27 February 2004
The government's drive to modernise public services and boost staff recruitment has hindered the Treasury's attempts to keep a lid on the salary bill in the sector, new research has shown.
Widespread changes to pay structures, including moves aimed at increasing productivity and making greater progress towards equal pay for women, have pushed up salaries, according to a report from Incomes Data Services.
There has also been a concerted effort to tackle recruitment and retention problems, boosting pay to close the gap with other sectors and introducing enhancements to reward good performance.
These developments, the report says, have increased flexibility and eased staffing problems, but they have also led to pay inflation. Last year, public sector earnings grew by 5.4%, compared with just 2.7% in the private sector.
Alastair Hatchett, head of pay services at IDS, said: 'This is the largest government pay reform agenda in more than a generation. It wants to raise the numbers and the quality of those employed in the public services in order to deliver better services. That has meant changing relative pay levels. But it has a problem. There is a tension between this policy and the need to keep public sector spending and borrowing within bounds.'
The Treasury has already applied the brakes on rising wages, making clear that it is looking for pay rises pegged to inflation for next year.
This has provoked strikes in various parts of the public sector: civil servants in the Department for Work and Pensions are locked in an ongoing dispute, and university lecturers took action this week.
However, IDS predicts the new policy will continue. 'Public sector pay is now being curtailed by a much tougher policy from the Treasury,' its report says.
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