Public sector pay reform 'absolute disaster for Wales'

The chancellor has been urged not to introduce regional pay in the public sector as he prepares to deliver his Budget.

A union representing public sector staff said it would be an "absolute disaster", depriving the Welsh economy of more than £1bn.

The UK government is examining how public sector pay can be brought into line with the private sector.

But critics say it would mean a pay cut for people in poorer parts of the UK.

Last autumn, Chancellor George Osborne asked independent pay review bodies to report in the summer on whether the public sector could be "made more responsive to local labour markets".

But the Public and Commercial Services Union (PCS), which has members working for the UK and devolved governments, said the proposal would hit Wales particularly hard.

According to the Institute for Fiscal Studies, Wales has the biggest public-private pay gap in the UK.

Women in Wales can earn an extra 18.5% and men an extra 18% in the public sector than they could expect to make working for private companies, the think tank has said.

PCS senior national officer Jeff Evans said: "What these figures demonstrate is that regional pay would also be an absolute disaster for the Welsh economy."

The gap could be only be closed by holding down public employees' pay while wages in the private sector rise in line with inflation, he added.

"The real impact on the Welsh economy would be even greater, however, since the reduced spending power of public sector workers would translate into reduced revenues and wages in private sector businesses that currently benefit from that spending," he added.

First Minister Carwyn Jones has described the proposal as "ludicrous" and as "code for cutting pay in Wales".

New Plaid Cymru leader Leanne Wood on Tuesday night invited him and other Welsh party leaders to unite in opposition to the proposal.

Treasury officials say it would ensure the UK has a responsive, modern labour force.

They see the move as "pro-growth", saying it would help make the private sector become more competitive.