The implications of this proposal will include lack of job creation in some parts of the UK due to the lower civil servant wages relative to wages of the private sector. Currently, the UK is working under an important deficiency of collective demand with the rate of unemployment. Therefore the government suggestion is that due to rate of growth of private sector wages is low relative public sector wages according to Ashcroft (2012). Hence this will lead to high levels of unemployment as well as deficiency of demand. The government has also suggested that this will lead to a situation where the public will crowd over the private sector.
Indeed the government has acknowledged that scraping public sector wages or limiting their growth comparative to the private sector will restrict the development of further demands. As a result this is likely to contribute to the crisis of relative demand deficiency in such regions. However there is a view by the government that under scraping public sector pay comparative to the private sector could assist in improving the competitiveness of the local private sector. From the governments point of view, Osborne’s aim is to rebalance the economy hence gets the public sector on the move. This implies that cutting national pay for public sector employees is likely to level the playing field.
In areas where the public sector receives more pay than private sector workers, the treasury argues that the private sectors are crowded out as they are unable to compete with the pay levels as suggested by Willis (2012). However this means that setting pays should take place at the local levels but the trade unions caution that this will lead to great differences across the country hence driving the pay down along the regions. Owing to this effect, most regions are expected to face an economic count down.
Unions have responded angrily on plans to scrap national pay for some public sector workers in the UK. One of the implications is