Public sector job losses could top 100,000 if government refuses pay rises, says IFS | Institute for Tax Studies

More than 100,000 public sector workers would lose their jobs this year if the government refuses to fund higher-than-expected pay for nurses, doctors, teachers and caregivers, according to the Institute for Fiscal Studies.

The IFS said Chancellor Kwasi Kwarteng had to choose between increasing public sector budgets or accepting the likelihood of industrial action, new staff recruitment and retention problems and a drop in the quality of services already under extreme pressure.

The think tank added that if the government stuck to its current spending programme, its ambitious plans to clear the backlog of NHS operations, improve primary education and overhaul social care would be “almost impossible”.

Although the average public sector wage settlement this year – about 5% – was below inflation which is currently near 10%, it was also above the 2% to 3% increase forecast in the established budgets. a year ago, leaving a £5billion hole. in public sector budgets.

Bee Boileau, research economist at IFS and author of the study, said there were no easy options. “Offering higher salary rewards without additional funding puts enormous pressure on departmental budgets and requires painful cuts elsewhere. Failure to offer higher salary rewards risks a wave of strikes and ongoing recruitment challenges. and retention.

“But providing additional funding to departments would mean offsetting spending cuts elsewhere, or a U-turn on some of the Chancellor’s recent tax cuts if he’s serious about reducing debt as a share of income. national.”

Staff costs are the most important element in services such as the NHS and local authorities. The public sector wage bill, covering 5.7 million employees, was £233 billion in 2021-22, more than a fifth of all public spending and a third of all public service spending.

The average pay allocation this year is around 4% to 5%, with nurses getting a 5% raise, doctors and dentists 4.5%, while settlements for teachers and school workers local governments vary, with lower paid staff receiving more.

But even sticking to the average public sector wage may not be enough to avoid industrial action, the IFS said. Most workers will take a pay cut in real terms at a time of skyrocketing energy prices and costs, leaving them behind their private sector counterparts who are expected to receive 6% in mean.

The Royal College of Nursing is voting its 300,000 members on strike this winter. Other NHS workers, including doctors in training and physiotherapists, are also threatening to strike.

A 10-year decline in public sector wages relative to the private sector has exacerbated problems for the NHS, local authorities and care businesses to recruit and retain staff – characterized by reports of poorly paid care workers leaving to get better paid supermarket jobs.

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