For the second year running, the UK'S Labour government has accepted in full the recommendations of the pay review bodies for above-inflation pay awards for public sector workers from April 2000. These awards have loosened the government's grip on public sector pay, but its plans for new pay systems for teachers and health workers remain controversial.
The Labour government has announced details of the pay awards from 1 April 2000 for public sector workers covered by pay review bodies. The pay review bodies, which recommend pay awards for 1.3 million public sector workers - including teachers, nurses, doctors, judges, the armed forces and senior civil servants - recommended above-inflation pay increases for the second year running (UK9903188F). Most groups have been awarded pay scale rises of 3.3%-3.4%. With many commentators anticipating a general election in 2001 and the Labour government under criticism for its stewardship of the public services, these awards come at a sensitive time.
Recommendations
Each year the pay review bodies, whose members are appointed by government, take evidence from trade unions, employers and the government, commission evidence on pay movements and other relevant issues (eg recruitment and retention), undertake workplace visits and make recommendations which the government is free to accept or reject (UK9702104F). The review bodies provide a balanced analysis of the evidence they receive in an arena characterised by claim and counter-claim. The decisions of the review bodies affect not only those staff directly covered by their remit but also have a significant influence on collective bargaining outcomes for 4 million other public service employees.
As in previous years, most attention has focused on the position of nursing and teaching staff. The review body covering nurses, midwives and health visitors recommended a general pay rise of 3.4%, with 7.8% for 60,000 experienced nursing staff stuck at the top of the grade, taking their annual salaries from GBP 17,830 to GBP 19,220. In 1999, larger awards were targeted at boosting starting salaries for nurses. In contrast, the 2000 award aims to improve retention of experienced staff. The pay rise for hospital consultants and family doctors is fractionally lower at 3.3%. However, many hospital consultants and family doctors are set to benefit from additional pay increases, agreed in 1999, to compensate them for a growing workload.
Qualified teachers, heads and deputies received a basic 3.3% award, but this could increase to more than 11% for teachers who have completed about seven years in the profession and who pass a performance review to move on to a higher salary scale from September 2000. They would receive an immediate GBP 2,000 annual salary increase with opportunities to earn additional performance-based increments, taking the classroom maximum to GBP 30,000. The review body reported continuing teacher shortages in certain subjects and in particular areas of the country, especially inner London, but overall vacancy rates remain fairly low. It did acknowledge, however, that "good quality graduates are not entering teaching in sufficient numbers" and expressed concern about problems of teacher motivation and morale.
Military salaries are to be increased by 3.3% from 1 April 2000, except in the case of the Chief of Defence Staff whose salary will be raised by 4.8% to maintain the linkage with his counterparts in the judiciary and civil service. Similar rises were recommended by the Senior Salaries Review Body that makes recommendations for a range of senior public servants, including the judiciary, top civil servants and members of parliament. A key exception were the 3,000 most senior civil servants, who were granted awards of up to 11% to close the gap with private sector senior salaries. Because civil servants are subject to a form of individual performance-related pay, the average awards will not be known until after performance assessments have been completed.
Social partners' reactions
In general, the health service trade unions welcomed a second year of non-staged, above-inflation pay awards. UNISON, however, which represents many lower-paid nurses and ancillary staff such as porters and cleaners who are not covered by the pay review bodies, expressed concern that the awards would do little for the lowest paid. This criticism was echoed by other unions representing non pay review body groups.
More vocal concern was expressed by health service employers about the affordability of the settlements. Although, in real terms, the National Health Service (NHS) has been granted a 4.3% increase in budgets for 2000-1, sufficient to accommodate the pay awards, this budgetary increase is being whittled away by the impact of additional employer pension contributions, the costs of implementing the EU working time Directive (UK0001150F) and continuing central government pressure to generate annual efficiency savings. The impact in terms of both increased productivity and workload was noted by the Nurses' Pay Review Body, which warned that "there is bound to be an adverse effect on staff motivation and morale if they do not feel that improved productivity is fairly reflected in their pay".
Similar points about affordability were made by the local education authorities which have overall responsibility for funding and managing the schools in their area, but are disputed by the government. The teachers' unions expressed reservations about the pay awards, concerned that starting salaries for graduate teachers pitched at GBP 16,050 are uncompetitive and that recruitment and retention problems remain severe.
Commentary
The past year has seen some relaxation of the tight controls on public sector pay rises that arose from the Labour government's commitment to maintain the previous Conservative government's public expenditure plans for its first two years in office. Public sector pay increases had to be funded from within existing budgets through efficiencies or other savings. These measures were designed to reassure the business community and dampen down expectations of inflationary public sector pay rises. 1999, however, saw substantial above-inflation pay rises for many groups of public service workers (UK9903188F), not least to deal with shortages of nurses and teachers. The Labour government has now set its sights on bringing about major changes in public sector pay arrangements as part of its plans to modernise government and encourage a climate of "partnership". The main themes running through these changes are the streamlining of pay structures, the linking of pay to individual performance or competencies, and reinforcing the devolution of managerial responsibilities by allowing greater local flexibility over some terms and conditions.
The key proposals in the NHS are the establishment of three new national pay "spines" to cover all staff - one for doctors, one for nurses and professions allied to medicine, and one for other staff. This is intended to ensure equal pay for equal value and allow more flexible job roles. Pay progression will no longer be based on automatic service-based increments and instead based on "contribution". The government wants the new system to be agreed and implemented from spring 2001 but many issues remain to be resolved - the proposal for a performance-related element, for example, which may be based on team rather than individual performance.
A new pay system for schools is due to come into effect in September 2000 (UK9812169N) and teachers' fears about performance-related pay (UK9904199N) have been partially calmed by assurances that there will be no crude link to pupil results and that sufficient resources will be made available to fund performance pay, enabling substantial pay rises for many teachers. Head teachers, however, remain uneasy about the burden of assessment - despite the inclusion of outside assessors - and the funding of the scheme. It remains to be seen whether these reforms will solve the recruitment and morale problems in these services, which stem as much from increased workloads and pressure to fulfil government targets as from dissatisfaction with pay levels. (Stephen Bach, IRRU)