End national pay deals to help struggling regional economies, urges think-tank

The government was today urged to scrap national pay deals in the public sector in favour of individual contracts for employees.

A report by think-tank CentreForum warns that national pay systems ignore local differences; handicap struggling regional economies; and make it impossible for public sector managers and institutions to cope sensibly with economic difficulties.

The report, More Than We Bargained For: The Social and Economic Costs of National Wage Bargaining, was written by Alison Wolf, Professor of Public Sector Management at Kings College, London.

“The current national pay system may seem equitable at first blush. In fact, it is nothing of the sort,” she said. “It does real damage to local services and local economies up and down the country. And it is the poorest and most vulnerable who are hit the hardest.”

High profile reforms, such as the ‘pupil premium’, which would give extra money to schools with disadvantaged pupils, will achieve little unless national pay scales are scrapped, according to Wolf. If these schools could pay significantly more to attract the best teachers, their pupils’ prospects could be transformed, she said.

For poorer regions, inflexible public sector salary scales do damage in another way: they handicap the private sector, the report suggests. England’s regions are as unequal today as when Labour took power in 1997, in part because employers cannot compete through lower costs, it says. If they want good employees, they must match high, nationally set and funded public sector rates.

In December, both the Chartered Institute of Personnel and Development and the Public Sector People Managers’ Association told Personnel Today that the government should scrap national pay scales.

Comments are closed.