To ask the Chancellor of the Exchequer, what assessment his Department has made of the effect of the public sector pay freeze on the Government's ability to achieve a high-wage economy.
The temporary pay pause announced at SR20 was a difficult but necessary step in the face of huge uncertainty and the unprecedented impact COVID-19 had on the economy. This helped protect jobs at a time of crisis and ensure fairness between the private and public sectors. The private sector saw suppressed earnings growth and increased redundancies: employment fell by 2.9% between Q1 2020 and Q1 2021, while over the same period employment in the public sector rose by 3%. 11.6m jobs, from 1.3m different employers, were furloughed. Public sector average weekly earnings rose by 4.5% in 2020/21 whilst private sector wage increases were a third lower than they were pre-crisis, at only 1.8%.
The solid recovery in the economy and labour market has meant that the government have been able to confirm at the Spending Review that public sector workers will see pay rises across the whole SR period (2022/23-2024/25).