Increasing pay for public sector workers by 10% would not add much to inflation, according to a new report by the think tank IPPR.
A 10.5% pay boost to restore real pay to 2019/20 levels would add at most 0.14 percentage points to inflation if funded by borrowing, the report said.
It also revealed that if an average public sector worker were to receive a pay award of around the 6% announced last week they would still be £1,400 worse off this year on average than just before the pandemic, because wages have not kept up with prices.
IPPR said that the decline in real-terms pay since 2010 had hit the living standards of public sector workers, and had also contributed to the recruitment and retention crisis that is undermining the quality of public services.
IPPR is calling for a 10.5% average uplift this year to restore public sector pay to 2019/20 levels, at an additional cost of £7.2bn beyond last week’s pay offers.
Joseph Evans, researcher at IPPR and one of the report’s authors, said: ‘It’s wrong to claim that giving the public sector a more meaningful pay rise will further embed inflation. Research shows that there is very little inflationary impact from a significant pay rise, but that the need to stop the fall in living standards for public sector workers is urgent.
‘Without an inflation-matching pay rise the public sector will continue to face a triple crisis of falling living standards, a recruitment emergency and declining quality of public services.’
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