By Richard Johnstone | 22 August 2011
The public sector has not yet taken action to reduce its total pay bill, which may put more jobs at risk, a new survey has found.
A survey by management consultants the Hay Group found that although some organisations had made small efficiencies in their wage bill, none of the 85 interviewed plan to implement an imposed salary cut and almost 80% have no plans to freeze automatic annual pay increments.
The consultants warned that that the public sector must take more effective measures to reduce total wages and benefits cost, or face having to make greater cuts to headcount than planned. The number of public sector jobs at risk is expected to reach 330,000 as the government cuts between 14% and 25% of public sector budgets.
The Public Sector Employment Conditions report surveyed pay and reward professionals from public sector organisations including central government, local councils, universities, police, health, and the third sector.
The survey also found that only 1% of public sector employers will introduce forced unpaid leave, and just 2% intend to implement shorter working hours.
Mark Thompson, a reward consultant at Hay Group, said it was ‘worrying and surprising’ that more organisations are not looking at the full range of alternatives to cut costs.
He said: ‘Public sector leaders should take the opportunity afforded by budget cuts to make changes. They should consider some of the strategies successfully adopted by the private sector, including pay freezes or reduced working weeks. Better still, they should combine such short-term measures with a longer-term view and make the pay system more flexible and performance related. At the moment, we are seeing neither.
‘However, in making cost savings, organisations must strike a difficult balance – between introducing strong efficiency measures, maintaining the morale of the retained workforce and ensuring the future competitiveness of the sector.’
The survey found that public sector organisations have been quicker to halt performance‑related payments, with over a quarter (26%) considering or implementing freezes on performance‑dependent rewards.
Thompson said this should be reversed, as ‘pay for results should be encouraged’.
‘Financial recognition for specific achievements fulfills a dual purpose. It can drive results in the organisation’s focus areas – for example cost saving –whilst also helping to galvanise a workforce that is feeling stretched and insecure, delivering a far greater return than automatic marginal rises in base salary.’
