It’s not just the public sector that needs a pay rise – we all do.
The government’s unfair public sector pay cap is currently coming under criticism from all sides.
Rightly so. Those in the public sector have now faced years of pay freezes and real wage cuts. Vital public sector workers are unfairly receiving less and less money for their hard work.
Don’t forget about the private sector
And it’s not just those in the public sector that have had a pay squeeze over the past seven years – it’s the entire economy.
This is obvious when we look at how pay has changed since 2010, the first year of public sector pay restraint. The graph below shows how real weekly earnings in the private and public sector have changed compared to 2010.
The public sector has undoubtedly been hit hard, but the private sector is suffering too. We normally expect real wages to grow: between 2000 and 2010, average real weekly earnings grew by 15%.
But in both sectors, current real average weekly earnings are still below the level they were in 2010.
Despite recent record increases in employment, workers’ haven’t yet been able to successfully demand higher pay.
The future looks grim
This isn’t set to get better. The graph above goes up to 2016, the last full year we have data for. As you can see, between 2014 and 2016, real wages did actually start to climb back up towards their 2010 level. However, latest estimates show this trend reversing. In 2017, average weekly earnings have started falling again.
And this is just the start of it – the OECD has forecast that UK real wages will fall by 1.1% in 2018. This is the joint worst across the OECD countries, and makes the UK one of only four countries that will see a fall in real wages.
The UK needs a pay rise
It’s unfair that those working in vital public services are receiving less and less money for their hard work.
Scrapping the public sector pay cap is clearly affordable, popular and fair.
But it’s not enough. To avoid a living standards crisis, the government must also address the pay squeeze in the private sector. Reversing the public sector pay cap should be just the start of a change in government thinking about how to ensure that everyone can access decent jobs and pay.