The warning of 'massive unrest' over what would amount to a 10 per cent cut in living standards by 1997 came from Alan Jinkinson, leader of Unison, Britain's biggest union, after Kenneth Clarke repeated that the days of the automatic pay rise in the public and private sector may be over. And he added that public service pay review bodies should be aware there would be no cash from the contingency reserve to fund wage increases.
Mr Clarke told reporters yesterday: 'When inflation was running at 5 per cent, 6 per cent, or 7 per cent and if you missed out on a pay rise you were markedly poorer. That does not apply today.' He expected review bodies would take into account 'much lower inflationary expectations that prevail'.
The Chancellor said the annual pay rise was 'not going to be one at the kind of levels that we all got used to in the 1970-80 period. Indeed there are large parts of the private sector where . . . the annual pay rise only became a tradition . . . when we had the pay policy of the 1960s and 1970s. It doesn't necessarily take place. There are plenty of private companies who have not even had a pay rise.'
Yesterday, John Monks, TUC general secretary, calculated that 270,000 public sector jobs would go over the next two years. Leaders of 450,000 civil servants will meet today to discuss the 'Budget bombshell', the implications of which had still not dawned on many trade union officials.
The standstill on wages expenditure is the most stringent policy on public sector pay attempted in the post-war period and will mean a considerable widening in the pay gap between the public and private sectors. Mr Jinkinson accused ministers of harbouring a 'hidden agenda' aimed at turning the public sector into a 'low wage ghetto'.
However, the Cabinet has gambled that the relative docility among public sector workers which greeted the 1.5 per cent curb, and the announcement of a year-long standstill on pay bills, will be maintained over the next three years.Reuse content