Radical approach must be taken to resolve public sector pay crisis

In case you haven’t noticed, there is a not-so-secret campaign being waged by the government to directly control the management of public sector pay deals. The economy is moving into uncertain territory, which always makes governments nervous, but does it give ministers the right to undermine established mechanisms for collective bargaining?

Yes, collective bargaining is arcane, and yes, we need a fresh look at how the public sector is rewarded, but not by making sweeping statements that leave some employers floundering in the midst of current pay disputes, and others trying to prepare for the next pay round.

Council tax is predicted to rise, on average, by 4% this year as local authorities seek to ensure they can continue to deliver services. Such increases are generally in line with the retail price index, which is calculated with mortgage and council tax payments factored in. The three-year pay deals for the public sector, however, are consistent with the government’s intent of keeping inflation at 2%, based on the consumer price index. This just so happens to exclude, you guessed it, council tax and mortgage payments.

Unpaid delivery

For the average public sector worker, this is a real kick in the teeth. The government is effectively saying to millions of staff that it expects them to deliver services more efficiently and effectively for pay that will not reflect their biggest personal expenditure, and will take no account of economic changes over the next three years.

I’m not a staunch trade unionist. But I am concerned about the impact such statements have on the psyche of public sector staff, and the ability of employers to recruit and retain high-quality employees to deliver services to some of the most vulnerable people in society. The government is creating deeper divides between employers and unions, which neither side wants, by making unilateral statements without first consulting and assessing the impact such policy decisions may have. It may also lead to more employers opting out of national pay bargaining to look after their own interests and those of their local taxpayers.

The position isn’t the same across the UK in some areas there are long-standing differences in pay levels in some parts we have full employment and there is strong competition for jobs in the local labour market. Combine this with uncertain national pay arrangements, and employers will vote with their feet, dealing with pay themselves.

Putting a more objective and pragmatic view on the government announcement, what would three-year pay deals actually look like? Importantly, a multi-year settlement would help public sector employers manage their finances more effectively and plan the deployment of resources in a more strategic manner. Being subject to annual settlements can mean that margins for error creep into forward planning. On that basis, I support the intent of financial and industrial stability that a three-year deal could bring.

Public sector employers also need to recognise that with economic slowdown there simply will not be any new money, and settlements have to be tempered against affordability criteria. I’m sure we could all arrive at this conclusion after a protracted struggle between employers and unions, which may produce small movement at the margins, but the settlement will broadly be the same. All we can then look forward to is a life in almost constant dispute.

Reward package

The government urgently needs to sit down with employers and unions and look at the total reward package (and total cost) of the public sector workforce, and be prepared to mix up some of the elements to achieve change. The time has come for something a little more radical and creative, and I would urge all parties to accept some of the realities – as harsh as they may be – and get on to find a way forward that produces a win-win for the workforce and the communities it serves.

Stephen Moir, director of people and policy, Cambridgeshire County Council, and president of the Public Sector People Managers’ Association

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