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Hundreds of thousands of public sector workers are threatening to tear up agreements and demand higher pay as the cost of living surges.
Inflation figures released yesterday were worse than expected, prompting Unison, one of the biggest public sector unions, to call for the reopening of a pay deal for 500,000 health workers clinched only two weeks ago.
Other unions said that they wanted to revisit pay deals and gave warning of rolling strikes this autumn if Gordon Brown persisted in trying to cap pay rises at 2 per cent.
Soaring food, fuel, gas and electricity prices sent the official inflation rate surging last month, wrong-foot-ing policymakers and forcing the Governor of the Bank of England to write to the Chancellor to explain how it had failed to keep the lid on inflation.
In an open letter to Alistair Darling, Mervyn King admitted that the consumer prices index (CPI), which measures food and fuel prices, reached 3.3 per cent in May, smashing through the upper limit of the Government’s 1 to 3 per cent target range. He blamed external factors such as the cost of crude oil and world farm prices.
Mr King predicted that the CPI would rise to more than 4 per cent before the end of the year.
The retail prices index, regarded as a better measure of the cost of living because it includes mortgage interest and council tax, rose from 4.2 per cent to 4.3 per cent.
Yesterday, amid signs of the Government losing its inflation-fighting credentials, Mr Brown ordered a pay freeze for all ministers and proposed a less generous deal for MPs than that suggested by an independent report.
The Prime Minister said that increases would be inappropriate at “a time of economic uncertainty”.
Mr King said that it was crucial that employees should not respond to the loss of their real spending power by bidding for more substantial pay increases. The rise in living costs has not yet fed through into wage demands, but policymakers fear that if this happened it could lead to a 1970s-style prices and wages spiral.
Dave Prentis, the general secretary of Unison, said that Mr Brown would pay the “ultimate price” at the next general election if he continued to “shower insults” on public sector workers. He told the union’s annual conference that it would ballot for industrial action among its NHS members if the Government refused to reopen a deal giving 8 per cent over three years. Unison officials said that they would revisit a clause in the deal which recognises that members need to be “protected” if inflation rises.
Mike Jackson, senior health officer, said that the second and third years of the three-year deal could be renegotiated. Many public sector deals have escape clauses allowing renegotiation if circumstances materially change.
Mark Serwotka, the general secretary of the Public and Commercial Services Union, which represents civil servants, said that he would press to reopen the current three-year deal for the Department for Work and Pensions, where there is also a get-out clause. Private sector workers also signalled that they expected higher pay to offset the rising cost of living. Usdaw, the shopworkers’ union, which has more than 360,000 members, said there was now a strong case for pay deals of more than 4 per cent.
Average pay deals across the public and private sectors, excluding bonuses, are currently running at 3.9 per cent.
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Highly paid public sector jobs?! As a civil servant I am unable to get a mortgage, can't afford a decent holiday every year and see private sector consultants coming in to the office in their shiny new cars and Armani suits earning more than us. Thats the inefficiencies your taxes pay for - not us.
Matt, East Midlands,
Stop moaning and accept that the only way to bail out Brown and his government, is to accept pay rises below the rate of inflation.
Brown clearly believes that the public are stupid enough to believe that impoverishing themselves will cure inflationary pressures.
Gordy, can you spare a dime?
sisan leigh, salford, england
Neil, Galloway. In the same way the average public sector pension is £3100 per year. Hardly gold plated. To achieve a maximum final salary would have meant working in the public sector for 40 years (most of your working life) and 50% of very little is very little.
David Leslie, Perth, Scotland
To the dogged D Leslie: the private sector perks you cite go to only a few (in any case, share options can go down as well as up) - but nothing, repeat nothing, compares with an index-linked final salary scheme. And the bill facing taxpayers for those public sector pensions is truly mind-boggling.
Neil, Galloway, Scotland
i work in an NHS mental health unit and i like many of my colleaques have only just risen out of the official government poverty line...im currently paid £ 17450 per annum...not enough to maintain a home and a family as a male single parent and without recourse to benefits as i earn too much !
dave., fareham,
I told my enthusiastic son in 1997 that, attractive as Tony Blair seemed, all Labour governments end in tears. He didn't believe me - he does now.
carol, ashford, UK
Where do some people get the idea of "gilt edge pensions, jobs for life" etc. The publice sector is rife with privatisation, job losses etc. The vast majority of public sector workers exist on the benefits they provide to others - and do not get the benefits or perks that others get.
Lorraine , Nottingham,
Time to get Norman Strauss and John Hoskins back on the job!
Ian Gibb, Ashtead, Surrey
Too many public sector workers? Some are clearly necessary, but rather a lot are only there to perptuate the idea that the education system works.
Massive inflation? So what, serves the overpaid private sector right as their pensions buy them nothing while public sector pensions are protected.
D.L. Stephens, York, England
I doubt many would notice the difference in services if Civil or local public servants went on strike. The services provided are awash with the culture of pay more and get less for your money. If they are given huge pay rises then make them pay for their pensions at the full rate!!!!!
Terry Bradley, St Albans, UK
I wish the comment re one worker from outside the public sector does the work of three inside the public sector has he been in hospital or maternity recently?
margaret, chelmsford, essex
Dave, Mold. Everybody knows that in the private sector you get free share options, bonuses, golden handshakes, golden goodbyes, golden handcuffs, pension contributions etc, we read about it in the paper every day.
David Leslie, Perth, Scotland
Workers in the NHS are made redundant because there are not enough funds to pay them.
We do get competition from overseas: staff are bought in to this country while our British trained staff can't get jobs. Over 90% of midwives qualifying cant get work.
margaret, chelmsford, essex
You don't like the pay ? Go find another job.
Timsky, Guildford,
There is no money to pay for public sector pay rises and private sector workers are being crushed under the current tax burden. If the Unions insist on living in la la land then the ghost of 1979 will be visisted on them , all over again.
Morse, Oxford,
I've had to endure a 3 year payfreeze & our Union the FDA doesn't seem to want to do anything about it to protect the workforce's living standards.
Leonard, London,
FOR INFO; rise in costs actually felt in your pocket is 4.3%
For a non-higher rate tax payer, their wages neet to rise by 5.7% in order for their pocket to remain unaffected. For higer rate tax payers it goes up to 6.49%
This is because you pay NI and TAX on all of your wage rise.
Lance, Crawley, UK
Morse, Oxford. Try the internet. Oxford City Council, Oxford County Council, NHS, DWP, etc. Not difficult, but you'll require IT skills for many public sector jobs.
David Leslie, Perth, Scotland
Wages are just another price. It is said that prices must go up because of costs.. it may also be said that wages must go up because of costs.
If unions can commit to zero mid-year wage increases.. why can't retailers and their suppliers do the same?
Rui, Lisbon, Portugal
"Average pay deals across the public and private sectors, excluding bonuses, are currently running at 3.9 per cent. "
At 2.45% for the public sector, the private sector are doing very nicely if 3.9% is an average of the two. Time for the public sector to strike I think.
judy, Liverpool, England
So there might be a strike by civil servants? Can this be extended indefinitely? That would rid us of huge swathes of expensive mediocrities who leech off everyone else. One of the worst contracts I had was writing public sector 'job' adverts for The Guardian - what a joke.
Lisa Amato, Windsor, UK
there is no room in the economy for strikes...if you dont want your job, let someone else do it...anyone and everyone can be replaced, why should the rest suffer because of a few people. A pay rise should be on merit and ability not necessarily on inflation, not enough money, get a 2nd job, tough!!
C Kroustis, London, UK
let them indulge in their muscle flexing, at the end of the day what are they going to do; get jobs in the private sector?
Good luck !!
bandeg, maidstone, kent
I bet the farmers are terrified, how will they manage to grow potatoes if the potoatoe council goes on strike?
bandeg, maidstone, kent
too many drones pushing bits of paper around to compile useless statistics to show if targets are being hit... get rid of the stupid figure compiling, throw all the extra clerical staff out and things will soon improve... these drones are not contributing.
paulc, gloucester,
Some public sector workers can't see the difference between the private and public sectors. But in the last resort, we can choose whether to buy private sector products; whereas we're all forced to pay taxes for public sector wages - AND FOR THOSE FINAL SALARY PENSION SCHEMES!!
Neil, Galloway, Scotland
The government have little to fear from UNISON, unlike the tanker drivers union (hats off to them). Prentice and his mates are more interested in political posturing than action.
Ian Blaber, Bristol, England
The government could fix most of its problems by simply cutting taxes.In the short term this would decrease tax revenue and they may not be able to sponge money for their wife's taxi bills,but in the long term lower taxes=higher tax revenue. Reduced tax will cut the inflationary pressure on workers
Justin, London,
This inept government has created this public sector monster and the inflation that feeds it. Real life inflation has been up for years, ignored because of rising property values created by lax monetary control. Back we go to the 70's. Is any body surprised with the pickpocket Brown in charge?
John, Lincoln,
Public sector have been protected from job insecurity / pension provision for far too long, now they want more, no chance, looking at public sector jobs on websites they are paid well enough, pity we cannot outsource some of them although we might have secret documents left on indian trains instead!
Richard de Gerber, Kingston upon Thames, UK
Ever fallen in love with someone, ever fallen in love, in love with someone, ever fallen in love, in love with someone you shouldn't have fallen in love with ...
Sorry, I'm getting nostalgic for 30 years ago.
Added apologies to Pete Shelley :)
Paul, Coventry,
This inept Government will be loving the distraction caused by arguments between private and public sector workers. Where in reality the Government needs to cut the tax burden on families. Billions are wasted on the Welfare state, on Europe, and Quangos, reduced tax will reduce wage inflation.
Michael, Worthing,
Everyone will suffer since unreasonable wage demands (and out of control inflation) are limited only by increasing job insecurity through rising unemployment. We all need to tighten our belts given tightening resource supply. The party is over.
Arnold Ward, Weybridge, Surrey, UK
So, it's back to old labour it would appear
james, burnley, lancs
Make all pensions "money purchase" ones then we'll ALL have a vested interest in working hard. Public sector pay, let the market reign, nurses will come back when their pay rises to attract them. Same with all public sector. Especially local council workers. get rid of the "gold plated" pensions!
Tom, Bournemouth,
Morse, Oxford. Whilst that may be the case, that's nothing to do with the public sector. I've just check the Oxforshire County Council and Oxford City Council websites. There are a total of 180 jobs advertised. If the public sector is so great, come and join us, and face the reality.
David Leslie, Perth, Scotland
Inflation, inflation, inflation. Hang on to your hats, if you can.
Victor, London, UK
Public sector workers need to realise that their salaries come from the taxpayer.- those who create profits in order to keep them employed. Sadly they think that they can hold us to ransome in the belief that the economy will not function without them. Wrong!
Paul Savage, Lambourn, UK
Much of the public sector is inefficient.
Most of it is unionised.
Labour are dependent on trade union money for their existence (business gave up on them long ago).
I suspect that we, the public, will be expected to subsidise inefficiency and waste for the (indirect) benefit of the labour party.
Anthony Price, Truro, Cornwall, UK
I run a private sector company and we can't match the incomes or terms and conditions offered by the public sector, or the job security.
It sticks in the throat a little that the civil service unions are prepared to destroy the rest of the economy at a time when everyone is suffering.
AP, bristol,
Unions did a great job for their members in the 1970s when they flexed their muscles. I'm sure there are a lot of happy car workers, miners, shipbuilders, steel workers etc. really grateful to Scargill, Red Robbo et al...in other countries.
Dave, Slough,
John , Antrim,
What makes you think the private sector pays anymore ?.
I haven't had a pay rise in four years, am under permanent threat of redundancy in the face of cut-throat competition and I have to provide my own pension.
I'd work for the public sector tomorrow, where do I apply ?
Morse, Oxford,
Everyone knows that one worker in the private sector will do the work of 3 in the public sector so if the unions want to tear up wage agreements and demand more money then the goverment and other public employers should tell them the price is massive job losses for their members.
Dave, Mold, Flintshire
David Leslie, Perth, Scotland
...because public sector workers never get made redundant do not face overseas competition and enjoy pension rights that simply do not exist anywhere else. And I wish I had savings to fall back on, that all went when I was laid off for the seventh time.
Morse, Oxford,
Browns disguise as a competent chancellor is being stripped by global inflation. It was easy to look good when there were no problems. His readiness to alter pay agreements by not funding them in full will now backfire because the unions will feel free to ignore similar agreements and demand more.
mike gee, bournemouth, uk
Strange that nobody has put a cap on the salaries and bonuses of boardroom directors and City traders and bankers who regardless of the financial crisis they created continue to pay themselves huge increases in earnings as if it is their natural right.
peter fieldman, paris, france
The public sector must become more efficient - core workers such as nurses remain poorly paid yet GPs and NHS managers are vastly overpaid. The solution is to achieve a more even balance in all public sector salaries, not to increase salaries across the board.
Steven, Aberdeen, UK
Pay rises based on percentages are crazy, food and oil price rises effect everyone the same so why not give all pay rises as an extra £1000 a year for everyone whether they earn £8000 a year or £80,000 a year. Poor people spend all their money so the Govt get part back in tax and VAT anyway.
Bob In Exeter, Exeter, UK
Wasn't it Gordon Brown who told us all a few years back the era of boom & bust was over thanks to his macro economic management skills?
Maybe massive strikes will prompt a no confidence vote and we can get someone else to fix the mess that Blair & Brown have created.
Joe, Kiev, Ukraine
If numbers were cut by 25% then we could afford to pay those left more. That said, the average public sector employee would be in for a significant shock were they to be employed in the private sector More money (possibly) but with zero job security, no pension and targets that have to be achieved
David N, Leeds, UK
If your pay rise doesn't match or better inflation you're going to be worse off.If you don't pay key workers,i.e. teachers ,health workers,police etc a decent wage when all around are being paid ridiculous wages you are asking for trouble,society will breakdown.MPs should lead by example
Mike , Birmingham, England
Maybe we should remember the fantastic final salary pension schemes available to public sector workers which the rest of us private sector employees can only dream of, whilst footing the bill.
James , Glasgow ,
What planet do the public sector live on? Private sector wages have gone up at sub-inflation rates for at least the last 8 years + pensions have been eviscerated by employers and Gordon Brown to pay for a public sector that works shorter hours, gets above inflation rises and gilt edged pensions
clive, Chesterfield, UK
The UK has a very subservient workforce that has listened for the last two decades of how we must tighten our belts and expect less whilst those at the top have had an orgy of taking. Governments are frightened by direct action but it is the only way the workers will improve their living standards.
Chris, Chipping Norton,
The public sector is a drain on the economic life of this country and the pockets of everyone who pays taxes. It needs to be shrunk and it needs to be run with significantly greater efficiency and accountability. Stuff them. If they strike then fire them - their jobs need to be cut anyway.
Wendy, Glasgow, UK
Public sector workers should be paid less. Their sector is highly inefficient and therefore requires more workers than the private sector would need to do the same job. In addition the pension benefits they receive are way above what people in the private sector get.
Paul, London,
I understand now that when Labour governments end, they leave everyone on strike, the economy in ruins, and the country at war.
Jonathon Thomas, Exeter, UK
Deja Vue?
Even private sector workers don't have pay rises you know.........we don't make a fuss, we just look for another job, or take two.
Mags, Nr Oxford, UK
Who cares? If public sector workers withdraw their 'labour' in most cases it wouldn't be noticed. Plus there's a benefit, the rest of us get a break from paying their (largely unearned) wages. Pity we can't put a stop to their gold-plated, unfunded pensions too. Bring it on!
Eddie Reader, birmingham, england
Alex,
Easy to say, but you try working in the public sector on the wages paid....
Thats not greed, its necessity!
Just because we have more negotiating power isnt a reason to damm us. Everyone pays for higher private sector wages through goods prices, whats the difference?
John, Antrim,
I work in the public sector - we already earn a third less than our private sector counterparts. Asking for a reasonable wage rise is hardly asking a lot when most of my counterparts are currently using their savings at a huge rate to try and stay solvent
james, glasgow,
Why is it the fault of the public sector? The mortgage lenders, oil companies, food producers and distributors et al are all private, it is they who are charging more for their products. Why should the fact that you work in the public sector mean you get a reduced standard of living?
David Leslie, Perth, Scotland
I remember the three day week !
Do the unions and labour want to go there again ?
Peter Kennedy, Bristol,
It was so obvious this time last year that inflation was going to be a problem.What did the BOE do?Cut rates 3 times in order to try and protect an already over-valued housing market.The end result?A big problem for the whole economy.House price inflation eventually leads to general inflation.CRAZY.
stephen hulton, eure, france
Welcome to a classic labour legacy. Run the country into the ground having inherited a great economy at a great time. Bankrupt the treasury (IMF bailout soon?). Let the unions loose to bring the country to a standstill and then lose the election and spend 18 years blaming the Tories for their mess.
Edward, London,
The last 'era of strikes' led directly to the Conservative Party being in power for 18 years, the first 11 of these under Margaret Thatcher.
Who'd have thought that union leaders were so fond of the Tories as to want to trigger a repeat?!
Simon B, Bristol,
people in the public sector wanting higher wages leads to higher taxes, simple as. we are all feeling the pinch so demanding higher wages is greedy when everyone else in the private sector does not have such power and will bear the costs.
Alex, London, England
pathetic economics is all i can say .when an average nurse gets 21000 a year . whilst truck drivers are getting 35000 a year and are striking to have pay increases up to 39000 . thats why there is a skills drain of nurses going overseas for better greener pastures
kuda, derb,
Mr Brown will definitely pay the ultimate price at the general election whether he agrees or not with Mr Prentis. The union leaders are now getting a taste of what the electorate has been digesting throughout the labour regime. Public sector workers have had it far too good for far too long.
Eddie Rhodes, Durham, England
As predicted the more militant public sector Unions will be putting in pay claims well above the phantom 2% limit imposed by the Government. In particular the Transport Unions of ASLEF and the RMT will ride roughshode over any such notion, especially in light of the Shell settlement. Deja vu 1979.
pete, Croydon, uk
And now the Unions want to rear up agreements. They don't realise they are hastening a slump at least they will when they haven't got a job.
V Cooper, Yeovil, UK