As we know, consumer price inflation has now reached 2.9%, and is likely to rise substantially further – potentially to around 4% – when the VAT increase is factored into the calculations next month. The local government pay claim by the trade union side of the negotiations, for around 2.5%, is beginning to look rather modest. The employers’ side have today offered 0%, as was widely predicted.
Now, I’m not too upset on my own account. I still have a job, which is more than some people. Indeed, the lower the pay increase, the fewer redundancies will be necessary, therefore the better my prospects of keeping a job. I live well within my means anyway, so for the sake of an extra few hundred pounds after tax, I can pass. All the same, I like playing with graphs and I decided this presented an excellent opportunity to do so.
The blue line is the Consumer Price Index, from April 2006 to the present. The red line is the path it would have taken had it precisely followed the 2% annual target set for the Bank of England. The purple line is the cumulative local government pay settlement since that date, rebased to the same starting point. I have extended the latter two lines up to the date of the pay settlement after this one, to make the timescale and divergence clearer.
I hope this explains why some people who are perhaps finding it harder to make ends meet will not be terribly impressed by a 0% pay rise, and will find the media assertion that public sector pay has been rocketing implausible. Of course the mathematical average is going up, with bankers now included in the public sector sums, and ongoing outsourcing of routine tasks meaning more low-paid work is in the private sector, but that doesn’t mean many individuals are in clover. In fact, it would take a pay rise of just over 4% to bring local government staff back in line with accumulated inflation – or more like 5% by the time April comes around.
Anyway that’s obviously not going to happen, and as I said, I’m not complaining personally. What I would appreciate though is a consistent message. It seems there is always an excuse to keep pay down. When inflation was last soaring, the Government said low public sector pay increases were an essential part of getting it back down. When it went too low, that was also a reason not to give the public sector workforce too much money, because we didn’t need it. Then there was a recession, so we couldn’t afford it, and now all the money has gone elsewhere to make sure the banks don’t fall over, so it’s not available to public sector workers. Next, inflation will be soaring so we’ll need low public sector pay increases as an essential part of getting it back down.
Doesn’t add up, frankly. Paul is less diplomatic.