Government departments have recommended a pay rise of 2.8% for millions of public sector workers including teachers, NHS staff and senior civil servants next year.
Inflation – which measures price changes over time – is predicted to average 2.6% next year by the government’s official forecaster.
But union Unison said the proposed pay increase was “barely above the cost of living”, while teaching unions said it would only deepen the “crisis” in recruitment and retention.
The recommendations will now be considered by independent pay review bodies.
The government said departments would have to fund 2025-26 and future pay increases from their own budgets and unlike in recent years there would be no additional money if recommended pay awards exceed what departments can afford.
It added that officials would have to consider whether additional costs could be covered through other savings or improvements in productivity.
After winning power, the new Labour government accepted a series of above-inflation pay rises for public sector workers for 2024-25, bringing an end to long-running strikes.
The government said it had inherited a “challenging” financial position and defended the decision given “deteriorating recruitment and retention across the public sector”.
However, it added that this “required difficult trade-offs”.
The British Medical Association said the recommended pay rise for 2025/26 “indicates a poor grasp of the unresolved issues from two years of industrial action” and warned there was a “very real risk” of further strikes if “pay erosion” was not addressed.
Royal College of Nursing general secretary and chief executive Prof Nicola Ranger described the pay recommendation as “deeply offensive”.
“The government has today told nursing staff they are worth as little as £2 extra a day, less than the price of a coffee,” she said.
“Fair pay must be matched by structural reform. Let’s open direct talks now and avoid further escalation to disputes and ballots.”
The Department for Education said the 2.8% pay rise would “maintain the competitiveness of teachers’ pay despite the challenging financial backdrop the government is facing”.
However, the National Education Union said it fell “well short of the urgent action needed”.
General secretary Daniel Kebede said: “Teacher pay has been cut by over a fifth in real terms since 2010, hitting teacher living standards and damaging the competitive position of teaching against other graduate professions.”
