New analysis published (5/2/21) by the TUC reveals the economic hit to Wolverhampton from government plans to cut pay rises for key workers in the public sector.
For the year April 2021 to March 2022:
Wolverhampton North East 6,560 public sector workers will lose £4.2million, the 27th hardest hit constituency in England (Conservative MP)
Wolverhampton South West 2,834 public sector workers will lose £1.8million (Conservative MP)
Wolverhampton South East 1,898 public sector workers will lose £1.2million (Labour MP)
A total of £1.3 billion will be cut from key worker pay settlements in England this year, following announcements made by the chancellor in November 2020.
Fairness for key workers
Millions of key workers who kept the country going through the pandemic will lose the pay rises they were expecting.
The TUC is encouraging the chancellor to reconsider, and to commit to policies that will improve pay and conditions for all key workers.
These should include:
- Fair pay rises for key workers in the public sector – with a plan to restore wages to their levels before austerity
- Guarantee that all outsourced public sector workers get a pay rise so that they earn at least the real Living Wage
- Action to ensure that every key worker in every sector gets a pay rise, including raising the national minimum wage to at least £10 per hour
- Ban zero-hour contracts – and use the long-awaited employment bill to strengthen rights to fair working conditions for key workers
Impact on other workers and local economies
The TUC argues that cutting key worker pay weakens wage growth for other workers too – especially those in jobs that directly depend on consumer spending.
If public sector key workers are forced to tighten their belts, the reduced spending hits businesses too. And that impacts on other workers’ pay.
The TUC says that the chancellor must not repeat the mistakes of the 2010s. Millions of public sector workers saw their pay capped by George Osborne. They lost thousands of pounds – and the knock-on impact was wages falling across the economy and the worst slump in living standards in more than 200 years.
This is particularly important for parts of the country that the government has promised to level up, as the analysis shows that restricting pay rises for key workers will increase existing inequalities.
TUC Regional Secretary Lee Barron said:
“Key workers have kept the West Midlands going through the pandemic. The Prime Minister clapped them, but his applause will ring hollow if he cuts their pay. It’s no way to thank them.
“We’re all part of the same pay circle. When a key worker spends their wages, it goes into other people’s pay packets. Shop staff, factory workers, delivery drivers, childminders, bar staff – right across the economy, we are all connected.
“If our key workers get the pay rises they’ve earned, it will benefit everyone. The spending boost will help our local businesses and high streets recover quickly. And it will help level up our unequal economy.”
– Full data: This links provides the full data used in the analysis, including calculations for the loss of spending power as a percentage of gross domestic household income, which is used to produce the rankings: Download FULL DATA
The analysis calculates the hit to the economy from the difference in economic activity expected if pay settlements go ahead in full, compared with if the chancellor implements the cuts.
To allow comparisons between different regions and constituencies, the TUC calculated and ranked the effective loss of spending power per head compared to the previous year.
– Pay cuts for key workers in the public sector: In November 2020, the chancellor announced a pay freeze for all public sector workers apart from healthcare workers and people who earn less than £24,000 a year. Based on data provided by HMT, the TUC estimates that 2.6 million public sector workers will be subject to the freeze in 2021.
– ‘Winning a pay rise for key workers’ campaign: The TUC is running a campaign for fair pay for key workers, including those in both public and private sector employment. Further details of the campaign are here: https://www.tuc.org.uk/