Civil servants hit hardest by 2% pay policy, says study

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Civil servants hit hardest by 2% pay policy, says study

The Government’s pay policy towards the public sector is inconsistent and biased against its own workers because of a built-in deduction to its 2% pay ceiling for civil servants.



That is the conclusion drawn by two civil service unions from a new study into Government Pay Policy and Progression Rises compiled by the independent pay research body Incomes Data Services. It was commissioned and published by Prospect (the union for professionals) and the FDA (the union for senior managers and professionals in public service).

The effect of the ‘progression clawback’ is that the UK’s 540,000 civil servants will this year be 0.6%-0.9% worse off than other public service workers, the two unions warn. The news will fuel discontent with Government pay policy ahead of the major debate on public sector pay at the TUC in Brighton.

The IDS study highlights the very different outcomes that pay reviews in health, education and the civil service have had on employees’ actual pay increases. It attributes this to the different ways in which annual progression increases (performance or service-related) are treated by the Treasury in different parts of the public sector.

In the NHS and education, progression increments are not included in the pay award. All staff receive the same basic award, and most are paid progression increases in addition to the basic award.

In the civil service, the cost of progression increases is included in the overall value of each award. This has meant that most of its staff receive lower basic awards than their public sector colleagues. Many civil servants who have reached the maximum for their grade have received no consolidated increase for several years.

IDS concludes that because civil service pay is being ‘squeezed’ in this way, “basic awards in the civil service are often lower than those in other key groups in the public sector, even though all are subject to the same Government policy on public sector pay”.

The effect of these differences in this year’s pay round is dramatic. In 2008, NHS and teachers’ pay will increase by headline amounts of 2.75% and 2.45% across the board, resulting in many increases of between 4% and 5% once progression payments have been taken into account; while many civil servants will receive cost of living increases of between 1% and 2% out of an overall pot of 3.75%.

Dai Hudd, Prospect Deputy General Secretary, said: “This report demonstrates starkly how civil servants have been made the poor relations of the public sector, which is itself discriminated against by Government pay policy. Apart from being unfair and unjust, these real pay cuts are having a very damaging effect on the morale of the Government’s most skilled and vital staff.”

Dave Penman, head of operations at the FDA, said: “This report finally lays to bed the myth that all public servants are treated equally by this government. The approach to pay in the civil service has left a workforce demoralised and facing significantly lower pay increases than the rest of the public sector. It’s time all public servants were treated fairly and equally.”

The IDS report notes that both the NHS pay review body and the Office of Manpower Economics have criticised Government policy for confusing two very different elements of the pay system. Incremental progression is “designed to reflect the extra knowledge and skills that staff gain with service,” the NHS pay review body said in 2007.

The argument that planned progression and other pay additions constitute ‘pay drift’ has also been rejected by OME. It says that such additions reflect deliberate employer pay strategies, such as systems to reward skill acquisition, moves to variable pay and targeted market premia, and policies to address equal pay concerns.

Other ways in which civil service pay has been held back include the modernisation agenda, which has reformed pay structures in the NHS and education but not in the civil service; and provision for multi-year deals to be revisited in the light of economic circumstances, which again has been denied to civil service bargaining units.

The IDS report will be delivered to the Chief Secretary to the Treasury this week and is available from Prospect (sherri.hoppen@prospect.org.uk) or the FDA (oliver@fda.org.uk).