Public sector pay freeze could spark industrial unrest

The government is at risk of worsening industrial relations in the public sector after it failed to rule out a pay freeze for workers this year.

Last week the Chartered Institute of Personnel and Development urged the government to put a stop to public sector pay rises in response to the lowest RPI inflation for decades. The index, used to negotiate pay rises, dropped from 0.9% in December to 0.1% in January.

John Philpott, chief economist, said the money would be better spent getting people back to work.

But the proposal caused a row in the HR profession, as Public Sector People Managers’ Association president Stephen Moir said capping pay would inevitably lead to recruitment and engagement problems (see Opinion, below).

Research from Personnel Today’s sister organisation, pay specialists IRS, published last week, found one-quarter of pay awards decided this year had resulted in pay freezes across the private and public sector.

The biggest public sector union, Unison, admitted to Personnel Today that it had missed a golden opportunity to secure long-term pay deals last year, but would fight for deals worth up to 4% as early as possible.

Steve Bloomfield, national officer for business and environment at Unison, said there were several long-term deals rejected because unions felt they “were not right”. When asked if the unions had missed a trick in not securing multi-year deals, he replied “exactly”.

“We would condemn a pay freeze. It’s mischievous that government employers are trying to hide behind the credit crunch to do cutbacks on staff or money,” he added.

TUC general secretary Brendan Barber said: “Unions will be on their guard that the recession is not used as a cover for efforts to boost shareholder value at the expense of the workforce.

“We expect wage settlements to stay ahead of inflation,” he added.

His words were a stark reminder of the threatened strike action last year over ongoing pay disputes.

However, the government refused to rule out pay freezes. A Treasury spokesman said pay deals must deliver value for money for taxpayers. “The government’s policy is that overall pay settlements should reflect the recruitment and retention position of the workforce,” he added.

Last year, Unison secured a three-year deal for NHS members at an average rate of 2.6%. Experts warned that public sector unions may need to be more creative with their negotiations.

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