(Bloomberg) — The Bank of England has agreed a 3.5% pay rise for its 4,200 staff and a one-off 1% salary top-up this year under a sub-inflation deal that has been accepted by the union.
(Bloomberg) — The Bank of England has agreed a 3.5% pay rise for its 4,200 staff and a one-off 1% salary top-up this year under a sub-inflation deal that has been accepted by the union.
The increase in the overall pay pot will be targeted at lower paid staff to protect them against the worst of the living standards squeeze, with the better-off receiving smaller rises of as little as 1%. BOE staff will also see the value of their benefits increase by 1% of pay for this year only and given the option of taking the uplift in cash.
BOE Governor Andrew Bailey, whose total compensation was roughly £598,000 ($737,510) last year, declined a raise for a second year running.
Unite has accepted the package, which means the BOE will avoid the embarrassing prospect of a strike. Workers across the public sector, including nurses, teachers and rail staff, are staging walk-outs in protest at sub-inflation pay offers that have brought services to a halt. The BOE deal may be used as an example in government negotiations over this year’s settlements with public sector staff.
Consumer price inflation was 10.5% in December, more than five times the BOE’s 2% target. The central bank fears that large pay settlements will only feed into higher inflation as companies try to recover wage costs by raising prices, setting off a damaging feedback loop.
Like other central bankers, Bailey has called for pay restraint to head off a wage-price spiral. But he has to balance the BOE’s inflation-fighting prerogative with the needs of staff, who are struggling amid a once-in-a-generation cost of living crisis. As recently as 2017, staff threatened to strike.
A BOE spokesperson said: “We need to strike a balance between maintaining budgetary discipline with public funds, retaining critical skills, and addressing the cost of living pressures facing our staff. For next year, we have agreed a 3.5% pay award budget targeted towards staff lower in their pay scales, and a one-year only non-pensionable benefits uplift worth 1%.”
For the average BOE worker, the package will be worth 4.5% this year including the benefit uplift — half the rate of inflation and less than the 5% the government agreed for 5.5 million public sector workers in 2022. However, it is more than the 3% that would be consistent with a 2% inflation target and 1% annual growth in productivity.
The settlement is also considerably lower than the 7.2% growth in average private sector regular pay. Inflation is expected to drop this year now that gas and food prices are falling.
Last year, BOE staff received a 1.5% pay rise, which followed at 1.25% rise in 2021. The European Central Bank agreed a 4.07% deal for 2023 in December.
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