Keir Starmer is set for a major confrontation with unions after downplaying the likelihood of real-terms pay increases for public sector workers.
This has sparked widespread concerns about a potential crisis in recruitment and staffing.
Despite not completely ruling out above-inflation pay settlements, such as for junior doctors, Starmer cautioned unions to brace for disappointment ahead of the upcoming pay review body findings.
Unions representing health workers and teachers have expressed that inadequate pay rises could worsen existing recruitment and retention issues. The main teaching union warned that the education sector is “at breaking point.”
During a visit to Washington DC for the NATO summit, Starmer was questioned about granting above-inflation pay awards in the upcoming public sector negotiations. He responded, “No, is the answer to the last bit of that question,” highlighting the poor state of public finances. He emphasised that the government’s priority is addressing the most significant and important issues.
A challenge for the new government
Public sector pay is emerging as a key challenge for the new government, which is struggling to balance improving services with a tight fiscal situation. Starmer has ruled out increases in income tax, national insurance, or VAT, and any new tax revenues are already allocated. Labour is relying on economic growth to generate additional funds, but this will not provide immediate relief.
Unions argue that declining real-terms pay is driving people out of public sector roles, particularly in teaching, nursing, and medicine, and making recruitment more difficult. The National Education Union (NEU) cited research linking increased workloads and stagnant pay to a significant rise in staff considering leaving the profession.
Following a series of strikes, state school teachers in England accepted a 6.5 percent pay offer last year, but unions insist this is insufficient to reverse years of real-terms pay cuts. Daniel Kebede, general secretary of the NEU, stressed the need for an above-inflation, fully funded pay offer to address recruitment and retention issues in education.
What about the NHS staffing crisis?
NHS staff accepted a two-year pay agreement last year, but unions like Unite and the Royal College of Nursing (RCN) remain unsatisfied. Sharon Graham, general secretary of Unite, warned that many years of pay freezes and below-inflation pay rises have led to a mass exodus of experienced staff from the NHS.
An RCN spokesperson emphasised the necessity for a fair and prompt NHS pay award to address the staffing crisis. Meanwhile, Unite members in local government recently rejected a pay offer of just under 6 percent, highlighting the urgent need for increased funding.
The government hopes to soon resolve the long-standing pay dispute with junior doctors. Talks between the British Medical Association (BMA) and new Health Secretary Wes Streeting may lead to a multi-year deal with above-inflation amounts, despite Streeting dismissing the BMA’s 35 percent pay rise request.
Paul Nowak, general secretary of the Trades Union Congress, called for the government to publish public sector pay review body reports and engage in open negotiations with unions to address pay and staffing issues comprehensively.
As the new government navigates these challenges, the future of public sector pay and the impact on recruitment and retention remain critical issues to watch.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
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