WHAT A WAY TO MAKE A LIVING

On the same day as the Budget capped public sector pay for the fifth consecutive year, 95,000 public sector workers (members of PCS) staged a walk out over pay and conditions.

The Cabinet Office described the PCS’s move as futile: “The government took the tough decision to freeze public sector pay for two years, while protecting those earning under £21,000 by increasing their pay by at least £250 per year. Pay restraint has helped to protect jobs in the public sector and support high quality public services.”

Public sector workers will now be subject to a 1% limit on pay rises until 2016. Local government budgets will be adjusted accordingly. Five years of consecutive below inflation pay rises have meant and will continue to mean real-term cuts in spending power for many.

Meanwhile, proposals to end local government’s three year pay freeze have been met with dissatisfaction from both unions and employers. Under the plan unveiled last week by employers’ negotiators, staff will receive a 1% pay rise in exchange for alterations to terms and conditions. A fallback option of a smaller pay rise was also tabled if unions rejected the changes to conditions. Unison objects to both offers and has urged members to reject the proposals.

When pay restraint is presented as a trade off for preservation of jobs and services, it is difficult to resist. However, considered in the context of the depth and breadth of other cuts being made across the sector, there are weaknesses in this approach.  I do believe preserving jobs is preferable to cutting them (both for services and the economy), however, pay restraint is not a sustainable route to the preservation of quality services.

Pay cuts and freezes are typically a short term measure, but in the UK public sector they have now become a long term one. Five consecutive years of pay falling in real terms has done comparatively little to reduce the public sector pay budget, even without considering the collateral effects that reduced spending power has on local economies.

At the same time, cuts are being heaped on the sector from every direction imaginable. Politicians of every stripe acknowledge that the scale of cuts is such that tinkering, ‘salami slicing’, or efficiencies alone cannot achieve the necessary change.  But pay restraint does absolutely nothing to aid the transformational change that must take place. It only serves to further de-motivate the staff responsible for bringing these changes about.

Continued pay restraint also has a negative impact on the sector’s ability to attract the brightest and best. Why would talented young people starting out in their careers look to local government as an option knowing that they are likely to be earning less (in real terms) in three years time than they are now? Around 15 per cent of employees in the private sector are aged 16 to 24 compared with around 5 per cent of employees in the public sector and recent decisions will do nothing to ease this differential.

The report on public expenditure on health and social care published on Tuesday by the House of Commons Health Committee says that it is ‘neither prudent nor just to plan for sustainable efficiency on the basis that NHS pay will continue to fall relative to pay elsewhere in the economy.’ The same principles should apply to local government and other parts of the public sector. What should have been a short term measure is getting close to spanning a generation, while serving no greater purpose in making the necessary changes in the way the public sector works.

AK

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