Borough public sector workers to lose out on millions in pay rises, union says

Public sector workers in the three constituencies of Wigan, Makerfield and Leigh are set out lose out on more than £7m, the TUC's number-crunching suggests.

A total of £1.3bn will be cut from key worker pay settlements in England this year, following announcements made by the chancellor in November 2020.

The analysis calculates the hit to the economy from the difference in economic activity expected if pay settlements go ahead in full, compared with if the chancellor implements the cuts.

The TUC estimates that Wigan will have the biggest hit locally, with 5,234 public sector workers expected to lose out on just over £4.4m.

This, it is suggested, will be a loss of spending power of about 0.22 per cent of the constituency's gross domestic household income (GDHI).

Wigan is also ranked within the top 100 of national constituencies worst hit, at 71.

In Makerfield workers are estimated to lose out on around £1.6m, while in Leigh the analysis suggests the figure will be around £1.7m. In both cases this represents a loss of spending power of 0.08 per cent of GDHI.

The TUC says cutting public sector pay rises has a knock-on effect across the economy, particularly in areas dependent on consumer spending, and is demanding politicians do not adopt austerity-type policies similar to those from the 2010s as a response to the Covid-19 pandemic.

TUC regional secretary Lynn Collins said: “Key workers have kept the North West going through the pandemic. The Prime Minister clapped them, but his applause will ring hollow if he cuts their pay. It’s no way to thank them.

“We’re all part of the same pay circle. When a key worker spends their wages, it goes into other people’s pay packets. Shop staff, factory workers, delivery drivers, childminders, bar staff – right across the economy, we are all connected.

“If our key workers get the pay rises they’ve earned, it will benefit everyone. The spending boost will help our local businesses and high streets recover quickly. And it will help level up our unequal economy.”

The TUC claims Greater Manchester will take a hit of around £91m, while the North West loss is around £243m.

Of the three constituencies wholly within the borough Wigan has a hit to public sector earnings above the North West average.

However, the TUC does caution against reading too much into neighbouring constituencies with widely-differing figures as they can be affected by people travelling out of largely-residential areas into nearby local centres to work.

In November 2020, the chancellor Rishi Sunak announced a pay freeze for all public sector workers apart from healthcare workers and people who earn less than £24,000 a year. The TUC estimates that around 2.6m people will be subject to this in 2021.

The TUC's analysis is based on taking the median level of public sector pay in a region, as compiled by the Office for National Statistics (ONS), and applying that to how many public sector workers there are in a constituency.

To calculate the effect on the local economy of changes in spending power it uses a multiplier of 1.3, which was the mid-point in research done by the International Monetary Fund (IMF) during the last recession.

The TUC is encouraging Mr Sunak to commit to a number of policies including pay rises for all workers in key areas, including those who have been outsourced, a raise in the national minimum wage and a ban on zero-hours contracts.

The organisation also wants ministers to plan to return wages to pre-austerity levels.

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