London: Britain’s new finance minister, Rachel Reeves, indicated that she will consider granting above-inflation pay increases for nearly 2 million government employees later this month to avert major public sector strikes.
According to media reports, two pay review bodies have recommended a 5.5% wage rise for 460,000 teachers and 1.4 million staff in the state-run National Health Service (NHS). When asked if the government would approve these pay rises, Reeves expressed her appreciation for public service workers and emphasized the “cost” of prolonged conflicts with unions, which had hindered the previous government’s efforts to improve public services.
“I really value public service workers, in our schools, in our hospitals, in our police as well,” Reeves told the BBC. “There is a cost to not settling, a cost of further industrial action, and a cost in terms of the challenge we face recruiting.”
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The Labour Party secured a commanding majority in the general election earlier this month, pledging a decade of “national renewal” after 14 years of Conservative-led governments. During the campaign, Labour ruled out increases in income tax, corporation tax, and value-added tax, leaving limited room for increased spending.
The estimated cost of a 5.5% pay rise for teachers and certain NHS staff could be around 3 billion pounds ($3.88 billion), according to the Institute for Fiscal Studies (IFS). Inflation in Britain is currently around 2%.
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Reeves, Britain’s first female finance minister, assured that the government will “make sure the sums add up” if public sector workers receive above-inflation pay rises. The IFS noted that to approve these pay raises, the government would need to raise taxes, increase borrowing, or cut spending in other areas.
Reeves stated that she would outline her plans for public sector pay deals and announce the date of the next budget before the end of this month.
