The UK government is ready to engage with junior doctors if they lower their opening pay demands, Chancellor of the Exchequer Jeremy Hunt said, although it will refuse any deal that entrenches inflation and hurts growth.
(Bloomberg) — The UK government is ready to engage with junior doctors if they lower their opening pay demands, Chancellor of the Exchequer Jeremy Hunt said, although it will refuse any deal that entrenches inflation and hurts growth.
Junior doctors are staging four days of industrial action and demanding a 35% pay increase they say is needed to make up for about 15 years of below-inflation increases. The move comes amid signs that public sector disruption is taking a toll on growth, with data published Thursday showing the economy stalled unexpectedly in February as strikes crippled services.
Speaking to media at the International Monetary Fund spring meetings in Washington, Hunt accepted there had been a “short-term growth impact” but said caving in on wage demands would boost inflation and hurt the economy. Inflation is currently 10.4%, but the government has said it can afford public sector pay rises of just 3.5%. Private sector pay has been rising at around 6%.
Hunt said union leaders should follow the example of nurses, who he said started with an opening bid of 19%. They eventually accepted a 5% pay rise alongside a one-time payment to end their strikes.
“When they were publicly willing to commit to a much lower number, that became the basis of a fruitful discussion,” he said. “We do want to do everything we can — except things that entrench long run high inflation.”
The doctors’ strikes are a headache for the government, less than a month before local elections and with a national poll expected next year. Just last month, it had appeared to be making progress on halting waves of industrial action that has impacted daily lives, disrupting schools, railways and hospitals.
The British Medical Association on Wednesday accused the government of putting up obstacles to “meaningful” discussions and called on the ministers to agree to use the arbitration service, ACAS, to facilitate talks with the union. It urged Health Secretary Steve Barclay to make a “credible” pay offer.
But Hunt, a former health secretary who was at the center of a bitter contractual dispute with junior doctors in 2016, said the government must avoid pay awards that fuel inflation.
“The worst possible thing for growth is inflation,” he said. “It means we have higher interest rates, we have a contraction in the economy’s spending power, which makes it hard to grow at healthy rates.”
The UK isn’t the only European nation facing public sector strikes. France and Germany are also grappling with high pay demands from workers who have seen their wages fall behind inflation.
Hunt said funding public services sustainably means requires getting the economy growing. The UK is only Group of Seven nation whose output has yet to recover to pre-pandemic levels and the IMF expects the UK to be the slowest growing Group of Seven nation this year.
Yet Hunt also rejected that downbeat forecast for a 0.3% contraction, and said the IMF “has undershot on the British economy for quite some time – every year since 2016 bar one.”
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