CBI calls for public sector wage freeze

The CBI business organisation has called for an immediate two-year freeze in public sector pay.

While the CBI said there could still be wage increases for frontline staff and the lowest paid, the overall bill should not be allowed to rise.

Public sector union Unison said the CBI proposal could restart the recession.

Prime Minister David Cameron has already announced a cut in bonuses for senior civil servants, and an inquiry into wider civil service pay.

Members of the new cabinet have also voluntarily cut their pay by 5%. Big savings

The Conservative-Liberal Democrat government plans to reduce public spending by £6bn in the current financial year, and Chancellor George Osborne is due to present an emergency Budget on 22 June.

This could also give details of changes to public sector pay.

The CBI said the civil service had to follow the lead of the private sector, where average pay fell by 0.9% last year.

By contrast, it said wages in the public sector increased by 2.8% in 2009.

The CBI estimates that selected public sector pay and recruitment freezes could save £18bn over the next two years.

It said the move could run parallel with new measures to allow businesses to create jobs and boost economic growth.