Unions warn Labour over pay policy

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Labour Editor

Unions have warned Labour that a Blair government could face damaging outbreaks of industrial unrest unless the party begins to thrash out a detailed policy on public-service pay.

The stark warnings have been delivered in a series of private meetings in which senior Labour figures have been told that considerable expectations about the relative generosity of a Labour government may be building up among some state employees.

However, Gordon Brown's Treasury team have told union officials that they can expect a continuation of the present government's policy of maintaining wage bills at their current levels. Employees' representatives have been told that pay rises must be funded by improvements in efficiency, which unions equate with job losses.

Any extra money would be devoted to the creation of new jobs specifically aimed at improving services.

In a meeting last week of the Public Policy Forum, which involves most of the Trades Union Congress's affiliates, unions warned that there would be "catch-up pressures of varying degrees of intensity among public-sector workers". While the TUC itself has no formal links with Labour, the warning is clearly aimed at the party leadership.

Unions have become increasingly frustrated with what they see as Labour's "policy vacuum" over public services. Senior union officials have given their opinions explicity in face-to-face meetings with Mr Blair.The Shadow Cabinet, however, has shown little inclination to fill the void, according to union sources.

The forum is attempting to evolve a united position on the public sector which it will urge on the Labour leadership.

While union warnings on pay smack of "old Labour", the biggest unions are nevertheless showing signs that they have taken on board some of the new thinking.

The forum meeting last Tuesday agreed that a future government would have to ensure high quality public services. An internal TUC paper prepared for the meeting concedes that "the `consumerist' pressures will be greater". It also accepts the inevitability of continuing stringency over public- sector financing.

Following consultation with unions, the TUC conceded that there was little support for a public-sector pay commission under Labour. Both the TUC and a Fabian Society pamphlet had floated the idea.

In a paper submitted to the forum, Unison, the largest public-sector union, said that instead of such a commission, unions should concentrate on the low-pay commission promised by Labour which would advise the government on the level of a statutory minimum wage.