Unions warn against pay freezes

Freezing workers' pay will reduce consumer demand and could threaten the UK's "fragile" recovery from recession, union leaders warned today.

The TUC said reports of widespread wage freezes, falling pay in private firms and soaring public sector earnings had been "greatly exaggerated".

Unions had negotiated some pay freezes and even cuts in firms struggling to survive as an alternative to job losses, but most firms had agreed decent pay rises through the recession, said a report.

Average pay deals were worth 2.3% last year even though inflation was below zero for much of 2009, research for Incomes Data Services showed.

TUC deputy general secretary Frances O'Grady said: "The UK's deep recession and low inflation have inevitably pushed wage settlements down. Unions have sensibly accepted pay freezes where it genuinely helps to keep people in work, but union negotiators are wise to employers exaggerating the need for pay restraint just so they can boost profits.

"There is a determined attack on the public sector from a politically motivated fringe that want to shrink the state. Not surprisingly they want private sector employees to think the entire public sector is paved with gold.

"Public and private sector pay are rarely linked. In the boom years the public sector fell behind the private sector, while two-year deals in much of the public sector has allowed public staff to catch up a little.

"With inflation rising, it is only right that both private and public sector staff should look to pay increases in the year ahead. If staff are not paid properly then companies will have no-one to buy their goods and services."

The TUC is holding a pay bargaining conference in London today.