Public Sector Pay Set to Rise in Q4 as Strikes Intensify

Main points

• The latest ONS estimates suggest the annual growth rate of average weekly earnings was 6.1 per cent in the three months to October, marginally higher than the 5.8 per cent our tracker predicted last month.
• Today’s estimates also suggest that real regular pay in the UK fell by 2.7 per cent, lower than the 3 per cent record fall in the second quarter, but remaining among the largest falls in growth since comparable records began in 2001.
• NIESR’s wage tracker now predicts that average weekly earnings will grow at 5.7 per cent in the fourth quarter of this year as compared to our previous forecast of 5.6 per cent. This wage growth surprise is mainly driven by the public sector, which is forecast to see a regular pay rise of 3.9 per cent in the fourth quarter, a 1.7 percentage point increase from our previous forecast.
• The disparity in public and private sector wages remains among the largest seen outside of the pandemic period, with private sector regular pay growing by 6.9 per cent while regular pay in the public sector grew 2.7 per cent.
• In October 2022, 417,000 working ways were lost due to labour disputes – the highest we have seen since November 2011. While this pales in comparison to the figure of 2.5 million days per month recorded during the ‘winter of discontent’ in 1979, it remains a concern as more industrial action is set to occur in the coming months.

“Average earnings excluding bonuses for all sectors in the three months to October rose by 6.1 per cent year-on-year, which will maintain pressure on the Bank of England to keep hiking interest rates despite the backdrop of a worsening economic outlook. The private sector saw a 6.9 per cent increase while public sector wages just grew by 2.7 per cent. This asymmetry between the private sector and public sector will potentially fuel a Winter of Discontent on top of the 417,000 days lost due to industrial disputes in October and the wave of industrial action set to happen in the run-up to Christmas.”

 Hailey Low
Associate Economist, NIESR

See our previous tracker to follow the analysis