Public sector workers’ pay growth lags private staff

Public sector pay growth is lagging behind wage rises in the private sector, a closely watched survey published today reveals.

Brits employed by taxpayer funded services such as the NHS and schools received an average pay rise of 1.4 per cent over the last year, compared to a three per cent bump for those working in the private sector, according to XpertHR.

Over two in three of these pay awards were lower than public sector employees received in 2021, while over eight in 10 wage jumps in the private sector were higher.

The data does not include public sector workers’ deferred payments, such as pension schemes, which are typically higher than those in the private sector.

The figures come as nurses, teachers and barristers are threatening to join railway workers in strike action in a bid to squeeze out pay rises.

Workers are primarily striking to secure higher wages to offset the soaring cost of living eroding their living standards. 

Inflation has surged to a 40-year high of nine per cent, but is expected by the Bank of England to top 11 per cent in October when the energy watchdog hikes the cap on bills again.

Price rises are outstripping pay rises in both the public and the private sector, according to XpertHR’s research, illustrating the heavy burden inflation is heaping onto UK households’ finances.

Across the entire UK workforce, pay jumped four per cent.

A lack of evidence of widespread inflation-busting pay rises will dampen concerns that Britain is dipping into a 1970s-style inflationary feedback loop.

The Bank has warned that high pay awards that are not matched by productivity gains risk embedding elevated living cost rises over the long-term by incentivising firms to raise prices and, in turn, triggering more worker wage demands – a process known as a wage/price spiral.

Britain suffered from this plight and it took decades, and much higher interest rates, to shake inflation out of the economy.

Bank governor Andrew Bailey and co have responded to soaring inflation by lifting borrowing costs at each of their last five meetings, taking them to a 13-year high of 1.25 per cent. Markets think rates will eventually peak at three per cent.

Sheila Attwood, XpertHR pay and benefits editor, said: “Despite pay awards reaching record levels not seen for 30 years, any marginal increases we are seeing are outstripped by the sheer pace of inflation.”

“There are no signs that pay award levels are going to fall, meaning wage rises are likely to remain steadfastly below the rate of inflation for the foreseeable future,” she added.