Public sector pay: how do earnings compare to inflation - and how has it changed over the last decade?

Public sector pay has failed to keep pace with inflation over the last decade, with the average worker currently £43 worse off per week than they were at the start of 2010.

The UK could be facing a tsunami of strike action this year, with railway staff, teachers, lawyers, NHS staff and firefighters among the public sector workers either balloting for, or threatening, strike action.

On Tuesday (19 July), unions slammed a government pay offer for the NHS and other public sector employees which would see doctors and dentists get a bump of at least 4.5% while nurses, paramedics and support staff such as porters will get at least £1,400 more.

Police officers meanwhile will get £1,900, while teachers will get a rise of at least 5%.

With inflation running at record levels of 9.4% in June – and expected to rise to 11% later this year – unions said the offers amounted to real terms pay cuts, with the Royal College of Nursing warning rising living costs will force staff out of the profession.

But how much do public sector workers earn, and how do wages compare to inflation?

NationalWorld has analysed Office for National Statistics (ONS) data to see how public sector pay has held up against inflation since 2010, and more recently in the 2020s.

How much do public sector workers earn - and how has it changed?

The public sector encompasses a wide range of professions including the NHS, social care, teachers, police, firefighters, local authority workers, public lawyers, civil servants and the armed services.

On average, workers earned £461 per week in January 2010, according to the ONS. By May 2022, earnings had risen to £591.

But after adjusting for inflation, wages in January 2010 were actually the equivalent of £634 in May 2022 prices – meaning real terms pay had fallen by 7%, or £43 per week, during that time.

The figures include bonuses but exclude any payments made in arrears, and are seasonally adjusted to iron out fluctuations caused by the time of the year, such as Christmas.

The measure of inflation is the Consumer Prices Index (CPI), which weighs changes over time in the price of a basket of goods and services representative of the things a typical consumer buys.

The chart below shows how wages have changed in real terms since 2010. Can’t see the chart? Click here to open it in a new window.

The period between 2010 and 2017 saw either pay freezes or caps imposed on public sector workers by central government.

After years of real-terms pay decreases compared to 2010 levels, earnings finally increased in June 2020, in the initial wake of the Covid pandemic.

A one year public pay freeze was implemented again in the 2020/21 spending review, except for NHS and low-paid workers.

How has pay compared to inflation since 2010?

Separating public sector wages from inflation shows why workers have suffered real terms pay cuts in the years after 2010.

While public sector wages have increased over the last 10 years, inflation has risen at a faster rate. That means workers have not been able to buy as much with their money.

The below chart shows the change in wages and inflation between January 2010 and May 2022.  Can’t see the chart? Click here to open it in a new window.

During the entire 2010s period, wages grew at a slower pace than inflation.

In 2020 wage growth finally overtook inflation – although the latter may have been artificially low due to the impact of Covid lockdowns on consumer spending habits as well as statisticians’ ability to measure prices.

The change was short-lived, however. In November 2020, the Government introduced a fresh pay freeze for public workers.

By early 2021, wages had started to stagnate – and inflation began to rise more quickly.

The below chart shows inflation compared to public sector wages, this time since January 2020. Can’t see the chart? Click here to open it in a new window.

This year the UK has seen unprecedented levels of inflation, with the CPI hitting a record high of 9.1% in May and 9.4% in June – although their average wage data is not yet available for June.

In the first five months of 2022 alone, public sector workers lost the equivalent of £28 from their weekly pay packets ( a drop of 4.6%) if you adjust January 2022 earnings to account for recent inflation.

What has the Government said?

The Government has said it would be worse for the economy long term to give workers a pay rise in line with or closer to inflation.

The new health and social care secretary Steve Barclay said the pay offer to NHS staff was a “fair deal”.

He said: “This government hugely values and appreciates the dedication and contribution of NHS staff which is why we will give over one million NHS workers a pay rise of £1,400 this year, on top of the 3% they received last year when pay rises were temporarily paused in the wider public sector.

“We asked the independent pay review bodies for their recommendations and I am pleased to accept them in full..

“Very high inflation-driven settlements would have a worse impact on pay packets in the long run than proportionate and balanced increases now, and it is welcome that the pay review bodies agree with this approach.”