The Chancellor has announced in his Budget that some public sector departments will have the option of moving to regional pay systems for workers whose pay freezes end this year. The unions have warned that, with Wales heavily dependent on public sector employment, a plan to decrease public sector pay to match with lower rates locally in the private sector could hit the Welsh economy hard.
According to figures from the Institute Of Fiscal Studies, there's an 18 per cent gap between public and private sector pay in Wales. Westminster says this means some private firms find it hard to compete and struggle to recruit. The unions say regional pay would hit Wales and women particularly hard.
– Jeff Evans, PCS Wales
Closing the gap between the two sectors could only be achieved by holding public employees' pay down for several years while the wages of private sector staff rose in line with inflation. That equalisation would slash £1.25 billion off the £8.2 billion public sector pay bill. The real impact on the Welsh economy would be even greater, with reduced spending power of public sector workers translating into reduced revenues and wages in private sector businesses that currently benefit from that spending.
Fuel costs are also high on the agenda for Welsh businesses. Adam Dandy from the North Wales Truck Stop, wants to see the Chancellor reduce duty on fuel. An increase in fuel duty is scheduled for August, although it's thought the Chancellor could announce a change to this plan in his Budget statement. Tillery Valley Foods, which employs 350 people making ready meals in the Gwent Valleys, says its fuel bill has rocketed and it's hard to pass on the increase to customers.