George Osborne is reported to be announcing a proposal for regional pay deals, in his upcoming budget, angering public sector workers and Trade Unions. In essence, the proposal entails abandoning national pay deals in the public sector, and allowing government departments the power to set localised pay rates. The Treasury have stated that no current public sector worker will receive a pay cut, but the levels of pay will be gradually adjusted through pay rises in some regions and freezes in others. There will also reportedly be more localised measures to take into account living costs in different communities in the same region. The proposals could start to come into effect next month.
The biggest problem with the proposal is that a pay freeze is an effective pay cut, with the cost of living rising due to inflation and factors such as the cost of fuel, and that the areas which will receive these pay freezes will be regions already hardest hit by austerity measures imposed by the coalition- most notably the North, and the devolved nations of the UK. According to figures published by the Office of National Statistics in November, full time workers in the North West already receive an average of almost £200 per week less than their counterparts in London , a figure that is even higher in the North East, Wales and Northern Ireland. The effect of the proposed measures will be a race to the bottom in pay and conditions for the public sector workers in poorer regions (surely followed by the private sector), and a bid-up of salaries in wealthier regions, further polarising pre-existing regional inequalities and entrenching differences in living costs. TUC General Secretary Brendan Barber said, “The Chancellor’s rush towards regional pay suggests the government is more interested in picking a fight with public sector workers than boosting the economy outside of London and the South East”.
The argument has been made that with the public sector pay average being between 0.5% and 18% higher than the private sector average depending on the region, “artificially inflated” public sector salaries mean the private sector cannot compete. Though this is somewhat redundant due to the fact there are often no equivalent jobs in each sector to make a proper like-for-like comparison between public and private sector pay, regional deals merely drive down both rather than redressing the balance. Squeezing public sector workers’ purses that much tighter inevitably means that they have less money to spend in the private sector (eg, retail), the knock-on effect of which is further private sector job losses, as businesses ensure they keep on top of costs when their profits are hit- often with little regard for their employees.
The prospect of higher salaries and better employment opportunities elsewhere, may mean that people who can move will. Those who can’t, or don’t want to leave their communities (and why should anyone be forced to?), face being left behind in unemployment and opportunity blackspots as falling populations leave the areas undesirable for future large-scale private sector investment needed for job creation and improvement of infrastructure. Equally, with less demand for the services provided by the public sector, workers here could soon find themselves surplus to requirement also. This in turn means the welfare bill shoots up, as the taxpayer has to compensate those hit by state and market failure.
Let us not forget these measures come on top of the current public sector pay freeze (an effective cut to salaries of 16% by 2015 due to the huge rise in the cost of living, and inflation) and the assault on pensions; and against the back drop of a planned cut to the top rate of tax for those earning over £150,000 per annum. That struggling public sector workers in already vulnerable regional economies are bankrolling a tax break for the wealthy, is both laughable and disgusting. With the government already having to borrow a reported £158billion extra in this budget, and unemployment at a 17-year high as the private sector continues to fail to create jobs as promised, this is little more than a thinly veiled attempt by the coalition to pit low paid workers from the public and private sectors against each other, in order to distract from their own failings and their budget for the vested interests. It is up to us as students to stand together with trade unions and their members to continue to make the argument for the alternative, or our future will be very bleak indeed.