04 March 2005
Despite the government's insistence that all public sector organisations should introduce regional wage variations, 'very little concrete action has been taken', a new report on pay indicates.
Instead, any substantial regional pay initiatives have tended to address the historical imbalance between the cost of living and pay rates in London and the Southeast, the survey by Incomes Data Services suggests.
Since 2001, the Treasury has asked all pay review bodies to investigate whether regional wages could be introduced in their sector, often within the context of a national pay spine.
When the initiative was announced, trade unions feared that the Treasury was attempting to ease the government's wage bill by limiting pay rises in areas with a relatively low cost of living, such as the Northeast.
But Pay in the public services 2005, published by IDS on February 28, shows that there has been little appetite for the initiative. The study states that 'since the policy emerged three or four years ago, the focus has shifted from potentially paying less in the Northeast to actively paying more in London and the Southeast for a number of key groups.'
Interestingly, separate government initiatives to improve and stabilise pay in key sectors have undermined moves towards regional variations.
'In the NHS, the national grading structure under Agenda for Change has meant this question has effectively been sidelined,' the report states.
But one experiment with regional pay has been flagged up. The Schools Pay Review Body has asked employers and unions to consider implementing a zonal approach, based on four zones equivalent to pay spines for inner London, outer London, the Home Counties and the rest of England and Wales.
IDS director Alastair Hatchett said: 'The review body is not simply looking at the issue of local labour markets with its proposals, but also focusing on how to staff "challenging schools" in deprived areas such as inner-city schools with staffing difficulties.
'Whether a zonal system, similar to that operated by the major retailers, is the best way to tackle this remains to be seen.'
IDS researchers found that average pay settlements in the public sector in 2004 settled at 2.9%. But average earnings growth, which includes pay progression and performance bonuses, was 5%.
PFmar2005
