Local Bargaining in the Public Sector- why Eastbourne should worry !

The TUC has produced a discussion paper in response to the Chancellor's announcements, and the Wolf report, on local pay in public services. This should be a major concern to all trade unionists, especially in Eastbourne's relatively "low wage" (for the region) economy !

The Chancellor has asked the public sector pay review bodies to look at how public sector pay can be made “more responsive to local labour markets. It is clear that the Government thinks that public sector pay is too high in some part of the country and it is argued that:

“Public and private sector organisations compete for employees in different markets across the UK. However, while private sector pay is set in accordance with local labour markets, public sector pay is usually set on a national basis. As a result, in many areas, public sector pay does not reflect local labour market conditions.
Differences between public and private sector pay can adversely affect private sector businesses which have to compete with higher public sector wages. It also leads to unfair variations in public sector service quality and limits the number of jobs that the public sector can support.”

The TUC counters that public sector pay supports local economies. The Government's view takes no account of the part that public sector wages play in supporting the less well-off regions and nations of the UK. For example, the North East has both the lowest wages and the highest unemployment in England. It would simply not be credible to argue that the public sector was “crowding-out” private sector jobs in the poorest regions and nations.

Rather, reducing public sector wages in struggling areas would be certain to lead to fewer jobs, as a further fall in consumer spending would drive more private sector enterprises out of business. The failure of these enterprises would then cause f ripple effects. Economists estimate that this doubles the impact of any public sector wage cut.

According to the ONS Labour Force Survey, average public sector pay varies by 10.4 per cent between the regions and nations of the UK . It is most likely that public sector pay would fall furthest in the poorest parts of the UK.

The TUC estimates the regional effect of cutting public sector pay by just one per cent for the 908,000 public employees in the South East Region would have the effect of cutting £231 Million from the local economy- with devastating knock-on effect across both public and private sector workers.

In summary — the main arguments against "local pay" in public services:

• Bad for local economies



• Long-winded and inefficient



• Bad for equalities — particularly affects women.



• Will worsen public services in poorer areas



• Will not improve public services in well—off areas