According to the large number of media enquiries today the Scottish Government is briefing that they intend to announce a pay freeze alongside the spending review next week. Of course the Scottish Government does not directly control the pay of the vast majority of public service workers in Scotland. Any more than they control job losses, so any linkage is tangential at best.
They also appear to be briefing that public sector workers will benefit from their council tax freeze. This is particularly galling when the biggest gainers from this real terms tax cut are the wealthiest home owners. Not many of our members in that category! What our members and other low paid workers do have to pay is increased charges for the council services they rely on, because that is how most councils are plugging the financial gap. The Government is keen to talk up the tax freeze, but less keen to talk about the services that will be cut to pay for it and the consequential job losses.
Part of this pay freeze is to pay for a shift in revenue to capital expenditure, in a claimed boost for jobs. What the Government forgets is that low paid workers spend almost all their earnings in the local economy. Capital expenditure is not nearly as efficient in creating jobs because the benefit leaks away in company profits and dividends, not to mention out of Scotland. The CBI has, not surprisingly, been busy lobbying for this shift. Company Directors will be amongst the biggest gainers and are the first to call for wage cuts in the public sector. This means they can award themselves the 55% pay increases reported last week.
It is also an issue of basic fairness. Many, including the Scottish Government, have rightly criticised the UK Government CSR announcement as unfair, hitting hardest those least able to bear it. Well a Scottish pay freeze is also unfair. Low paid workers providing public services face increased pension contributions, housing benefit cuts and increasing inflation on essential goods like food. That all adds up, not to a pay freeze, but a very real cut in living standards.
Nobody in the public sector is expecting substantial pay rises in the coming year. But most of the workers who deliver public services in Scotland are low paid and a pay freeze is not only unfair, but will damage the Scottish economy.