Unions say Chancellor’s introduction of regional and local pay will increase North-South divide


Unions have warned that regional pay will pick the pocket of public sector workers and lead to a growing North-South divide.

Following yesterday’s Budget announcement by Chancellor George Osborne that the government is to introduce local pay rates for public sector workers, TUC general secretary Brendan Barber said: “It’s not public sector pay rates that are stopping the private sector from creating jobs. It’s our stagnating economy, a lack of lending by the banks for firms to invest and consumers who are too worried about losing their jobs to spend – that’s the real reason businesses lack the confidence to grow.

“Picking the pockets of public servants outside London and the South East by localising pay will simply widen the North-South divide, and cause more businesses to fail by taking even more money out of local economies – at a time when they need all the help they can get. Pay rates for teachers and nurses should be based on their skills and the jobs that they do, not on the areas in which they happen to live and work.

“Local pay risks complex, costly and inefficient pay setting for public sector employers, regional skills shortages as public servants opt to work in areas where pay rates are higher, and a long term future of pay falling behind for workers outside London and the South East.”

Meanwhile, Prospect has condemned the flimsy evidence on which the Budget announcement was based, with deputy general secretary Dai Hudd saying: “Introducing regional pay would take a further £1.7bn out of people’s pockets, if pay were reduced by 1 per cent. All this is money that people would be spending in their regional economies, supporting their local shops, businesses and enterprises. Neither does the budget have anything else to say about growth.”

“This ill-thought through policy advocates holding down pay in certain areas of the country, based on the flawed economic logic that it will encourage local enterprise. We condemn the quality of the government’s report. The Cabinet Office should be ashamed to have produced such poor quality evidence in support of a policy that has devastating implications for large parts of the UK and their local economies.

“Hardest hit would be Wales, where it claims a public sector pay premium of a staggering 18 per cent. Its figures do not properly reflect the make-up of the labour market and its private sector comparator in each region. For example it glosses over the fact that the public sector has a higher proportion of highly qualified and female workers and that the pay gap between men and women in the public sector is narrower.

“Once more, ordinary people are the victims today. Rather than kickstart the economy, today’s measures will make things even worse for our members, who are already enduring a perfect storm of pay freezes followed by pay caps, increased pension contributions and job cuts.”

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