24
June
2013
Parents working in the public sector will take the biggest hit to their household incomes from government cuts and stagnant wages, according to Trades Union Congress research published ahead of George Osborne's spending review this week.
The TUC says its findings undermine government attempts throughout the austerity drive to pit private sector workers against "allegedly well-paid public sector workers." Its calculations also suggest that more than 180,000 children with a parent working in the public sector will be pushed into poverty by 2015, proportionately a far bigger rise than for the private sector.
If the chancellor uses Wednesday's spending review to bring in further changes to public sector pay, as widely feared, that number risks being higher still. The government, however, said the TUC had failed to factor in potential behavioural changes from its "work pays" reforms.
The TUC looked at government tax and benefit changes compared to the system inherited from the previous government as well as private sector wage changes based on Office for Budget Responsibility forecasts and the government's public sector pay policy. It used a model constructed for it by Landman Economics.
The model implies that families with at least one parent in public sector work will be out of pocket by twice as much a week as those with only private sector workers.
TUC general secretary, Frances O'Grady, accused the government of punishing families with public sector workers with "years of pay freezes and real terms pay cuts".
"Ministers like to play divide and rule by trying to pit private sector workers against allegedly well-paid public sector workers. But these figures tell a very different story," she said.
"The truth is that there are low and middle income workers in all parts of the economy and they are all are having a really tough time."
According to the TUC analysis, families where one parent works in the public sector and another works in the private sector suffer the biggest losses from government policies. Their average household income will be down about £100 a week in real terms by 2015 after taking account of the current public sector pay freeze and the combined impact of tax, tax credit and benefit changes.
They are followed by families with parents who only work in the public sector who will lose on average £91 a week. Households with only private sector employees will lose out on average by £44 a week, says the TUC.
Its calculations suggest that by 2015 almost 900,000 children will move into poverty, based on the government definition of a reported family income of less than 60% of median income.
For families only containing public sector workers, the projected rise in child poverty is the biggest. The TUC forecasts there will be 74% more such children in poverty by 2015, bringing the number to 238,700 from 137,000 under the 2010 system. For families with both public and private sector workers, the rise is 53%.
For those with only private sector workers – a much bigger proportion of the population – the rise in children falling into poverty is the smallest of all working households in percentage terms: up 36% to 1.46 million from 1.07 million. For families where no one is in work the rise is also 36%.
But a government spokesman said the analysis did not fully take into account the "dynamic and behavioural" changes that will result from its welfare and tax reforms. He sought to underline help from universal credit, which is designed to simplify the benefits system and ensure "work pays".
"The universal credit will make 3 million households better off – the majority of these from the bottom two fifths of the income scale – and lift up to 250,000 children out of poverty," said the spokesman, noting other moves to cut the cost of living, such as increasing the tax-free personal allowance to £10,000.
"The public sector pay deal will help protect jobs and the quality of public services, while helping put the UK's public finances back on track."
The TUC analysis follows a number of recent reports into the impact of years of tough pay deals since the start of the global downturn. The Institute for Fiscal Studies says Britain's workers have suffered more financial pain since 2008 than in any five-year period of the modern age.
A separate report on Monday suggests employers in the UK are managing to accelerate hiring only thanks to cutting or freezing pay.
UK job vacancies in May stood at 460,493, up 1.4% on a year earlier, according to the latest UK employment market report from jobs search engine Adzuna.co.uk. But the average advertised salary fell 1.7% from a year ago to £33,617. It said wages were down £1,504 per annum, or 4.4%, in real terms since May 2012.
The only regions where average salaries have increased in the past six months are London (+3%) and the south-east (+1%).
