By Vivienne Russell
9 October 2009
A one-year public sector pay freeze, as proposed by shadow chancellor George Osborne this week, risks widening the gap between public and private sector salaries, an employment expert has warned.
Osborne made the announcement in his keynote address to the Conservative Party conference on October 6. He said that the pay freeze, to be implemented in 2011 for all non-military public servants earning more than £18,000, would be ‘equivalent to saving 100,000 public sector jobs’.
But Duncan Brown, director of reward services at the Institute for Employment Studies, said that both inflation and private sector pay rates were likely to pick up next year, which would change the context in which the freeze would take effect.
While numerous private sector employers have chosen to freeze pay levels this year, negative inflation has meant this action has still translated into real earnings growth, he said.
‘Public sector remuneration committees have been trying, quite responsibly, to close the gap with the private sector at senior level,’ he told Public Finance.
‘The risk is that gap starts to widen again. It’s going to be a challenging time in the public sector next year and I would have thought you want all the management talent you can get to address that issue of continuing service levels while you cut costs.’
A flat, zero pay increase was a ‘fairly blunt’ way of trying to cut public spending, he added.
‘The reality in the private sector is a lot more complex,’ he said. Of the 40% of private sector organisations who chose to freeze pay this year, most would have given some form of pay increase or bonus to particularly talented or marketable individuals.
‘Whether that flexibility is there in the public sector or not is open to question.’
Trade union leaders reacted with hostility to the news of the freeze. Trades Union Congress general secretary Brendan Barber said: ‘The recession was caused by the collapse of a speculative bubble driven by bankers and the finance sector. It cannot be right to single out public sector workers to pay the price of putting it right.’
Dave Prentis, general secretary of the public sector union Unison, said: ‘Millions of public sector workers will be left out in the cold by this pay freeze’.
9 October 2009
A one-year public sector pay freeze, as proposed by shadow chancellor George Osborne this week, risks widening the gap between public and private sector salaries, an employment expert has warned.
Osborne made the announcement in his keynote address to the Conservative Party conference on October 6. He said that the pay freeze, to be implemented in 2011 for all non-military public servants earning more than £18,000, would be ‘equivalent to saving 100,000 public sector jobs’.
But Duncan Brown, director of reward services at the Institute for Employment Studies, said that both inflation and private sector pay rates were likely to pick up next year, which would change the context in which the freeze would take effect.
While numerous private sector employers have chosen to freeze pay levels this year, negative inflation has meant this action has still translated into real earnings growth, he said.
‘Public sector remuneration committees have been trying, quite responsibly, to close the gap with the private sector at senior level,’ he told Public Finance.
‘The risk is that gap starts to widen again. It’s going to be a challenging time in the public sector next year and I would have thought you want all the management talent you can get to address that issue of continuing service levels while you cut costs.’
A flat, zero pay increase was a ‘fairly blunt’ way of trying to cut public spending, he added.
‘The reality in the private sector is a lot more complex,’ he said. Of the 40% of private sector organisations who chose to freeze pay this year, most would have given some form of pay increase or bonus to particularly talented or marketable individuals.
‘Whether that flexibility is there in the public sector or not is open to question.’
Trade union leaders reacted with hostility to the news of the freeze. Trades Union Congress general secretary Brendan Barber said: ‘The recession was caused by the collapse of a speculative bubble driven by bankers and the finance sector. It cannot be right to single out public sector workers to pay the price of putting it right.’
Dave Prentis, general secretary of the public sector union Unison, said: ‘Millions of public sector workers will be left out in the cold by this pay freeze’.
