Public workers get better pay deals while private sector faces new tax burden
State employees will receive higher pay-rises than private sector workers for first time since covid times. Governmentʼs new tax changes hit businesses while public sector gets special protection
Public-sector pay is moving up-front while private companies face new limits on worker compensation (a shift not seen since covid times). State workers expect 5pct raises in early-2025‚ jumping from 2‚5pct earlier this year; private sector employees might get just 3pct – down from last years 5pct
Rachel Reeves budget choices made this gap bigger: her £25bn National Insurance increase hits private employers hard but state organizations dont pay it. The Office for Budget Responsibility thinks workers will take most of this hit through smaller raises
The governments spending plans show different paths for various sectors:
- Healthcare and social care adding most jobs
- Construction seeing good growth
- Education getting small increases
- Public administration showing job cuts
A Treasury rep says: “We want 2pct more productivity in public services; were putting £2bn into NHS tech.“ They also mention working on plans for eight growth-sectors but dont give details about timing
The CIPDʼs economist James Cockett thinks its good for state workers but needs better management: private sector faces tough choices with new costs – less money for raises training or hiring. Higher costs might slow down business growth; making it harder to keep giving good raises
