MILLIONS of private-sector workers face a pay freeze or cuts because of the economic crisis, while employees in the public sector are enjoying pay rises.
With the economy plunging deeper into recession, and inflation likely to drop below 0% into deflation, the CBI has warned that the “overwhelming majority” of its members will freeze wages this year.
Tens of thousands of other private-sector workers are also likely to see their earnings slashed. Several professional firms have reduced salaries by 20% by putting employees on a four-day week.
A snapshot survey by the British Chambers of Commerce shows that 30% of businesses are planning to cut working hours. David Frost, its director-general, said: “Across the country I am hearing more and more businesses left with no choice but to freeze and cut pay.
“It is unacceptable that the public sector should not share any of this pain. There is already an apartheid between the public and private sectors on pensions. We cannot have apartheid on pay too.”
Under three-year public-sector pay deals agreed last year, NHS workers will enjoy pay rises of 2%-3% this year and next. Similar deals were awarded to teachers and the police, while local government workers are seeking a 6% pay rise.
A spokesman for the Treasury said he was “unaware” of any plans to renegotiate the deals approved for teachers, policemen and NHS staff.
The Sunday Times has found that pay freezes are being implemented across industry, hitting professionals and lower-skilled workers, senior executives and junior staff.
Falling inflation and rising unemployment have made it easier for firms to impose pay freezes and cuts. Inflation measured by the retail prices index dropped to just 0.1% in January and is set to fall into negative territory when the February figures are released this month.
Economists believe that by September Britain will be in the grip of deflation, with overall prices down by between 3% and 4% on a year earlier.
Unemployment rose to 1.97m last month, the highest in 12 years. It is expected to reach 3m over the next year.
British Airways met unions last week to begin negotiating a freeze for all its 42,000 workers. This week Jaguar Land Rover will vote on whether to accept a year-long freeze and a four-day week.
National Express, the transport company, has told its 16,850 staff that their pay will be frozen. Similar measures have been introduced at Tate & Lyle, the sugar company, F&C Asset Management, the fund manager, and for 2,000 head office staff at the Home Retail Group, owner of the Argos chain.
Punch Taverns, one of the largest pub groups, has put wages on hold for all workers except pub service staff. Cookson, the ceramics maker, has frozen the wages of about half its 1,300 staff.
Top executives at National Grid have agreed to take a pay freeze this year, as have senior executives at the insurer Aviva. It has warned that “overall pay rises across the company will be the lowest in many years”.
Mark Wallace, campaign director of the TaxPayers’ Alliance, said: “The government has locked taxpayers into three years of pay rises for millions of public-sector workers while millions of workers in the private sector are facing a pay freeze, cut or even redundancy.
“This is not only unfair; it is irresponsible and economically unsustainable.”
Additional reporting: Roger Waite, Kate Walsh and Matthew Goodman.
Source:the times
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