Th3.5: Public Sector Wage Setting

Question 1

What can the government do since trade unions in the UK are weak?

Answer 1

in the short run, the government can effectively make whatever wage decisions it decides in order to improve the budget

Question 2

What did public sector workers experience between 2010 and 2015?

Answer 2

a pay freeze

Question 3

What did this pay freeze do?

Answer 3

put downward pressure on private sector wages since few people were likely to leave the private sector for the public sector and private sector employees could use this as evidence to limit pay rises for their workers

Question 4

What will the government do in the long run if private sector workers receive pay rises and public sector worker’s don’t?

Answer 4

people will move from the public sector to the private sector and the government will be forced to increase public sector wages in order to expand supply

Question 5

As a result, the wages of public and private sector workers tend to…

Answer 5

tend to rise by the same percentage over a long period of time but in the short term they can rise by different rates