LONDON: Chancellor of the exchequer Gordon Brown wants public sector pay deals to confine the increases to 2 per cent so that these do not contribute to the overall inflationary pressures on the economy.
In a letter addressed to the members of public sector pay review bodies (deciding on pay hikes for doctors, nurses, teachers, prison officers, the armed forces, judges and senior civil servants), Gordon said the attempt should be not to convert a temporary increase in inflation into a permanent increase. "The Pay Review Bodies should therefore base its pay settlements on the achievement of the inflation target of 2 per cent, rather than on the recent temporary rise in the rate of inflation."
The pay bodies cover 40 per cent of the public sector pay bill, around 50 billion pounds.
In Britain, most pay deals are based on the retail price index, which rose 2.5 per cent in the year ended October. Even the annual growth in the consumer price index has been above the benchmark 2 per cent set by the Bank of England for four straight months.
Brown attributed the higher rate of inflation largely to the increased oil prices. However, the core measure for inflation, which does not include energy, is well below 2 per cent and in line with the average rates, he maintained.
Official figures indicate that average earnings in the public sector had grown by 4.2 per cent in the three months ended September compared with a corresponding previous year period, outstripping average growth in the private sector.
The chancellor is to speak to the members of the Institute of Directors today where he is expected to emphasise on the importance of wage restraint in service sectors. The services accounted for a third of British families' spending a year ago but now the figure is a half.
Brown's message has caused angry reaction from the public sector union, Unison. Its spokesman said the union will fight attempts to impose wage restraints and dispute efforts to award below-inflation increases.
Posted
on : Thu, 24 Nov 2005 13:20 GMT | General News
By : Paula Jenkins
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