Boris Johnson will next week offer pay rises averaging about 5 per cent to millions of public sector workers, but ministers fear that below-inflation deals across the economy could trigger months of strikes.
The pay offer will be higher than originally proposed by government; ministers will argue it will help nurses, teachers and others cope with the cost of living crisis as inflation is expected to top 11 per cent in the autumn.
But ministers are braced for months of unrest in the public and private sectors. Sharon Graham, general secretary of the Unite union, said there could be hundreds of disputes if workers had to “pay the price of inflation”.
BT, the former telecoms monopoly, is facing its first industrial action in 35 years, as the Communication Workers Union announced on Friday that 40,000 members of staff would strike on July 29 and August 1.
The action will lead to delays in repairs to households’ internet and phone lines, making working from home harder. The CWU is also balloting 115,000 Royal Mail workers over possible strike action in August.
In the public sector, teachers, nurses, police, prison staff, civil servants and the armed forces are waiting for Johnson’s cabinet to decide this year’s pay deals — one of the big outstanding decisions for his caretaker government.
The public sector pay review covers roughly 2.5mn people, some 45 per cent of public sector workers with total pay costing taxpayers £220bn in 2021-21.
One cabinet minister said the government would accept the recommendations made by independent pay review bodies, which make proposals for pay based on guidelines set by ministers.
Former chancellor Rishi Sunak had hoped to keep pay rises to 2 per cent in most cases. But another minister said settlements averaging about 5 per cent were now expected, given the recent spike in inflation.
But Sara Gorton, head of health for Unison — the largest public sector union — told the FT this was insufficient: “A pay rise less than inflation won’t be enough to persuade disillusioned health workers to stay in the NHS.”
The pay review bodies take into account recruitment and retention pressures but also must consider the affordability of their recommendations.
If the pay review bodies recommended a typical 5 per cent increase — it will vary from sector to sector — and it was applied across the public sector, it would cost almost £7bn more than a 2 per cent rise. The Treasury is insisting this must come from existing budgets for 2022-23, set last autumn.
“If you went below their recommendations, you’d save a bit of money but what would be the net saving?” asked the cabinet minister. “You’d end up with a lot of strikes and a big economic hit. You’re going to have strikes in any event, but that would make things much worse.”
The minister said the government would not give “inflationary” increases above the pay bodies’ recommendations.
Johnson’s spokesman said a decision on public sector pay would be made next week before MPs depart for their summer break on July 21, but declined to comment on details.
Last month the rail network came to a virtual standstill when the RMT union held a wave of strikes. Now the government is braced for further rail industrial action during the summer holidays from both the RMT and Aslef.
Next week a third rail union — the TSSA — will set dates for further national strikes, which could be co-ordinated with the other unions.
Network Rail has offered a 4 per cent pay rise followed by another conditional 4 per cent next year — plus some bonuses — as well as a promise of no compulsory redundancies.
Meanwhile the new head of the British Medical Association, Philip Banfield, warned that a doctors’ strike was “inevitable” by next spring. The BMA voted last month for a 30 per cent rise in doctor salaries over five years to restore their real-terms income cut since 2008.
Additional reporting by Philip Georgiadis
FT survey: How are you handling higher inflation?
We are exploring the impact of rising living costs on people around the world and want to hear from readers about what you are doing to combat costs. Tell us via a short survey.