How does a 6% public sector wage increase compare to the private sector increase?

This week, millions of public sector workers were offered pay rises of 5-7% over the coming months.

Teachers were offered a 6.5% pay rise, junior doctors, consultants and dentists were offered a 6% pay rise, and police and prison officers were offered a 7% pay rise.

These awards apply to people working in England and Wales, where the devolved administrations make separate offers to their employees.

Senior civil servants will receive 5.5%, while military staff expect a 5-6% pay rise, which will apply across the UK.

Read more: Public sector pay rises announced by the government mean strikes, budgets and inflation

The government ruled out covering the increases with larger loans or taxes, saying it would be financed from current budgets.

The government hopes the offers will put an end to the wave of strikes that have plagued the public sector for the past year, and several unions have already signaled they will accept the offer.

How does this relate to the private sector?

Rishi Sunak described the award as the government’s final offer.

However, the new staff pay rise will still be well below the current inflation rate of 8.7%, meaning everyone will still receive a real pay cut despite the new offer.

Moreover, if the average wage in the public sector averages 6.5%, it will still be below the average for the entire economy.

Charlie McCurdy, an economist at the Resolution Foundation, told Yahoo News UK: “Private sector wage growth has outpaced public sector growth for several years, and we are seeing the impact as schools and hospitals struggle to recruit and retain staff. “

The latest data from the Office for National Statistics showed that the average increase in wages between March and May 2023 was 7.3%.

This was due to an increase of 7.7% in the private sector and only 5.8% in the public sector.

These figures do not take into account the latest offer, which will only apply from the start of the financial year – but this does not appear to be enough to plug the gap.

As McCurdy noted: “The latest pay deal will help address this imbalance – and also reduce industrial action – although huge questions remain about the future funding of public services and public officials.”

Last month, the Resolution Foundation noted that private sector wages have been rising steadily since January 2022, from around £550 a week to £600 in April 2023.

However, in the public sector, wage growth stabilized and increased steadily from January 2022 through mid-year, before rising sharply in the last six months of 2022.

Public sector wages are currently expected to experience another sharp increase, but it is yet to be seen whether this will catch up with the private sector.