The UK's Chancellor angered unions today by announcing plans to cap public sector pay rises to 1% for two years from 2011.
Alistair Darling also said that contributions from the state to the pensions of teachers, local government and health workers and civil servants would be capped, saving £1bn a year.
Workers will have to make a greater contribution to pensions, with those earning over £100,000 paying more, he told the Commons.
The Government said the senior civil service pay bill would be cut by up to £100m over three years and any new government appointment over £150,000 and all bonuses over £50,000 would require Treasury approval.
Brendan Barber, general secretary of the TUC, said a centralised pay cap on public sector staff was unfair and inefficient and would damage long-established independent review systems.
“What we need is a fair tax system to make sure that those who did so well out of the boom years make a proper contribution, rather than expecting public sector workers, many of them low paid, to pay the price.”