NIESR Monthly Wage Tracker - Spring Budget Should Include a Public Sector Wage Rise

20.500.12592/1q350g

NIESR Monthly Wage Tracker - Spring Budget Should Include a Public Sector Wage Rise

14 Mar 2023

• Real total pay in the United Kingdom fell by 3.2 per cent on the year in the three months to January, remaining among the largest falls in growth since comparable records began. [...] The ONS attributes the rise in the employment rate to increases in part-time and self-employed workers, and men in employment. [...] The Bank of England’s February Monetary Policy Report attributes the rise in private-sector wage inflation to elevated short-term inflation expectations (which the Bank estimates to have been 4 per cent in the fourth quarter of 2022), as opposed to recruitment and retention difficulties in the previous year. [...] The NIESR researchers estimated a vector error correction model of sectoral wages in the UK to find that private-sector wages move independently over time whereas public-sector wages gradually adjust to the wage equilibrium determined by the private sector, explaining the cyclical relationship observed between the two sectors in figure 2. [...] Despite the public sector making up only 20 per cent of the total labour force, a 1 per cent increase in public-sector pay can lead to an increase of between 0.1 and 0.4 per cent in average nominal pay in the private sector as a whole.

Authors

Nathaniel Butler-Blondel

Pages
7
Published in
United Kingdom

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