Few people disagree with the concept of equal pay. But major headaches are being suffered by local authorities, which are legally bound to modernise their employment practices.
The government’s single-status agreement requires councils to harmonise pay and conditions for comparable posts – affecting 1.5 million public sector employees.
Put simply, it means treating manual workers equally to white-collar staff. The agreement aims to break down workplace divides which have meant that some employees traditionally received better pay, more annual leave and enhanced sick-pay arrangements than colleagues doing jobs of the same value.
It’s a laudable goal. Yet many local authorities are still fighting to implement the agreement before a 2007 deadline, even though they have had since 1997 to do so. For others, implementation is more easily said than done.
North East Lincolnshire Council, for example, has an ongoing dispute with unions after it emerged that some workers faced a 15% salary cut because the authority wants to cut costs while implementing the equal pay regulations.
And last month, union pressure forced Aberdeen City Council to drop similar plans. It subsequently apologised for its actions and withdrew letters informing 2000 staff they faced salary cuts of up to £16,000.
“This is a big HR challenge,” said Lorraine Pitt, lead officer on pay and employment experience at the Society of Personnel Officers in Government Services. “Some councils have not even thought about implementing it.”
A major stumbling block is the sheer cost, as job evaluations and a pay review can cost a large local authority £250,000, according to a study by the Employers’ Organisation for Local Government (EO). Even for a small district council, the cost can be £30,000.
“Many authorities struggle to keep it affordable,” said Pitt, who is also Essex County Council’s director of corporate personnel and development. “But it is important to tackle the situation head on rather than negotiating around the edges.”
Like the proverbial hot potato, the process must be handled carefully. More than half of the authorities questioned by the EO said job evaluation had a negative effect on staff morale. Only 14% said it was a positive experience.
“Some manual workers are very attached to traditional pay structures because they receive bonus payments,” said Pitt. “What it really needs is a radical rethink about the way pay is structured, but the unions aren’t always receptive to that idea.”
Neither are all local councils. Extra salary cost is the single biggest impediment to conducting a successful local pay review, according to the 180 local authorities that responded to the EO study.
Boosting the salaries of low-paid staff can be prohibitively expensive, especially when thousands of employees are involved. Which is why some councils are trying to fund single-status implementation by eating into the salaries of their higher-earning staff.
These local authorities believe their remit is to improve services for council taxpayers, which means delivering value for money rather than incurring extra costs. But other factors also play a part.
EO pay adviser Jon Sutcliffe said: “There hasn’t been a tradition of performance-related pay in local authorities in the same way as in blue-chip companies and it’s challenging to introduce one when you are not in a profit-driven environment.”
Unison, the public sector union, concedes that implementing equal pay throughout local government will cost £15.5bn. But a spokesman said: “Without any extra money, many local authorities are reluctant even to set the ball rolling.”
Then there are the knock-on costs. The Inland Revenue has confirmed that any back-pay paid from local authorities is subject to income tax and National Insurance contributions.
“These are not straightforward issues,” said Alan Warner, corporate director, people and property, at Hertfordshire County Council. “We settled quite quickly but then we have a smaller manual workforce than many authorities.”
Unison has warned public sector bean counters struggling to balance the books that there is “no foundation for statements such as ‘a third of jobs go up, a third go down and a third stay the same’ as the result of a job evaluation exercise”.
The minority of authorities opting to ignore single status altogether are playing a dangerous game. Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development, said they faced being dragged through the courts.
The preferable approach is to allow enough time to find a solution, said Cotton. “You can’t do this sort of thing overnight. You have to have adequate resources. The problem is finding the money. Many authorities are in a tough position,” he said.
Meanwhile, the unions have pledged to pile on the pressure in the quest for equal pay, leaving many local authorities facing the unenviable dilemma of whether to do so by cutting local services or cutting local jobs.
“It’s a case of politics,” said Cotton. “Councils are already under pressure from voters on the one hand and pressure from the government on the other. It is difficult to square all the circles.”