British civil servants will feel the brunt of the pressure on living standards, after ministers set guidelines that will leave them with pay below inflation by an average of just 2% next year.
The government released its framework for salary rewards in 2022-23 on Thursday, which said departments would be allowed to offer salary rewards of 2% on average, with the option to pay an additional 1% if they could demonstrate that this helped achieve long-term workforce priorities.
With inflation expected to rise to almost 9% by the end of the year, according to the latest forecast from the Office for Budget Responsibility, this means that around 450,000 public servants in ministries, agencies and other public bodies are faced with a very high remuneration in real conditions. to cut.
It comes as public sector workers have already fared worse compared to their private sector peers than at any time in the past 30 years, according to Ben Zaranko, senior research economist at the Institute for Fiscal. Studies.
MP Heather Wheeler, Parliamentary Secretary to the Cabinet Office, said in a statement that the guidelines would ‘ensure broad parity with private sector pay deals’ and ‘fair pay increases for hard-working staff’.
But the civil service union PCS said the offer was “paltry” and fell far short of what staff needed to avoid hardship as food and fuel bills soared and tax rates increased.
There will be some protection for the lowest paid, with the main statutory minimum wage rate set to rise by 6.6% from today, equivalent to £1,000 a year for a full-time worker.
But independent forecasts suggest the wage offer is well below the average private sector offer for the year ahead. Surveys from XpertHR, a research group, point to a median compensation of 3% for 2022, with the bottom quartile of employers offering up to 2.5%. The OBR projects that nominal incomes will increase by 5.3% in 2022, with household disposable income decreasing by 2.2% in real terms.
Zaranko said the paltry civil service regulations could set a benchmark for rewards in other parts of the public sector that are politically more contentious.
The Department of Education has already presented teacher pay proposals that are generous for those approaching the start of their careers, but involve significant pay cuts in real terms for more experienced staff. However, the government has yet to issue guidelines to health workers, police or prisons, among others.
Zaranko said pay cuts in real terms could add to recruitment difficulties, particularly at higher levels and for those working in London.
But he added it was a natural consequence of Chancellor Rishi Sunak’s decision in last week’s spring statement to “contain spending and prioritize tax cuts and fiscal tightening”.