Freeze on pay begins to hit public sector

THE PAY freeze implemented in 2010 is beginning to have some effect on public sector pay, the Office for National Statistics revealed yesterday.

Average weekly pay was 2.1 per cent higher in November 2011 than in the same month of 2010, standing at £464.

Meanwhile consumer price inflation in the twelve-month period stood at 4.2 per cent – twice the rate of earnings growth, and so continuing to eat away at real take-home pay.

Average private sector pay rose 2.1 per cent over the period to £462, whilst public sector earnings increased by 1.7 per cent to £477 – the lowest rise since records began in 2001.

The gap is reduced when bailed out banks are excluded, with average non-financial services public sector pay rising 1.1 per cent to £467 per week.

When bonuses are excluded, average private pay stands at £438 per week and public sector pay at £474.

“Low pay growth, as well as the increase in unemployment and job security worries, means consumer spending may remain very subdued this year, despite lower inflation alleviating the squeeze on real incomes that caused so much distress to households in 2011,” said economist Chris Williamson from Markit.