Are Britain’s striking public sector workers underpaid?

The workers driving the UK’s worst wave of strike action in decades are concentrated in occupations where pay has suffered the sharpest squeeze during a prolonged stagnation in wages.

After months of angry exchanges between the government and unions, Prime Minister Rishi Sunak called this week for “an honest, grown-up conversation about what’s affordable for the country” on public sector pay, suggesting nurses and doctors, teachers and rail workers would need to moderate their demands.

An analysis by the Financial Times of official data illustrates the real terms pay cuts many of these workers have already suffered in recent years — either as a result of government austerity policies or big structural shocks that have hit sectors such as rail, postal delivery and higher education. Train drivers, who are in the private sector, had competitive wage levels until relatively recently but their pay has also plateaued.

These pay cuts have been compounded by public sector pay offers for 2022-23 that fall short of current private sector averages as Britain reels from a cost of living crisis. As a result, many workers look set to fall behind their peers in other rich economies.

Some of the worst declines in pay affect relatively high earners. Doctors, whose junior ranks are voting on potential strike action, saw their average pay fall by almost 25 per cent in real terms between 2011 and 2020. University lecturers have seen average pay fall by 17.5 per cent as the higher education sector expanded and came under new funding pressures.

Train drivers have historically earned well above the national average — and fared relatively well until recently, with their average pay rising 7.65 per cent between 2011 and 2022. But they have lost ground since the start of the pandemic, when lockdowns triggered a lasting slump in commuting, and they face additional threats to job security and working conditions, as rail employers seek to modernise and restructure the network.

Lower paid public sector workers across the UK — especially those living in the capital and other areas with high living costs — are also under intense pressure. Nurses’ pay had fallen by 7.76 per cent in real terms between 2011 and 2020 — even before the latest cost of living shock — while secondary schoolteachers’ pay fell by 5.1 per cent in real terms over the same period.

These figures are not an exact match for the pay awards given by any single employer in the public or private sector over the period. They represent the change in average pay for these occupations, including public and private sector employees, and will reflect changes in the structure of the workforce, as well as pay deals for existing staff.

When it announced overall pay awards for workers in July, the government claimed levels for workers covered by the public sector pay review bodies — including teachers and most NHS staff — were similar to those in the private sector.

But this claim now looks out of date. Official data shows average private sector pay growth, excluding bonuses, was running at 6.9 per cent in the three months to October, compared with just 2.7 per cent in the public sector. The Bank of England believes pay growth across the economy has stabilised at around 5 to 7 per cent.

Wage settlements for existing employees, which the government says are a more appropriate comparator, are also more generous. Data gathered by the research group XpertHR shows an average pay award of 5 per cent in the three months to November.

Meanwhile inflation is outstripping earnings for almost everyone, with consumer prices up by 10.7 per cent in the year to November.

In comparison the flat rate pay rise of £1,400 for NHS workers in England, Wales and Northern Ireland equates to an average 4 per cent rise across the health service for 2022-23, tilted towards lower paid workers, with those in the bottom pay band gaining 9.3 per cent, while pay for senior nurses and midwives rose by 4 per cent.

Ministers have been keen to cite the Royal College of Nursing’s demand for a pay rise 5 per cent above retail price inflation in England in order to portray unions’ position as unreasonable. But the RCN has made it clear this is an opening position for negotiations, and other unions representing NHS workers have been less specific, simply arguing that pay should rise in real terms.

Some unions — although not the RCN — have accepted the Scottish government’s offer of a 7.5 per cent pay rise for NHS workers.

Teaching unions have taken a similar position to health unions, and are seeking a “fully funded above-inflation pay rise” without giving a specific figure.

Pay awards for teachers in England in 2022-23 are also weighted towards the lower paid, with newly qualified teachers outside London receiving an 8.9 per cent increase, while experienced staff in the top band receive 5 per cent.

Prison staff were given a rise of at least 4 per cent, the armed forces received 3.75 per cent and senior civil servants were awarded 2 per cent.

In the rail sector, Network Rail’s latest offer of a 9 per cent pay rise over two years, tied to big changes in working practices, has been accepted by two unions, the TSSA and Unite, but rejected by the RMT, whose members are driving strike action. The Rail Delivery Group, which represents train operating companies, has offered 8 per cent over two years — which has been rejected by the RMT and is being considered by the drivers’ union, Aslef after initial scepticism.

Rail unions refer to inflation as the benchmark for an acceptable pay deal, but in practice Aslef has agreed a string of deals with other train operators that exceed the RDG’s offer, but fall short of the inflation rate.

Public sector unions point out that the government’s arguments for pay restraint amid high rates of inflation would be more convincing if they did not come on the back of a decade of real term cuts.

“If we had had pay rising in real terms for a decade, and we got to this very difficult period, we’d be having a very different conversation,” said Paul Nowak, general secretary of the Trades Union Congress.

“Our cost of living crisis, our wages crisis has not been a year in the making, it’s been 10, 11, 12 years in the making. That’s the reality.”

Source: Economy - ft.com