Public sector job losses could pass 100,000 if government refuses pay rises, says IFS
More than 100,000 public sector workers would lose their jobs this year if the government refuses to fund higher than expected pay awards for nurses, doctors, teachers and care workers, according to the Institute for Fiscal Studies.
The IFS said the chancellor, Kwasi Kwarteng, faced a choice of either topping up public sector budgets or accepting the likelihood of industrial action, further problems recruiting and retaining staff, and a decline in quality of services already under extreme strain.
The thinktank added that if the government stuck to its current spending programme, its ambitious plans to clear the NHS operations backlog, level up primary education and overhaul social care would be “nigh on impossible”.
Although the average public sector pay settlement this year – about 5% – was below inflation currently running at almost 10%, it was also higher than the 2% to 3% rise anticipated in budgets drawn up a year ago, leaving a £5bn hole in public sector budgets.
Bee Boileau, a research economist at the IFS and an author of the study, said there were no easy options. “Offering higher pay awards without additional funding puts enormous strain on departmental budgets and requires painful cuts elsewhere. Not offering higher pay awards risks a wave of strikes and ongoing challenges with recruitment and retention.
“But providing additional funding to departments would mean offsetting spending cuts elsewhere, or a U-turn on some of the chancellor’s recent tax cuts if he is serious about having debt fall as a share on national income.”
Staffing costs are the biggest single element in services such as the NHS and local government. The public sector pay bill, covering 5.7 million staff, was £233bn in 2021-22, more than a fifth of
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