03 December 2004
Finance managers are unimpressed with the salary increases and benefits on offer in the public sector
When staff return to work after the Christmas break, the annual round of pay negotiations for many public sector workers will begin in earnest.
Chancellor Gordon Brown has repeatedly demanded public sector wage restraint, a point he reinforced in July's Spending Review, with its emphasis on belt tightening all round.
At the same time, unions continue to raise concerns about differences in pay and conditions between public and private sector employees, and the impact this has on the recruitment and retention of crucial staff in public services.
This month's Public Inquiry, conducted in association with Reed Accountancy Public Sector, reveals that finance managers share this worry. Just 18% agree that perks in the public sector are better than those enjoyed by their private sector counterparts. By contrast, 67% disagree.
Miles Roberts, finance director at regeneration agency Groundwork West Durham, sums up the thoughts of many. 'In my experience, salary and benefit levels in the public sector are far lower than the comparative roles in the private sector. I would estimate a differential of 20% to 25%,' he says.
There is some variation between different parts of the public sector: just 10% of local government respondents agree with the statement, while 83% disagree. In central government, however, 28% agree and 58% reject the notion.
Research on pay rises across the economy has shown that, in August, average private sector pay rises outstripped those in the public sector for the first time since April 2001. Whereas average rises for firms went from 2.9% to 3.1% between August 2003 and 2004, public sector deals fell back from 3.3% to 2.8%.
Our respondents give short shrift to the suggestion that pay in the public sector is rising too quickly: just 18% support this proposition while 64% reject it.
As one anonymous respondent from the health service puts it: 'We are consistently losing staff to both private and other public sector employers and cannot recruit on the salaries we are offering.'
Among local government finance managers the figures are even more stark: 9% agree and 71% disagree.
One solution put forward, anonymously, would certainly provoke a row between unions and employers if adopted. 'Salaries should be competitive and relate to the local market.' Trade unions would fight tooth and nail any attempt to end national pay bargaining.
But some respondents advocate a more imaginative approach. When asked if above-inflation pay rises are the only way to fill 'recruitment black holes', 45% say no.
Andrew Gardner, group chief accountant for the Chartered Institute of Environmental Health, is typical. 'The benefits and flexibility within the public sector should be an attraction on their own, without pay increases,' he says.
On the issue of pensions, meanwhile, it would seem that the recent high-profile warnings of a looming crisis have hit home. The generous pension schemes offered by public sector employers are one of the attractions, but these look less secure as affordability increasingly becomes an issue.
Our respondents are evenly split on whether public sector pensions will in future have to be less generous to be affordable. Forty-two per cent accept that this is the case, while 41% reject it.
One respondent, however, believes that staffing difficulties go deeper than pay and perks. 'The recruitment crisis in the public sector is all about its image. It's not perceived as exciting, and it can be.'
Tackling that image problem may prove to be just as important as an appealing pay packet.
PFdec2004
