UK private sector pay grew almost five times faster than public sector workers in the year to May, according to official figures released as ministers prepare to sign off on real pay cuts for teachers, doctors and civil servants NHS.
The new data will galvanize union leaders who have threatened strikes if the government on Tuesday confirms it will keep pay rises below 5 percent at a time when inflation has soared above 9 percent.
Unions representing teachers, health workers and civil servants have warned of widespread upheaval if ministers approve further real pay cuts for next year.
Patrick Roach, general secretary of the NASUWT teachers’ union, accused ministers of “contempt” for public sector workers. “If the government is hoping that teachers’ anger will dissipate over the summer holidays, they are wrong,” he said. “Teachers have been badly let down by this government for over a decade.”
Figures released by the Office for National Statistics on Tuesday show a sharp divide between private and public sector workers. Overall wage growth of 7.2% in the private sector was almost five times higher than the 1.5% rate in the public sector.
The data showed hiring remained strong despite mounting pressure from high energy prices and the rising cost of living, with the employment rate 0.4 percentage points higher in the three months to May than in the previous quarter, at 75.9 the percentage.
The jobless rate held steady at 3.8% from a month earlier – below the pre-coronavirus pandemic level – even as more people joined the workforce, with economic inactivity down 0.4 percentage points from the quarter.
The number of job vacancies hit a record 1.294 million, although the Office for National Statistics said the pace of job vacancies growth had slowed. Layoffs remain at record lows.
Kitty Usher, chief economist at the Institute of Directors, said companies struggling to fill vacancies would be encouraged by “early signs” of people who have left the workforce starting to return. But she added that there was nothing in the data to prevent the Bank of England from continuing to raise interest rates when it meets in early August.
The ONS said growth in average weekly earnings, including bonuses, was 6.2 per cent in the three months to May, equating to a real pay cut of 0.9 per cent. Growth in regular weekly earnings of 4.3 percent equates to a real wage decline of 2.8 percent — a record decline.
The ONS noted that these figures were slightly skewed from a period when many people were on holiday, but said this was not as high as it was earlier in the coronavirus pandemic.
Nadhim Zahawi, the UK chancellor, said the figures were “encouraging in uncertain times”, adding that the government was helping households with rising living costs through grants and tax cuts, while working alongside the Bank of England to curb of inflation.
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The tight labor market has given some workers more bargaining power, allowing them to secure larger wage increases that at least partially offset the squeeze on household incomes caused by rising inflation.
“Markets, not militancy, are pushing wages up,” said Tony Wilson, director of the Employment Research Institute, adding that labor costs were a crucial driver of rising prices.
However, Samuel Tombs of consultancy Pantheon Macroeconomics said the figures would ease pressure on the BoE to accelerate the pace of monetary tightening. He argued that this was because the data showed overall wage growth slowing, labor supply recovering and demand for workers starting to stabilize, with second-quarter unemployment likely to exceed the central bank’s forecast.
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