Thursday, August 11 2022

The government is refusing to offer public sector workers an inflationary pay rise, saying it will only drive up prices (Alamy)

Alain Tolhurst

3 minute read

Technology Minister Chris Philp has defended the government’s decision not to offer public sector workers a pay rise in line with inflation, as he believes this year’s price hike is ‘transitional’ .

Philp thinks that if “hypothetically” workers “across the economy” were given a 9% wage increase in order to match inflation, it would create a “death spiral” that would lead to even more inflation . The government can only determine wage increases in the public sector.

“It’s like a dog chasing its tail,” he told Sky News.

Railway workers staged a series of nationwide pay strikes last week, with teachers’ unions set to vote on industrial action in what has been dubbed the “summer of discontent”. On Monday, criminal lawyers staged the first of several walkouts to protest the pay.

Philp said the government had already offered £37bn of support, mostly aimed at people on low incomes.

He insisted that a number of external factors had caused the inflation to spike, therefore wage increases would not help those facing the problem in the long run.

“We expect this to be a transient phenomenon. It’s driven by things like the Ukraine crisis, like the COVID situation in China, supply chain issues,” Philp explained.

“If we have a series of general wage increases for everyone, then what’s going to happen is we’ll see even more inflation.”

The minister for technology and the digital economy said that if “hypothetically” everyone currently in employment gets a pay rise of 9% – the current rate of inflation, which is expected to increase further this year – then “everyone what would happen is prices would then go up another 9% the next day,” as companies try to find the money to pay those wages.

“Taxes would have to rise to fund it, and to the extent that there is excess money floating around in the system, that would lead to inflation,” he added.

“A general pay rise tomorrow for everyone is not how you beat inflation.”

Philp said to help those less well off deal with the cost of living crisis, the government must use ‘monetary measures’ like raising interest rates and quantitative easing to bring inflation down long-term.

This morning, postal workers began voting on whether to strike, and around 115,000 members of the Communications Workers’ Union received their ballots.

Postal workers are demanding Royal Mail Group negotiate with them for a ‘direct and unconditional’ pay rise for employees, criticizing the current 2% offer as a ‘dramatic reduction in pay in real terms’ due to the surge of inflation.

Doctors are demanding a pay rise of up to 30% over the next five years, after delegates to the British Medical Association’s annual conference voted in favor of a pay rise to offset real cuts in their wages over the past 14 years. years.

This is a major escalation in the push for wage increases by health unions, which are calling for a wage increase at least equal to inflation or the risk of a strike.

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