Northern Ireland’s army of public sector workers have been slapped with a devastating wages blow as they prepare for strike action.
Chancellor George Osborne has announced in his Autumn Statement proposals that could lead to pay cuts for the 230,000 people working in the public sector here.
A review will look at whether public sector pay should be set locally, rather than nationally, because the Chancellor believes it is in danger of “squeezing out” the private sector in some regions.
Northern Ireland's public sector workers currently receive a national rate of pay.
MPs have vowed they will oppose the measure which would affect the province, where public outstrips private pay, more than other regions of the UK.
In Northern Ireland the average private sector wage is £20,498 while the average public sector wage is £29,010 — a massive 42% difference.
A two-year, 1% cap on public sector wage increases, once the freeze currently in place has expired, was also announced by the Chancellor at Westminster yesterday.
People are also being asked to work longer, with plans to raise the state pension age to 67 brought forward to 2026.
Mr Osborne told MPs: “This is a significant step towards creating a more balanced economy in the regions of our country that does not squeeze out the private sector.”
Nigel Dodds, DUP MP for North Belfast, said: “Certainly this is bound to cause great worry and concern for Northern Ireland people. This is something the Conservatives have been looking at for some time, on ideological grounds.
“The squeeze on public sector pay is also a concern, as we have such a high proportion of public sector workers.”
Mark Durkan, SDLP MP for Foyle, said regional setting of public sector pay could undermine unions in their negotiations with the Government.
He said: “This is a measure that the Treasury have tried before, and it’s been resisted by the unions. It’s been made to sound attractive, but it depends what comes with it.”
Treasury documents published yesterday suggest Northern Ireland would be in the firing line from any policy change.
They refer to a study carried out by the Institute for Fiscal Studies earlier this year which found that in Northern Ireland, Wales and Scotland, there were large differences in the pay of someone in the public sector compared to a person with the same qualifications employed privately.
The Treasury said: “Such differences between public and private sector pay can adversely affect private sector businesses which have to compete with higher public sector wages. It also leads to unfair variations in public sector service quality and limits the number of jobs that the public sector can support.”
Although officials insisted there would be no “nominal” pay cut for workers, the move paves the way for wage freezes — an effective cut, once inflation has been taken into account — for years to come, starting as early as 2013.
Independent pay review bodies will report back to the Government by July 2012.