The Government to end the public sector pay freeze

The Chancellor is to announce the end to the public sector pay freeze as the minimum wage is set to rise in response to increases in the cost of living.

Pay Day

 

The Chancellor is to announce the end of the pay freeze for public sector workers in next week’s Budget and Spending Review.

The announcement comes after a “temporary pause” in pay rises last year which the Chancellor says was due to the huge uncertainty created by Covid and aimed to ensure the gap between public and private sector pay did not widen.

How much of a pay rise public sector workers receive depends on the recommendations from the independent Pay Review Bodies, who set the pay for most frontline workforces.

The government says it will be running a full pay round and the awards will be announced next year once it responds to the pay review bodies’ recommendations.

The news comes as it was confirmed that the UK’s lowest-paid workers will receive a pay rise from next April as the National Living Wage increases from £8.91 to £9.50 an hour .

The National Minimum Wage for people aged 21-22 will go up to £9.18 an hour and the Apprentice Rate will increase to £4.81 an hour.

The news comes amid worries about rising inflation and increasing wages in some parts of the private sector, particularly those where there are considerable skills shortages.

Statutory pay rises?

Kate Palmer, HR Advice and Consultancy Director at Peninsula, said: “These changes represent an increase of more than 5%; the third-highest annual rise since the financial crash in 2008.

“It’s expected that a similar increase will be applied across all age bandings of the national minimum wage rates, as well as to payments associated with family-friendly leave, for example, maternity, paternity, adoption, shared parental, and parental bereavement pay.

“The increase will likely also be in place for statutory sick pay entitlements; however, this may mean a subsequent rise to the lower earnings limit which employees must meet to be eligible for most statutory payments.

“Organisations should prepare their payroll teams to manage the changes to take-home pay and update any associated policies, so staff are aware of the new pay rates. This increase in demand on payroll and HR teams may mean that organisations will have to recruit additional people, so it could also be beneficial to review recruitment strategies now, to ensure there are sufficient staffing resources in place.”

Reaction

TUC General Secretary Frances O’Grady said the boost to the minimum wage was vital due to rising living costs. However, she stated that government needed to go further and raise the minimum wage to £10 an hour and reverse the withdrawal of the £20 a week uplift to Universal Credit.

She added: “This increase won’t come into effect until next spring by which time many household budgets will have been hammered by rising bills and the universal credit cut.”

On the end to the public sector pay freeze she said: “The pay freeze won’t be over unless the Chancellor fully funds pay rises above the rising cost of living. Otherwise, he will force departments to choose between pay cuts or service cuts.”

Meanwhile, the Early Years Alliance expressed concern that childcare providers would struggle to cover the rise in the minimum wage without significant investment in the sector. CEO Neil Leitch said: It is absolutely vital the upcoming Spending Review includes a significant increase in funding for early entitlements, if the government is to ensure its desire for better pay does not ultimately cripple the vital service our sector provides to children and families.”



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