Boris Johnson will offer next week pay increases of approximately 5% to millions of public sector workers. However, ministers are concerned that below-inflation deals in the economy could lead to months of strikes.
Ministers will offer a higher salary than was originally suggested by the government. Ministers will argue that it will help nurses, teachers, and others deal with the cost-of-living crisis. Inflation is expected to reach 11 percent in the autumn.
Ministers are preparing for months-long unrest in both the public sector and private. Sharon Graham, general secretary of the Unite union, said there could be hundreds of disputes if workers had to “pay the price of inflation”.
BT, the former telecoms monopoly is now facing its first challenge industrial actionAs the Communication Workers Union announced Friday, 40,000 staff members would strike on July 29th and august 1st for the first time in 35 years.
The action will lead to delays in repairs to households’ internet and phone lines, making working from home harder. The CWU is also polling 115,000 Royal Mail workers about possible strike action in August.
In the public sector, teachers, nurses, police, prison staff, civil servants and the armed forces are waiting for Johnson’s cabinet to decide this year’s pay deals — one of the big outstanding decisions for his caretaker government.
The public sector pay review covers roughly 2.5mn people, some 45 per cent of public sector workers with total pay costing taxpayers £220bn in 2021-21.
One cabinet minister indicated that the government would accept the recommendations of independent pay review boards, which make pay proposals based on guidelines created by ministers.
Rishi Sunak, former chancellor, had hoped that pay increases would be kept at 2% in most cases. Another minister however stated that settlements of about 5% are now possible due to the recent inflation spike.
But Sara Gorton, head of health for Unison — the largest public sector union — told the FT this was insufficient: “A pay rise less than inflation won’t be enough to persuade disillusioned health workers to stay in the NHS.”
Pay review bodies must take into consideration retention and recruitment pressures, but also consider affordability when making recommendations.
If the pay review bodies recommended a typical 5 per cent increase — it will vary from sector to sector — and it was applied across the public sector, it would cost almost £7bn more than a 2 per cent rise. This must be funded from the existing budgets 2022-23 that were established last autumn, according to Treasury.
“If you went below their recommendations, you’d save a bit of money but what would be the net saving?” asked the cabinet minister. “You’d end up with a lot of strikes and a big economic hit. You’re going to have strikes in any event, but that would make things much worse.”
The minister said the government would not give “inflationary” increases above the pay bodies’ recommendations.
Johnson’s spokesman said a decision on public sector pay would be made next week before MPs depart for their summer break on July 21, but declined to comment on details.
The rail network was virtually halted last month when the RMT union staged a wave de strikes. The government is now ready for more rail industrial action during summer vacations from the RMT as well as Aslef.
Next week a third rail union — the TSSA — will set dates for further national strikes, which could be co-ordinated with the other unions.
Network Rail has offered a 4 per cent pay rise followed by another conditional 4 per cent next year — plus some bonuses — as well as a promise of no compulsory redundancies.
Meanwhile the new head of the British Medical Association, Philip Banfield, warned that a doctors’ strike was “inevitable”Next spring. Last month, the BMA approved a 33% increase in doctor salaries over five-years to restore real-terms income that has been cut since 2008.
Additional reporting by Philip Georgiadis
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