‘Pay apartheid’ leaves private sector wages frozen as public sector pay rises

Millions of private sector workers face pay freezes or cuts while public sector staff have seen their wages rise in what business groups warn is a potential “pay apartheid”.

The CBI said that the “overwhelming majority” of its members would be forced to freeze wages this year, while a survey by the British Chambers of Commerce found close to one-third of businesses are planning to reduce hours.

The Institute of Directors also warned that wages were being cut in a variety of sectors including white-collar professions such as law and accountancy.

David Frost, director general of the British Chambers of Commerce, said the varied impact of the recession on the private and public sectors was unprecedented.“Across the country I am hearing more and more businesses left with no choice but to freeze and cut pay,” he said.

“It is unacceptable that the public sector should not share any of this pain. There is already an apartheid between the public and private sectors on pensions. We cannot have apartheid on pay too,” he added.

Last month, an overwhelming majority of staff at KPMG voted in favour of working a four-day week, while many automotive firms have also reduced the numbers of shifts for the coming months.

British Airways met unions last week to begin negotiating a pay freeze for its 42,000 workers, while National Express has told its 16,850 staff that their pay will also be frozen.

But in the public sector, wages of NHS workers will rise between 2% and 3% in the next two years following a pay deal negotiated in 2008. Similar deals were also awarded to teachers and the police when CPI inflation was hitting 5% last year.

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