Public sector workers need above-inflation pay rises, says TUC chief

The government should award public sector workers “entirely legitimate” pay restoration deals despite the tough economic backdrop to make up for more than a decade of real-terms salary cuts, the head of the Trades Union Congress has said.

Paul Nowak, the general secretary of the organising body for trade unions in England and Wales, said Rachel Reeves’s decision to deliver real-terms pay rises in July was a “crucial first step” in dealing with staffing pressures in frontline services.

But he said deals that simply reversed 14 years of wage decline – when public sector pay fell on average by 3.6% in real terms – would not go far enough to recruit and retain thousands of desperately needed staff, and above-inflation pay awards were needed.

“I think restoration of public sector pay is an entirely legitimate aspiration for public sector workers. It shouldn’t be the limit of our ambition. I don’t think that in 2010 the situation was perfect, by any stretch of the imagination,” he told the Guardian.

His words are likely to fuel attacks on Labour from the Conservatives, who have accused Keir Starmer of being “in hock to his union paymasters” after settling a series of long-running disputes with striking workers over the summer including junior doctors and train drivers.

Nowak defended the summer deals, saying the Tories had “played fast and loose” with the pay review bodies over the years, while unions could have a “grown-up conversation” with the new government.

Speaking before the TUC’s annual meeting of unions next week, Nowak said ministers would not be able to rebuild public services without staff, as employers including schools, hospitals and care homes were “trying to fill a bucket that’s got a hole at the bottom”.

The TUC is proposing a new public sector workforce commission that would bring together unions, employers and experts to advise government on improving public services – with recruitment and retention a priority.

Nowak said the unions wanted Reeves to set out a roadmap to rebuilding public services, including fair pay, in the budget in October – but added that he was “not kidding” himself that it would happen overnight.

While he acknowledged that the government faced a “huge challenge” ahead given its economic inheritance, the unions would expect “broader shoulders to do the bulk of heavy lifting” on tax rises.

He said there should be a “national conversation” on tax, suggesting there was still scope to equalise capital gains tax with income tax, bring in new wealth taxes and make sure that online retailers paid their fair share to help raise billions for public services.

Nowak suggested the “doom and gloom” currently on display from government on the state of the economy was a “necessary corrective” from the Rishi Sunak era. But he also appealed to Reeves to “set out what we can do about it” because people “need to see light at the end of the tunnel”.

He was particularly concerned about plans for winter fuel payments. “For those people just above the threshold, I think the chancellor will want to make sure that we go into the winter without those people feeling that they can’t pay their bills or afford to turn on their heating.”

In response to anxiety from some business groups over Labour’s new workers’ rights legislation, Nowak argued that it would “create a level playing field” for good employers as they already offered significant rights from day one.

He suggested there was a “mismatch” between the business lobby and real-life employers, arguing that the latter sometimes had “knee-jerk” reactions against any changes. Companies he spoke with were more concerned about skills than they were about the cost of new staff.

The unions “hope and expect” the consultation would deal with implementation rather than watering down the plans, he said, and that the government would recognise “siren voices” in the sector for what they were.

Nowak admitted frustration over the right’s description of unions as Labour’s paymasters. “What they’re describing is hundreds of thousands of working people who’ve opted to pay 50p, 75p a week to support their union to give them a political voice. It’s the cleanest money in politics.”