New analysis published by the TUC reveals the economic hit to the West Midlands from government plans to cut pay rises for key workers in the public sector. 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.
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.
For the year April 2021 to March 2022:
· The hit for England is -£1.7 billion
· The hit for the West Midlands is -£166 million
· The average hit per West Midlands constituency is -£2.8 million
· Of the top 30 worst hit parliamentary seats in England, seven are in the West Midlands: Birmingham Ladywood, Stoke-on-Trent Central, Birmingham Edgbaston, Wolverhampton North East, Dudley North.
Data for the specific hit to each West Midlands constituency can be found through the link in the notes below. 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
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.”
