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Sheffield workers set to be hardest hit by public sector pay cut

Analysis by the TUC has found that key workers in Sheffield Central will lose £9.7 million in earnings.

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Photo by Callum Wale on Unsplash.

New research from the TUC has found that workers in the Sheffield Central constituency will lose more from upcoming public sector pay cuts than anywhere else in the UK.

A total of £1.3bn will be cut from key worker pay settlements across England this year, following the Chancellor's Spending Review announcement in November 2020.

This will disproportionally affect Yorkshire and the Humber, where the public sector represents a much larger share of employment than elsewhere in the country.“

Key workers have kept Yorkshire and the Humber going through the pandemic," said TUC Regional Secretary, Bill Adams. "The Prime Minister clapped them, but his applause will ring hollow if he cuts their pay. It’s no way to thank them."

The TUC has calculated that, on average, each Yorkshire constituency will see an economic hit of £3 million from April 2021 to March 2022 if the planned cuts go ahead.

In November, Chancellor Rishi Sunak announced that previously planned pay rises for public sector workers would be reduced as a result of the pandemic.

The TUC says cutting key workers' pay weakens wage growth in other sectors – especially those that rely on consumer spending.

“If our key workers get the pay rises they’ve earned, it will benefit everyone," said Adams. "The spending boost will help our local businesses and high streets recover quickly. And it will help level up our unequal economy.”

Both the OECD and the International Monetary Fund have warned against a new wave of austerity in response to coronavirus. They have said that governments that can expand their borrowing should do so, instead of cutting public services.

"We made the mistake in 2010; we need to learn from the mistake," Laurence Boone, the chief economist at the OECD, told The Guardian.

Economists now believe the period of austerity that began in 2010 has held back economic growth and living standards in the UK.

An analysis published in October 2019 found that growth slowed in all 32 OECD countries where government spending was cut in response to the financial crisis of 2008.The only countries where GDP growth increased after the crisis – Germany and Japan – were also those where the government expenditure was increased.

Borrowing is currently at a record low cost, meaning that the government can borrow money cheaply to support high levels of public spending.

Nevertheless, the Chancellor has decided to cut workers' pay in the public sector despite warnings from top international economists against a return to austerity.

"We’ve got record redundancies, soaring unemployment and the worst economic crisis of any major economy," said Sheffield Heeley MP Louise Haigh in response to the TUC's findings.

"The government should be putting money in people’s pockets to give the economy a boost – cutting pay is only going to deepen the recession."

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