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Government scrap public sector pay cap, but the wage increases fall below inflation

Government scrap public sector pay cap, but the wage increases fall below inflation

The government have announced they are scrapping the cap in public sector wages, with around one million workers set to receive a pay rise.

The cap, introduced in 2010, was part of David Cameron’s attempts to reduce the budget deficit and imposed a pay freeze on all public-sector workers earning over £21,000 a year.

Police officers, teachers, and healthcare workers all stand to benefit from the wage increase that is set to be the largest public sector increase in a decade.

The armed forces, along with Junior Doctors and GPs are set to receive a 2% pay rise, with the armed forces also receiving a 0.9% one-off bonus this autumn.

Teachers stand to receive the most from this increase, with a 3.5% rise in annual earnings expected to be provided.

However, this move has been criticised by many who believe that an increase in pay is going to result in a cut in services elsewhere, with Labour’s Peter Dowd – shadow chief secretary to the Treasury – claiming that it ‘will have to come at the cost of other services’.

The government insist that the money will not be lost from elsewhere as the money is coming from departmental underspends and will consequently incur no additional cost to the treasury.

However, this increase falls significantly below inflation, which according to the Consumer Price Index (CPI) is at 2.4%.

This means that in real terms public sector workers are earning less in relation to the cost of food, clothes and other consumer products, meaning their money will not go as far as prior to the 2010 pay cap.

Labour’s shadow chancellor John McDonnell has called the government’s decision a ‘phoney pay increase’ and has again implicated that it will result in cuts to services elsewhere.

As much as the increase represents progress for some of the most pressured workers in the country, it is only an incremental improvement and much more needs to be done if the government are to regain people’s support and arrest their declining poll numbers.

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