Public sector still expecting pay rises

Two-thirds of state workers expect 2010 boost on a par with this year

Britain's public sector workers have not yet recognised the threat to their pay packets as the end of a "gilded age" looms, research to be published today reveals.

Despite the almost unprecedented one per cent cap set on salary increases from 2011 onwards by the Chancellor in this month's pre-Budget report, the Chartered Institute of Personnel and Development's (CIPD's) annual pay survey reveals that almost two-thirds of public sector workers are expecting an increase next year worth at least as much as this year's settlement. Some 57 per cent said they will get a pay rise equal to or higher than that in 2009.

The CIPD research shows that a similar number of private sector workers are expecting the same increases next year. Crucially, however, this year more than half of all employees in the private sector saw their pay frozen, while seven per cent even got a pay cut. By contrast, only 17 per cent of public sector workers saw a pay freeze. If private sector workers were to get the same increases as this year during 2010, then they would get almost nothing at all, while public sector workers would stand to get above-inflation rises.

Overall, private sector workers are expecting their wages to increase by three per cent next year, the CIPD says, while the public sector is reckoning on two per cent. Some seven per cent of private sector workers think they will be affected by pay freezes next year while only a fifth of public sector workers do not expect a pay increase in 2010.

"While most private sector workers predict that they will get a pay rise next year, more than one in four do not think that this will be the case, focused in hard hit economic sectors such as construction and manufacturing," said Charles Cotton, the CIPD's reward adviser. "Public sector workers are clearly not sensing that the pay cloud storms are gathering – it looks like 2010 will prove to be the last hurrah of this gilded age."

But it may be that public sector workers are set to be disappointed in their expectations. While the one per cent cap on all public sector pay settlements announced by the Chancellor will not apply until 2011, departmental spending budgets are also under attack next year and there is likely to be strong pressure to resist any calls for larger pay rises.

In the three months to October, state employees saw an average annual rise of 2.8 per cent, compared with just 1.1 per cent in the commercial sector, the Office of National Statistics said last week. The number of people on the public payroll has also jumped by almost a million in the last 10 years, 23,000 of them in the third quarter of this year.