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LONDON (Reuters) – British Prime Minister Rishi Sunak on Thursday sought to end months of public sector strikes by offering pay rises for teachers, doctors and other workers of 6% and above, but warned it would cost billions and could mean cuts. in another place.
Sunak faces an election in the next 18 months against the backdrop of the highest inflation of any major economy, a near-stagnant economy and a legacy of scandals and missteps from his Conservative Party’s 13 years in power. Opinion polls put the Conservatives behind the opposition Labor Party.
The prime minister said he had accepted the recommendations of independent wage review boards on a wage increase for public sector workers, emphasizing that it was a final offer aimed at ending months of strike action.
“This is a big paycheck, one of the most important we’ve had in decades, and it costs billions of pounds more than the government has budgeted for, and it has consequences,” Sunak said.
The package means finding an extra 5 billion pounds ($6.55 billion) – 2 billion this year and 3 billion next year – from existing administrations’ budgets.
“Today’s offer is final. We will not negotiate settlements again this year and no amount of strikes will change our decision,” Sunak said.
The education unions immediately said they would call off the planned strikes and recommended that the deal be accepted. But two unions representing doctors said the offer was unlikely to end the strikes.
The wage increases are below Britain’s current 8.7% inflation rate, but are intended to fill a gap in the wake of the country’s worst bout of industrial unrest in more than 30 years.
Junior Doctors will now receive a 6% pay increase and a salary increase of up to £1,250, while Teachers will receive a 6.5% increase. The police and the army will receive similar settlements.
After more than a year of high inflation – which peaked at more than 11% – the government is struggling to balance the need to end strikes with rising levels of public debt.
It has little room to spend on wages without raising taxes, cutting other public services or missing self-imposed targets for less borrowing.
No new borrowing
Sunak said wage increases would not lead to higher inflation because there would be no new borrowing or spending to finance the increases. Teacher salary increases will be funded by reallocating the existing department budget.
Explaining how he will finance the high salaries, Sunak said that the measures will include increasing the fees paid by international workers to access health services in the country, and the cost of obtaining a visa to enter Britain will also increase.
Other new funding sources are likely to come under close scrutiny from trade unions, which have said budgets for public sector services such as hospitals are already very tight.
“The government is putting its administration between a rock and a hard place,” said Sharon Graham, Secretary General of the United Union. “They now have to choose between paying workers a half-decent salary or cutting off services in public services that are already underfunded.”
The British Medical Association, which represents about 45,000 junior doctors in England, said the government’s offer was still a pay cut in real terms.
“Today, he missed a great opportunity to put a credible proposal on the table to end the strikes,” said BMA Council Chairman Phil Banfield. He added that junior doctors, who are in the middle of a 5-day strike, will likely continue to take further industrial action.
Ministers have repeatedly stressed the risk that raising wages too much would undermine the goal of lowering inflation and could entrench higher prices.
However, the BoE has been more focused on private sector wages, which have risen faster than public sector wages and have a more immediate impact on the prices of goods and services used to calculate consumer price inflation.
Britain’s total debt exceeds 100% of GDP, which is just below the average among developed economies.
($1 = 0.7634 pounds)
Additional reporting by Kaylee McClellan, David Milliken, Suban Abdullah, Paul Sandell, Farooq Suleiman and Alistair Smoot.
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