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Abandoning austerity is no solution to public sector pay- Big falls in govt. spending associated with positive outcomes
- Government should re-gear priorities or regionalise pay to increase wages
- In 2011, public sector pay was 18% higher than private sector pay. At that time the UK had the highest structural budget deficit in the OECD. Public sector pay restraint was essential.
- Tories plan to balance the books by 2025-26, which would mean the UK is due to be in deficit for 25 years. Softening this programme would be dangerous.
- A big increase in taxes should not be the way forward either. The UK’s tax burden is the highest in nearly four decades.
- For OECD countries with high budget deficits in 2010, a larger fall in government spending has been associated with larger deficit reductions, higher economic growth, higher wage growth and lower unemployment.
- Ireland’s fiscal consolidation has been 2½ times as large as the UK’s, yet Ireland has seen unemployment fall by twice as much proportionally.
- If public sector pay is to be eased, this should involve re-gearing government priorities or examining ways of regionalising pay.
