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Public sector pay to fall in real terms over the next three years

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The workload is rising but wages are not The workload is rising but wages are not

NHS staff and other public sector workers will experience another three years of declining pay, analysis by the Resolution Foundation has found.

The analysis states that real pay performed well in 2015 and 2016, but this was largely due to prices not increasing in that period. Now inflation is beginning to rise, real public sector pay is likely to have started falling in the three months to February 2017. On current pay trends, average pay in the public sector would be £1700 lower in 2019-20 than its peak in 2009-10.

‘This is further proof that we are short-changing our hard working midwives and other NHS staff who have already seen a substantial fall in the value of their pay, despite a rising cost of living,’ said Jon Skewes, RCM director for policy, employment relations and communications. ‘We call again on the government to lift the 1% cap on public sector pay, so that the dedication, commitment and skill of
our midwives and other NHS staff is recognised and fairly rewarded.’

Growth in public sector pay has been limited to 1% for the next three years, leading to real pay being forecast to continue to fall for the rest of this decade. The Resolution Foundation predicts that average real pay in the public sector will fall back below 2004-05 levels by the end of the parliament.

According to the Resolution Foundation, pay growth has been particularly weak in health and social work, and could fall by a further 6% by 2019-20. This may lead to recruitment problems, as potential staff are put off by falling wages. Additionally, in October 2016, the RCM calculated that if the average midwife had seen their salary rise with inflation since 2010, it would be more than £6000 higher now. This is expected to increase to over £9000 if public sector pay restraint continues to 2020 as the Government intends

‘Falling real pay is likely to see increasing recruitment strains,’ said Adam Corlett, Economic Analyst at the Resolution Foundation. ‘The Government should be planning now how to manage those strains, alongside any wider changes to policies like migration that will also have an impact.’

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