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Public sector pay cap: NHS staff real income cut by almost £2,000 over seven years of wage squeeze

The pay of ambulance staff is down £5,286 in real terms and for midwives it is £3,504 lower

Ben Chu
Economics Editor
Thursday 21 September 2017 15:22 BST
The 1 per cent pay rise cap is preventing medical staff from becoming homeowners
The 1 per cent pay rise cap is preventing medical staff from becoming homeowners (AFP)

The damage inflicted on the living standards of NHS staff by the Government's pay freezes and caps has been underlined by new figures, which show the average health worker enduring a real terms cut of almost £2,000 over the past seven years.

The figure, highlighted by the GMB union, will intensify the pressure on the Government to lift the 1 per cent public sector pay cap, for all public sector workers.

The median average salary of all NHS staff in June 2017 was £31,526 a year, according to data from the health service released on Thursday.

That compares with a like-for-like figure of £29,132 in August 2010.

Consumer price inflation has risen by 15 per cent over that period, translating into a real terms cut for these workers of £1,985 a year.

Yet the average conceals that some NHS workers have suffered still bigger real terms reductions in pay.

The pay of ambulance staff is down £5,286 in real terms and for midwives it is £3,504 lower.

The Coalition imposed a nominal pay freeze across the public sector in 2011-12 and 2012-13. That became a 1 per cent pay rise cap in 2013-14, which had been due to last until 2019-2020.

The Government said earlier this month that it plans to increase the pay of police and prison officers by more than 1 per cent in the next pay round, but trade unions have accused ministers of "cherry picking" certain workers for larger rises and are demanding that all of the UK's five million public sector workers should benefit from a 5 per cent nominal pay hike.

The NHS pay squeeze


Several unions are balloting their members for industrial action, including PCS, the civil servants union, and the Prison Officers Association.

Annual CPI inflation in August was 2.9 per cent, up from just 0.3 per cent in the summer of 2016.

It has been sent higher by the plunge in the pound in the wake of the Brexit vote in June 2016.

According to the Office for National Statistics, average public sector wages rose by just 1.5 per cent in the year to July, signalling an intensification of the living standards squeeze.

Many private sector workers have suffered even larger squeezes on their real incomes than public sector workers since the 2008 recession, with inflation outstripping nominal pay growth for long periods.

Average private sector wages are down around 5 per cent in real terms since 2008 versus 4 per cent in the public sector.

Public and private pay pain

But the Institute for Fiscal Studies think tank warned this week that public services will struggle to recruit and retain the staff they need unless ministers ease the restraint on pay, noting that the gap between public and private pay has now returned to pre-crisis levels.

The IFS estimates that increasing wages in line with either inflation or private-sector earnings would cost the Government around £6bn by 2019–20.

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