UK govt workers 'are now expecting bigger pay rises'

Government workers in the United Kingdom are expecting their pay to rise more quickly than the salaries of private-sector counterparts, according to research from the world's oldest association for human resource management.

The London-based Chartered Institute of Personnel and Development, or CIPD, said UK employers believe pay rises during the coming 12 months for public-sector workers are likely to be around 4 percent after having been 2.5 percent earlier this year.

Private-sector pay hikes next year, the CIPD said, are expected to be around 3 percent.

The association, which was founded in 1913 and currently has 160,000 members internationally in the private, public, and voluntary sectors, said employers are expecting government workers to get bigger raises than private-sector workers because of recent history.

It said a series of pay deals reached by the Labour Party government after its election victory in July lifted the median public-sector raise above the private-sector average of 3 percent, and created expectations the trend would continue.

The flurry of settlements saw the UK's finance minister, Chancellor of the Exchequer Rachel Reeves, announce raises for some parts of the public sector of between 4.75 percent and 6 percent.

The CIPD found how the elevated level of spending raised expectations after surveying 2,000 employers between Sept 18 and Oct 9.

James Cockett, the association's senior labor market economist, told Reuters: "Significant public-sector pay awards announced since the election, along with the additional public-sector spending announced in the recent budget, have provided a welcome boost to public-sector employers and workers."

The CIPD said public-sector employers expect new settlements during the coming three months to average at 5 percent.

The situation is in stark contrast to that of recent years when public-sector pay rises often lagged behind private-sector raises and inflation.

The change has been exacerbated by the Labour Party's recent budget, which called for additional tax contributions from private-sector employers, a move that could stifle pay rises, the CIPD said.

"These increased business costs are likely to act as a barrier to growth and could lead to employers offering lower pay rises, being more cautious about investing in workers' skills or taking on new staff," Cockett said.

The association said next year will be the first since 2020 in which public-sector pay rises outstrip those of the private sector.

A spokesman at the Treasury department told The Telegraph that the government is expecting better public-sector pay to lead to improved productivity and economic growth in the longer term.

"We set a 2 percent productivity, efficiency, and savings target to boost public-sector productivity and are investing more than 2 billion pounds ($2.6 billion) in National Health Service technology and digital, to run essential services and drive NHS productivity improvements. Growth is the number one mission of the government, and improving productivity is a key focus."