Public sector workers in the United Kingdom could be on the verge of going out on strike. Negotiations over pay continue as pressure and anger mount. Last year’s above-inflation pay increase was funded by the previous government by increasing National Insurance contributions. Today, it’s under dangerous budget pressures. Chancellor Rachel Reeves has repeatedly ruled out any above-inflation tax rises in this Parliament. This announcement just further complicates the money promise public sector pay.
The last Conservative government only budgeted for a 2% cash rise in public sector pay. Given the limited budget for the 2024-25 fiscal year, the situation has evolved since then. By December 2024, the federal government declared it could only fund a 2.8% wage increase for health workers. This decision resonates with workers from all corners of England. Both the British Medical Association and the Royal College of Nursing have slammed this figure. They contend that it does not go far enough to address the needs of health practitioners.
The government was under huge pressure from the large public sector unions. Budget cuts They accepted in full the recommendations of the independent public sector pay review bodies last summer. This acceptance marked a promising end to a recent wave of teacher, nurse and public worker strikes across the country demanding higher wages. The government’s teacher pay review body is concerned only with advising pay rates for teachers in England. The NHS pay review body controls pay in England, Wales and Northern Ireland.
Current reports suggest that the recommendations for public sector pay may exceed what the health and education departments have allocated for this fiscal year. More specifically, teachers with fifteen years of experience are making 9% less in real terms than they did fifteen years ago. The total UK public sector pay for the 2023-24 financial year amounted to £272 billion according to the Office for National Statistics.
“For pay awards to go beyond inflation they will have to be met by productivity improvements,” – Prime Minister’s spokesperson
In September 2024, when the government acted decisively. 2 They asked for long-term recommendations of pay in the public sector for the financial year 2025-26. For example, health and education departments have told them they can only absorb a 2.8% increase in their payrolls. In turn, frustration is mounting over the practicality of paying for the overwhelming majority of above-recommendations. In the words of Ben Zaranko of the Institute for Fiscal Studies,
“If the pay recommendations come in higher than what departments have planned for, that will create a budgeting challenge.” – Ben Zaranko
The situation remains fluid as discussions continue regarding how to balance fair compensation for public sector workers with budgetary realities. And with a national mood now laser-targeted on fair wages, reasonable working conditions, and labor rights generally, the stage is set for renewed industrial conflict.