By David Williams
6 May 2010
Two studies published this week have cast doubt over whether public sector managers will be able to curb staffing costs as they grapple with slashed budgets.
Surveys released by Incomes Data Services on May 6 and the Labour Research Department on May 4 indicated that private sector pay was beginning to rise just as public bodies were being tasked with finding savings in their staff budgets.
All three major parties had backed caps on public sector pay in the next Parliament, but attempts by Local Government Employers to implement a freeze are being challenged by the Unison union.
The IDS survey found that, in April, 25% of pay deals across the economy involved a freeze, down from 36% in January. However, the public sector is bucking the national trend, and now accounts for half of all pay freezes.
According to LRD figures, growth in private sector salaries is accelerating, with a quarter of settlements now involving an annual rise of 3% or more. As a result, the research organisation warned that the government will struggle to reduce the public sector deficit through curbing public sector salaries.
Pay and conditions researcher Lewis Emery said: ‘Public sector unions are already very unhappy… with the rise in inflation and pressure from comparisons with the private sector, it may be hard for the government to keep the lid on public sector pay.’
Alastair Hatchett, head of pay services at IDS, said it was uncertain how workers would react to an ‘austerity settlement’, such as locking down pay rises for up to three years.
Hatchett’s comments came as Greek citizens rioted over that country’s public sector austerity programme, which includes freezes to public sector pay and pensions.
‘I don’t know whether we will get a similar reaction here,’ Hatchett told Public Finance. ‘It’s untested and the politicians will have to go carefully.’
Chris Johnston, head of human capital at consultancy Mercer, said the government had ‘missed an opportunity’ to freeze pay last year, in line with the private sector. Johnston, a former Cabinet Office director of employment and reward, added that ministers would have to reform civil service pay, linking it more closely to performance and moving away from automatic incremental pay increases.
But business leaders insisted that public sector staff must bear the brunt of spending cuts, calling for a two-year freeze in salaries.
Susan Anderson, the CBI’s public services director, said earnings growth in the public sector had outstripped that in the private sector over the past year. ‘Given the state of the public finances, the public sector will need to contain employment costs, just as the private sector has done during the recession.’
A Unison spokeswoman added that an NHS pay settlement that gave staff a 2.5% rise in 2010/11 appeared generous, but was still failing to cover inflationary pressures.
But she indicated that the union might soften its line on future pay deals, and would be willing to negotiate with the NHS to ‘look at ways of preserving jobs and services within the budgets that are allowed’.
6 May 2010
Two studies published this week have cast doubt over whether public sector managers will be able to curb staffing costs as they grapple with slashed budgets.
Surveys released by Incomes Data Services on May 6 and the Labour Research Department on May 4 indicated that private sector pay was beginning to rise just as public bodies were being tasked with finding savings in their staff budgets.
All three major parties had backed caps on public sector pay in the next Parliament, but attempts by Local Government Employers to implement a freeze are being challenged by the Unison union.
The IDS survey found that, in April, 25% of pay deals across the economy involved a freeze, down from 36% in January. However, the public sector is bucking the national trend, and now accounts for half of all pay freezes.
According to LRD figures, growth in private sector salaries is accelerating, with a quarter of settlements now involving an annual rise of 3% or more. As a result, the research organisation warned that the government will struggle to reduce the public sector deficit through curbing public sector salaries.
Pay and conditions researcher Lewis Emery said: ‘Public sector unions are already very unhappy… with the rise in inflation and pressure from comparisons with the private sector, it may be hard for the government to keep the lid on public sector pay.’
Alastair Hatchett, head of pay services at IDS, said it was uncertain how workers would react to an ‘austerity settlement’, such as locking down pay rises for up to three years.
Hatchett’s comments came as Greek citizens rioted over that country’s public sector austerity programme, which includes freezes to public sector pay and pensions.
‘I don’t know whether we will get a similar reaction here,’ Hatchett told Public Finance. ‘It’s untested and the politicians will have to go carefully.’
Chris Johnston, head of human capital at consultancy Mercer, said the government had ‘missed an opportunity’ to freeze pay last year, in line with the private sector. Johnston, a former Cabinet Office director of employment and reward, added that ministers would have to reform civil service pay, linking it more closely to performance and moving away from automatic incremental pay increases.
But business leaders insisted that public sector staff must bear the brunt of spending cuts, calling for a two-year freeze in salaries.
Susan Anderson, the CBI’s public services director, said earnings growth in the public sector had outstripped that in the private sector over the past year. ‘Given the state of the public finances, the public sector will need to contain employment costs, just as the private sector has done during the recession.’
A Unison spokeswoman added that an NHS pay settlement that gave staff a 2.5% rise in 2010/11 appeared generous, but was still failing to cover inflationary pressures.
But she indicated that the union might soften its line on future pay deals, and would be willing to negotiate with the NHS to ‘look at ways of preserving jobs and services within the budgets that are allowed’.
