Barry Pirie asks if the public sector pay freeze risks leaving top talent out in the cold?
With a cast-iron guarantee of generating heated debate among politicians and the media at a local and national level, public sector pay levels have, in recent years, become one of the contentious issues that local government has had to deal with.
It is an issue which started to gather momentum in the wake of the 2008 financial crisis, where as private sector employment and pay levels suffered, public sector workers were singled out as a group which was overpaid and benefiting unfairly as the nation tried to balance the books.
The result is that as we head towards the end of 2015 we can not only look back on an unprecedented period of public sector pay restraint across all levels of local government but, as a result of the measures in the July budget that will keep future pay rises capped at 1%, we can look forward to four more years of the same.
By 2019, council workers will have had a pay cap which will have lasted nine years.
If the trends highlighted in last year’s communities and local government select committee report on chief officers’ remuneration continue, pay at the top of our organisations is likely to be lower in real terms at the end of the decade than it was at the beginning.
As colleagues in councils go about putting together new three-year budgets to take us through to 2019, it is going to become increasingly important for councils to consider what the right level for public sector pay is.
The case in favour of suppressing pay levels comes from a number of areas.
The most pressing of these is the continuing need to find savings to make up for the reduction in central government funding – quite simply, the salary bill does not fit the funds available in the future.
You can also argue that as our organisations shrink, increased competition for a smaller number of public sector jobs might make people less sensitive to pay levels.
This is something which might also allow councils to keep wages low.
Lastly, the enduring perception that council workers still benefit from remuneration, which is unfairly high compared to the private sector, makes pay restraint highly attractive from a political perspective.
There are also arguments that holding current pay levels may not work in the best interests of councils and citizens in some areas.
As councils move into the new budget cycle we face the challenge of delivering once-in-a-generation changes to the way we provide services.
The success of this will require us to keep our best people as well as attract people with new skills which we don’t have in our organisations at present.
This comes at a time when competition from the private sector for the best people is increasing and in the face of sustained wage recovery there which gives it more financial muscle when it comes to pay levels – factors which are already taking the talent we need out of our sector.
At the same time, the exit payment cap planned to come into force for April 2016 is likely to lead to a further loss of talent.
Add to this the fact that, the public sector has – as the Institute for Fiscal Studies’ Paul Johnson noted recently in The Times – a structural problem in attracting the best talent, particularly at higher levels, and we complete a picture of a sector which faces an imperative to deliver deep change but a real risk that we do not have people of sufficiency calibre to carry that change out.
In opening up discussions about pay in their organisation any senior public sector executive would be foolish to ignore the sensitivities attached to the issue and the risks of making the case which in any way goes against the grain of the current debate.
Equally, as the people responsible for the future quality public services which have a direct impact on the wellbeing or otherwise of the citizens we serve, we should not be afraid of identifying areas where a lack of sufficient talent and skills will pose a risk.
The link between pay and talent is a delicate one for organisations to balance with, but one which cannot be ignored.
As councils go about reshaping themselves in the coming years, it is right that the role of senior local government officers is part of the debate.
It is time however for the focus to move on the future substance of their roles and what they achieve, rather than how much they are paid in comparison to the prime minister – for that debate to be a valuable one.
Barry Pirie is associate director, people and business at Wiltshire Council, and president of the Public Sector People Managers’ Association
