Higher public pay in public services is needed to help solve the cost of living crisis and deliver a sustainable economic recovery says a new economic report commissioned by UNISON.
Raising the benchmark, the role of public services in tackling the squeeze on pay, by the New Economics Foundation challenges government attempts to create a race to the bottom by playing off private against public sectors and driving down wages for all.
The report finds that:
- public services employ one million low wage workers – double previous estimates which didn’t count workers in outsourced services;
- local authorities directly employ roughly the same proportion of low wage workers as the private sector – one in four are on less than 60% of the median wage;
- outsourcing is driving down wages, with half of low paid public service workers in outsourced services, where they are at even greater risk of worsening pay and conditions;
- the pay freeze and pay cap have seen real pay fall for all in the public services with the average worker now £2,000 a year worse off than in 2010.
The report also points out that public service employment has historically played a positive role in the wider labour market by setting an example and benchmark for other employers.
And it points out that paying all public sector workers at least the the living wage would boost the economy and benefit the Treasury through savings in tax credits and income support.
The International Monetary Fund estimates that public spending, including wages, has a strong positive impact on the wider economy through the multiplier effect – £1.60 for every £1 spent.
Welcoming the report, UNISON assistant general secretary Karen Jennings said it is a “stark reminder, if one were needed, that pay in public services will be central to the debate about the cost of living crisis over the coming months.
“Government can’t keep telling us the economy is on the road to recovery while the millions delivering our public services are getting worse off all the time.”
Helen Kersley of the New Economics Foundation added: “There are now one million public service workers on low wages: what kind of message does this send private employers?
“The public sector needs to raise the bar, and paying the living wage across the board is a good place to start.”
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