Local pay reform needs ‘better data’
By Vivienne Russell | 1 October 2012
The data needed to make regional pay in the public sector work is missing, a leading economist has told Public Finance.
Peter Dolton, professor of economics at the University of Sussex and a senior research fellow at the LSE’s Centre for Economic Performance, said moving to a regional pay system ‘opens up a whole can of worms’.
‘You couldn’t have a national minimum wage if you have regional pay levels varying in all sorts of jobs,’ he told PF.
‘And if you do that you’ve got to say on what basis would you change it or uprate it. We would need to know what cost of living changes are on a regional basis. We can’t just have a national Retail Price Index and a national Consumer Price Index, we’d need to know how that’s different in South Wales than it is in Surrey and we don’t have that.’
He added that when a regional pay system was last employed in the public sector in the pre-war period and 1950s it was backed by a ‘massive machinery’ of local pay boards and wage councils. ‘We don’t have that now,’ he said.
Dolton, who has been a member of two public sector pay review bodies, was speaking after 25 economists wrote to The Times newspaper urging the government to drop national pay bargaining. They argued that the current system was frustrating the private sector’s efforts to recruit in ‘low pay’ areas, and meant public sector workers were often underpaid in ‘high pay’ areas.
Reports into how public sector pay can be made more locally responsive are expected to be published in the autumn.