hit by the stagnation in real term wage increases revealed in today’s Office for National Statistics employment figures, the Resolution Foundation has claimed.

ONS figures out today show in the three months to February the employment rate remained at 74.6% and unemployment also stood still at 4.7% from the previous quarter.

But average weekly earnings for employees in Great Britain in real terms - adjusted for price inflation - increased by just 0.2% including bonuses and by 0.1% excluding bonuses, compared with a year earlier.

Stephen Clarke, economic analyst at the Resolution Foundation, said: “Britain’s brief pay recovery has come to an end.

“Well over a third of the workforce are experiencing shrinking pay packets according to the latest figures, in sectors ranging from accommodation to finance and the public sector.”

She predicted wages would be squeezed further if inflation rises. “While the National Living Wage is protecting the lowest earners from this squeeze, boosting wages across the rest of the economy is the big living standards challenge of this parliament.”

The foundation said pay is falling in nine sectors of the economy, including accommodation and food services, transport, finance and the public sector.

Together these sectors for account for 40% of the UK workforce.

The GMB Union said these earning figures were “disturbing” as wages had risen were below inflation, now at 2.3% - above the Bank of England’s target of 2%.

Rehana Azam, GMB national secretary of public services, said: “These disturbing figures show millions of workers are feeling the pinch in austerity Britain.

“Wages are falling in real terms for both private and public sector workers, but the situation is made even worse in the public sector by the cruel and unnecessary pay caps introduced by the government."

She called on Whitehall to increase funding for public services and improve public sector pay.

The ONS Labour Force Survey figures showed earnings for employees in Great Britain that were not adjusted for price inflation had increased by 2.3% including bonuses, and by 2.2% excluding bonuses, compared with a year earlier.

They also revealed there were 39,000 [31.84m] people in work in the three months to February this year from the previous three months – although, the percentage of the population as a whole remained the same.

There were also 312,000 more people in work than the same period the year before.

Figures showed 1.56m people were not in work - 45,000 fewer than for September to November 2016 and 141,000 fewer than for the same period a year earlier.

Damian Green, work and pensions secretary, said: “This is yet another strong set of figures, with unemployment at a rate that hasn’t been beaten since the 1970s and more vacancies than ever before.

“More people are finding full-time jobs and average wages have grown yet again, meaning more families have the security of a regular wage.”

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