Pay Review Body recommendations not sacrosanct, says IEA expert
“Pay Review Body recommendations are not sacrosanct. Governments have often paid more than recommended, and there is no reason why they should not pay less in certain circumstances. All public sector pay settlements must come from higher taxation or further borrowing – and neither option is desirable with government debt the equivalent of our entire GDP and tax at post-war record levels.
“The number of employees covered by these bodies – 1.2 million in the case of the NHS Agenda for Change grading and pay system – is far too large to make appropriate rewards for every sub-category of worker, and their recommendations must be a guide rather than set in stone.
“Ultimately, inflation has been caused by monetary over-expansion – rather than union pay demands. Nevertheless, inflationary expectations are important. If these expectations come down rapidly, the period of higher interest rates will be less protracted and painful.”
Notes to Editors
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