Public sector pay challenge

THE new government will find it difficult to impose a pay freeze in the public sector because of rising inflation and a thaw in wage restraint.

A study by the Labour Research Department (LRD) said pay freezes in the private sector had started falling, while average settlements were rising.

"While we may not have seen the back of pay freezes just yet, there is likely to be greater pressure on all employers to settle for a positive increase," said the LRD.

"Public sector unions are already very unhappy about plans to hold down wages … it may be hard for whichever party is in government after the election to keep the lid on public sector pay."