British civil servants will feel the full force of the squeeze on living standards as ministers set guidelines that they will be paid below inflation next year, averaging just 2%.

The government announced its 2022-23 Compensation and Incentive Framework On Thursday, the department said it would be allowed to offer an average 2 percent compensation bonus, with the flexibility to pay an additional 1 percent if they can show it helps meet long-term workforce priorities.

Inflation is expected to rise by nearly 9 percent by the end of the year, according to the latest forecast from the Office for Budget Responsibility, meaning some 450,000 civil servants in government departments, agencies and other public bodies will face high real pay cuts.

Compared with their private sector counterparts, public sector workers are already worse off than at any time in the past 30 years, said Ben Zaranko, senior research economist at the Institute for Fiscal Studies.

Cabinet Office parliamentary secretary Heather Wheeler MP said in a statement that the guidelines would “ensure broad equality with private sector wage solutions” and “provide fair wage increases for hard-working staff”.

But the PCS civil servants union said with food and fuel bills soaring and tax rates rising, the proposal was “ridiculous” and far below what employees needed to avoid hardship.

There will be some protection to the minimum wage, with the main rate of the statutory minimum wage rising by 6.6% from today – the equivalent of £1,000 a year for full-time workers.

But independent forecasts suggest pay is well below the private sector average for the coming year. The median salary in 2022 is 3%, with the bottom quartile of employers offering as much as 2.5%, according to research group XpertHR. In 2022, OBR forecasts that nominal income will increase by 5.3%, while household disposable income will decline by 2.2% in real terms.

The trivial civil servant solution could set a benchmark for rewards in other more politically contentious parts of the public sector, Zaranko said.

The Department of Education has made recommendations for teachers’ pay that are generous for those about to start their careers, but mean big pay cuts for more senior staff. However, the government has yet to provide guidance to health workers, police or prisons, among others.

Zaranko said the actual pay cut could exacerbate recruitment difficulties, especially for those at the top and working in London.

But he added that it was a natural consequence of Prime Minister Rishi Sunak’s decision in last week’s spring statement to “rein in spending and prioritise tax cuts and austerity”.