The price of pay restraint

12 Jan 07
MELISSA BENN | It’s extraordinary, really, how little one hears these days about pay, politically speaking.

It’s extraordinary, really, how little one hears these days about pay, politically speaking.

Once upon a time, the nitty gritty of wage claims, pay differentials and, of course, threats of industrial action were the stuff of high politics.

Now it’s more likely to be which ageing pop star is playing host to the prime minister and his family over the holidays.

Interesting then to consider three recent, if very different, stories on the pay question — all of which have important implications for whoever is Tony Blair’s successor later this year.

Last week, the Equal Opportunities Commission published its last major report before it merges into the brand new super body, the Commission for Equality and Human Rights. The report revealed the depressing but not entirely surprising findings that women are still failing to reach the top jobs in business and politics, high finance and the media, a gap that is unlikely to be bridged for generations.

Worse still, British women continue to suffer one of the biggest pay gaps in Europe — 17% for full-time staff and 38% for part-time workers.

Clearly, seriously frustrated alpha females should keep plugging away in the City, where the news of massive bonuses worth £19bn struck a sour note this Christmas. One lucky trader was rumoured to have received a single payout of £50m alone.

Contrast this with the news that Chancellor Gordon Brown will be meeting a delegation of public service unions later this month in an attempt to quash any pay claims marginally above 2%.

Some form of collision could have been predicted from the middle of last year, when Brown called for a three-year pay freeze as part of his ongoing plan to control inflation and cut the budget deficit. He insisted that this year’s 2.25% pay deals would be the start of a prolonged period of belt-tightening in the public sector.

It won’t be that easy. According to employment research organisation Incomes Data Services, pay rises this January — one of the busiest months for pay negotiations in the private sector — show a median growth of 4%. This is matched by similar increases in the retail price index, which will only fuel both public sector demands and resentment at being kept well below these figures.

Civil service insiders say the mood is ‘glum’ and has darkened considerably in recent months. There is great disappointment that the current prime minister has not honoured his promise to modernise pay rates in the civil service and keep salaries in line with the cost of living. According to one union official, this, combined with the threat of massive redundancies, has ‘really tried people’s patience’.

And there is only wary, weary realism about possible Life Under Gordon.

New health service pay claims will only add to the government’s headache. Unison will soon put in a significant pay claim for nurses and midwives while local government workers are claiming a rise of 5% or £1,000, whichever is the highest.

A series of small, localised strikes has already hit some local authorities and Mark Serwotka of the Public and Commercial Services union has said publicly that civil service strikes are ‘inevitable’ unless ministers and the Cabinet Office meet union concerns.

The PCS ballots its members about strike action towards the end of this month.

So Brown faces the old familiar Labour dilemma, squeezed between the competing demands of consumerist, mainstream Middle England, and the toiling producers; the men and women who actually work in the public services.

As one union official says: ‘If you start to limit pay increases, you risk undoing all the good work that’s already been done in the public services regarding conditions and pay levels so far. It makes the job less attractive, people leave, the service deteriorates.’

This Christmas’s bonanza for City traders ‘just highlights the sense of a them and us society. What really galvanises our members is a sense of fairness.’

The EoC report won’t give women workers much comfort either.

Neither Conservative leader David Cameron nor industry leaders, who have had huge pay increases over the past decade, are in a strong position to lecture others on the need for self-restraint over pay.

On the other hand, Brown knows that he has to be seen to be keeping the unions under control. One hint of trouble and Cameron will pounce on him at the dispatch box, gleefully suggesting that the dour Scot brings with him a return to the bad old days of the 1970s.

By the summer, the chancellor might well be in need of some celebrity refuge himself. Perhaps his new musical mates, the Arctic Monkeys, might offer him a place to stay, where he can listen to Whatever People Say I Am, That’s What I’m Not to his heart’s content.

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