Public sector workers will see their pay increase next year, the Chancellor has confirmed ahead of the Budget on Wednesday.
The government will lift the pay freeze that was implemented in November 2020 in response to the pandemic’s impact on the public purse, Rishi Sunak will announce in his speech tomorrow.
It will likely mean that 2.6 million public sector workers including teachers, police officers, prison officers and civil servants will get a pay rise next year, but how much they will receive will depend on what independent pay review bodies recommend.
Sunak said: “The economic impact and uncertainty of the virus meant we had to take the difficult decision to pause public sector pay.
“Along with our Plan for Jobs, this action helped us protect livelihoods at the height of the pandemic.
“And now, with the economy firmly back on track, it’s right that nurses, teachers and all the other public sector workers who played their part during the pandemic see their wages rise.”
The pay freeze applied to most public sector workers, aside from NHS staff. It was implemented to help ensure the gap between public and private sector pay did not widen further during the height of the pandemic, which put significant pressure on businesses’ finances.
The Treasury said that public sector average weekly earnings increased by 4.5% in 2020/21, while private sector wages only rose by 1.8%.
In July, the Department of Health and Social Care announced that it would award a 3% wage increase for nurses, paramedics, consultants and dentists in England, backdated to April 2021, but most other public servants did not recieve a pay rise.
Much of what the Chancellor will say in his Budget speech has already been publicised. Sunak has also confirmed new national living wage and national minimum wage rates from April 2022.
The Institute for Fiscal Studies said the minimum wage increase would not offset cuts to benefits and rising inflation.
Senior research economist Tom Waters said: “First, while this boosts earnings for full-time minimum wage workers by over £1,000 per year, those on Universal Credit will see their disposable income go up by just £250 because their taxes rise and benefit receipt falls as their earnings increase.
“Second, minimum wage workers are most heavily concentrated around the middle of the household income distribution – not the bottom – often because they live with a higher earning partner. That means that the minimum wage is a very imperfect tool to offset cuts to benefits, which are much more targeted at the poorest households.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
“Third, rising inflation will also blunt the real-terms value of this minimum wage hike – and of course while prices are rising now, the increase in the minimum wage won’t kick in until April.”
