Public sector reward: New approach is needed

Sorting out pay for local government workers has been far from straightforward in recent years. With strike action impacting on services up and down the country and an arbitration process that resulted in a higher than expected pay offer, certainty is something that has been lacking.

The effect of the recession continues to bite day after day in all sectors, including local government. The conversation around what public sector cuts there will need to be for the government to balance the books is a hot political topic. What percentage scenario ought we be planning for? Will it be tight, or will it be akin to Armageddon? Ultimately, local government continues to be a large employer because of the services it provides, therefore the size and growth of the salary bill will continue to be an area of keen focus for politicians and accountants across country.

So amid the anticipation of major public service cuts – and crystal ball-gazing as to what proportion of this will directly or indirectly effect local government – there is an offer on the table worth about 1.09%. With income from fees and investments falling, affordability, rather than budget provision, has become the main focus for councils in terms of what the pay award ought to be.

There were a large number of councils who wanted to go with a 0% deal, reflecting not just their financial reality, but also the reality across a number of other sectors where redundancies and job losses have been widespread. So is the desire of councils to also reflect the public mood and to seek to ‘share the burden’ of the recession?

Strong leadership

The view of the Public Sector People Managers’ Association is that the sector needs to show strong leadership and prepare now for the anticipated cuts and spending restrictions that will soon be with us. The 1.09% pay deal is going to hurt a number of councils, with the implications likely to emerge in the medium to long-term as they change the shape and nature of the services they provide and, therefore, who they employ. So the recession is going to push the age-old debate of annual pay awards versus security of employment to the fore.

One of the key issues is that employers are still locked in a bargaining process that is past its sell-by date, and needs reforming if it is to remain relevant to councils up and down the country. We need to look at more progressive cross-public sector reward strategies, and recognise the strategic issues that the recession is bringing and tackle them.

The pay, terms and conditions that the majority of local government work to were set more than 10 years ago. During this time, a number of councils will have varied the terms and conditions for their staff through local bargaining, which means there is now little consistency between councils. So trying to use a collective bargaining approach at a national level on the current terms and conditions just doesn’t seem to be the most sensible approach – there will be an entirely variable effect and outcome for staff across the country.

Total reward

What’s the alternative? Effort needs to be focused on developing a new approach to reward for the sector; a framework based on total reward. This will involve helping staff understand what reward and benefits they get in complete terms, and negotiating and introducing total reward benefit statements across the sector.

The time and effort of negotiating and implementing new reward frameworks that balance consistent outcomes in terms of total reward, alongside properly managed flexibility and choice at an individual and organisation level, will pay later. It is important to accept that the time and relevance for negotiating detailed terms and conditions at a national level is a thing of the past. We must focus on outcomes, not inputs.

Jim Savege is corporate director, HR, at Cumbria County Council. He is also lead officer for pay and reward at the Public Sector People Managers’ Association.

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