Chancellor George Osborne raised the prospect of regional pay earlier this year, however, a study for the TUC has found that there is "no economic case" for pressing ahead with the divisive measure, claiming there is no evidence that the pay of workers such as teachers, nurses and dinner ladies was preventing local firms from hiring staff.
The report goes on to say that within a worst case scenario where the pay of millions of public servants who live beyond London and the South East is brought down to private sector levels, as many as 110,000 jobs could be lost across England and Wales, and the cost to local economies would be £9.7 billion a year.
The report went on to say that on a best case scenario the introduction of local pay rates for public servants would see the creation of only 11,000 jobs, the report found.
Following the report, the TUC general secretary Brendan Barber said: "Quite apart from the huge hit that public sector workers would have to take in their pockets if pay in parts of the UK is held down to 'allow' the private sector to catch up, this report shows that the move would also prove hugely damaging to local economies.
"Despite the concerns being voiced by MPs in the parts of the UK most likely to be affected by the introduction of local pay rates, the Government has so far refused to rule out this move that would hit public sector workers and their families - who are already feeling the financial pinch as they suffer the effects of a lengthy pay freeze - very hard."
The findings of the report comes ahead of pay review bodies reporting back to the government, later this week, on the effect of introducing regional pay rates.
For more information, speak to London Accountants Harris Lipman.
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