There has been some amount of attention called to the fact that pay rates in the public sector have been steadily increasing despite the wage freeze that was called for by the Coalition. Conversely, wages in the private sector have been consistently dropping which is raising an eyebrow or two in the media.
In fact, millions of public workers have seen their pay packets increase by as much as 1.7% in the second quarter of this year as reported by Vocalink. It appears as though employees are being awarded incremental increases based on tenure, despite the freeze placed on wages by Government. This data is based on information gathered from 600 bodies in the public sector.
In a recent survey conducted by the Hay Group, more than 3/4 of managers in the public sector said they would continue awarding pay rises despite efforts by Government to cut costs. This is set against a backdrop where the entire UK economy dropped to 2.7% in the last quarter which was a decline of .2%. According to Vocalink, this is two months running in which the economy has declined.
Until quite recently, there was evidence of pay rises in the manufacturing sector, but this too has come to a sudden halt. Vocalink is responsible for processing 90% of the salaries in the UK is saying that the economy is falling due to wage drops in the private sector. This is in direct conflict with the Coalition’s aim at cutting costs in order to reduce Government deficit.
Even so, it is forecast that there will be further job losses in the public sector in the years to come and the trading environment will remain tough in the private sector. This does not bode well for either the public or private sector even if it looks like the public sector is reaping the rewards at the moment.
