IFS pay and pension findings, TUC has its say

Brendan Barber
General Secretary at TUC
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Post date: Tuesday, 31st January 2012

The TUC's Brendan Barber has commented on the Institute for Fiscal Studies' analysis of the impact of changes to public sector pensions and pay, published today. Here’s what he had to say on the report, which found the latest pension reforms will make little or no difference to the long-term costs of public service pensions.

This report examines only one of the three major changes to public sector pensions. As its analysis concedes, the switch to CPI indexation has had a huge impact on future pensions. Similarly the big increase in contributions immediately reduces the cost of public sector pensions by taking a big chunk out of most public servants' pay.

The IFS draws its conclusions only from changes in scheme design, where union negotiators - aided by the great support for the TUC's day of action on November 30 - were able to win concessions. But if you take the package as a whole there can be no doubt that many public sector workers may have to pay more, work longer and get a pension that will not keep up with the proper measure of the cost of living.

The current pay freeze and the 1% cap on future increases will ensure public sector workers enjoy an equality of misery with employees in parts of the private sector. Wages across the economy are running at less than half the rate of inflation.

And although it's true that during the recession, some private sector workers and their unions accepted pay restraint in return for job security, no similar choice exists for public sector workers.

In local government, education, the NHS and the civil service the pay freeze comes at a time when many public sector workers are facing a hike in pension contributions and when 710,000 of them will be losing their jobs.

Back in 2010, the chancellor said he wanted to protect the lowest paid by guaranteeing them a minimum pay rise of £250. But hundreds of thousands of low-paid workers in local government, the bulk of them women, didn't receive a penny extra.

The government's decision to open up every aspect of our public services to the private sector, the abolition of the two-tier code, plans to review TUPE and to explore the scope for regional or local pay bargaining will simply entrench regional inequality and risks opening up a race to the bottom for the pay of the lowest-paid public sector workers.

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