Belfast Telegraph

Saturday 30 August 2014

Academics scornful of Osborne pay plan

Controversy: George Osborne

Academics from Northern Ireland's universities and research bodies have told the Government that regionalised public sector pay will damage the economy here.

In a letter to The Times newspaper, 60 academics from across the UK joined forces to tell politicians that they found no evidence to support Chancellor George Osborne's view that locally-determined pay in the public sector could boost the private sector.

"On the contrary, such a policy could reduce spending power, undermine many small and medium sized businesses in areas of low pay, and aggravate geographical economic and social inequalities," it said.

The letter, which was signed by 14 academics from Northern Ireland, many of whom are on the public sector payroll, said that rather than cut costs to the Treasury, regionalised public sector pay could prove expensive.

"Moreover, for government, the medium and long-term economic and social costs could increase.

"We call upon the government to reinforce regional growth and not introduce policies that would undermine regional economic and social development."

The issue is particularly emotive in Northern Ireland where public sector pay is on average around 30% above the average wage in the private sector.

Economists have argued that such a premium draws top talent to public sector jobs and is a drain on the dwindling resources in local government. One of the signatories, Dr Andrew Baker of Queen's University Belfast, said in a release from the Irish Congress of Trade Unions, that small and medium-sized businesses would suffer if public sector pay is regionalised.

"There is a major short fall in demand across a number of regions and in Northern Ireland in particular," he said.

"There is a real risk of an inverse multiplier effect.

"Any number of SMEs who currently have reasonably successful business models are likely to bear a disproportionate share of the burden of the squeezed purchasing power of public sector employees that will follow from this policy."

Other signatories from Northern Ireland included Professor Paddy Hillyard, Professor Julia O'Connor, Professor Peter Shirlow, Professor John Pinkerton, Dr Fiona Bloomer, Dr John Barry and Dr Goretti Horgan.

Dr Mark Bailey, Dr Steven Nolan, Dr Tom Healy, Dr Rory O'Farrell, Micheal Collins and Paul McFlynn also signed it.

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