In 2001, for the third year running, the UK government accepted in full the pay awards recommended by the independent pay review bodies for more than 1 million public sector workers. The government hopes that the pay increases, which take effect from April 2001, will help with severe recruitment and retention problems, but this is challenged by the public sector trade unions.
The Labour Party government has accepted in full the pay awards recommended by the independent pay review bodies (UK9702104F) for more than 1 million public sector workers. From 1 April 2001, basic salaries for nurses, teachers, judges and senior members of the armed forces will increase by 3.7 %. Doctors and dentists gained an increase of 3.9%. Senior civil servants' pay will increase by 3% - however, due to the use of performance-related pay in the civil service this could increase to 11% for exceptional performers. Members of Parliament, including government ministers, have their pay awards linked to increases for senior civil servants and will gain a 3% increase. These "headline" figures, however, provide only a partial picture of pay awards. Continuing the pattern of recent settlements, higher settlements have been targeted at particular groups including newly qualified teachers and senior nurses. In addition, government ministers have made a series of announcements in recent months promising additional financial incentives for entrants to teaching and nursing as part of concerted efforts to tackle severe recruitment and retention problems in the public sector.
Background
The government's decision to implement the pay review bodies recommendations in full for a third year in succession (UK0003163F and UK9903188F) is unprecedented. In more than 20 years, there has not been a continuous three-year period when all the review bodies' recommendations have been accepted without their awards being staged or reduced to lessen the effect on the public sector paybill. These awards have to be seen in a context of continuing concerns about recruitment and retention. The tight labour market context has made many public sector jobs hard to fill, especially in London and other areas of southern England. Unease about pay levels have been reinforced by concerns about staff shortages and rising workloads.
The 2001 pay awards seem likely to be the last pay increases before the government seeks a second electoral mandate. The modernisation of the public services has been at the centre of the government's political programme, but it has found that public sector reform has been a more complex enterprise than it anticipated. Staff shortages, inflexible pay and grading structures (that have not been "equal value proofed"), patchy systems of performance management, and a general neglect of human resource management issues have all been cited as obstacles to improved public services. These problems have prompted major reforms of pay determination arrangements.
Recurring themes of the government's planned reforms include an emphasis on moving away from automatic annual increments to competency-based progression and a stronger focus on systems of performance management. The government has committed itself to performance-based pay incentives, although, with the important exception of school teachers (UK0011100F), these incentives are more likely to be on a team basis rather than geared to individual performance.
Progress with reform has been mixed. Local government, which has been an important influence on negotiations in the National Health Service (NHS), reached a single-status agreement in 1997 (UK9703119N) which placed manual and white-collar staff on a single national pay spine. Local authorities have then had to fit their staff onto a locally agreed grading structure, following a job evaluation exercise, which has often proved complex and time-consuming. The NHS is seeking to emulate this model of a national framework with local flexibility over grading and some terms and conditions. The greater complexity of the NHS workforce will require the establishment of three new national pay "spines", one for doctors, one for nurses and professions allied to medicine, and one for all other staff. The NHS is developing its own job evaluation scheme that will shortly be piloted in a number of NHS trusts. The timetable for implementation has been put back from the original date of April 2001.
The civil service has a system of delegated pay bargaining with individual agencies and departments responsible for pay determination arrangements, subject to Treasury approval. A largely discredited system of individual performance-related pay alongside problems of slow pay progression for individuals within lengthy pay bands, have emerged as key issues. Both these problems were highlighted in a report, entitled Incentives for change, undertaken by a senior industrialist, John Makinson, for the government. He proposed in early 2000 that rapid progression to more competitive salaries should be available and recommended the introduction of team bonuses linked to agency targets. These proposals are currently being considered.
Review body recommendations
As in recent years, most attention in 2001 has focused on the pay awards for nurses and teachers (UK0003163F). With the rate of inflation currently at 3.2%, most groups have received above-inflation awards, but this has done little to satisfy the main trade unions.
The review body for nurses, midwives and health visitors recommended a general pay rise of 3.7%. Approximately 70,000 senior nurses will gain a pay increase ranging from 5.2% to 5.7% because nurses that have been at the top of the scale for 12 months or more will be granted an extra increment. In addition, in November 2000, the Prime Minister announced cost of living supplements for qualified nurses and para-medics employed in London and the south east. These are worth between GBP 600 and GBP 1,000 in London and up to GBP 600 in other high-cost areas. These awards will give a newly qualified nurse a basic annual salary of GBP 15,445, whilst senior ward managers will receive between GBP 21,605 and GBP 26,290. Doctors and dentists received a slightly higher award of 3.9% which takes general practitioners' average target pay to GBP 54,220, and hospital consultants will start on GBP 50,810 rising to GBP 66,120 before additional substantial discretionary payments are included.
School teachers in England and Wales received the same basic increase as nurses but there were higher awards for newly-qualified teachers taking their minimum starting salary to GBP 17,000 a year. London area allowances have been increased by 30%, raising the inner London allowance to GBP 3,000 and the outer London allowance to GBP 1,974. Separate government announcements have included the establishment of a training salary for trainee teachers and an additional "golden hello" paid to those who go on to teach maths, sciences, languages and English. Together these incentives amount to GBP 10,000 per teacher. Plans have also been unveiled to assist trainee teachers to pay off their student loans over a 10-year period.
Social partner reactions
The pay review body announcements disappointed the health and education trade unions, which continue to highlight staff shortages and rising workloads. Unison, which represents many non-registered nursing staff, expressed concern that low-paid staff were again being overlooked. Nurses' leaders suggested that the pay increase would not "bring fast progress in encouraging nurses back to the health service". These sentiments were echoed by the British Medical Association, which commented that the pay increases "will do little to motivate front-line staff and even less to tackle the major shortfall of doctors in the UK". The nursing organisations also criticised the idea of cost of living supplements as "divisive". Health service employers viewed the pay increases as on the margins of affordability.
With the relationship between the teachers' unions and the government already soured by the controversy over performance-related pay, the teachers' unions reacted angrily to what they view as an inferior pay and conditions package in comparison to that offered to Scottish teachers. Resentment has crystallised around working hours, where Scottish teachers have been granted the protection of a 35-hour weekly limit. The School Teachers' Review Body's recognition that workload pressures were a major concern and its proposal that the relevant ministry should tackle the problem as a matter of urgency has cut little ice with the teachers' unions.
Commentary
The 2001 pay round highlights several issues. First, the review bodies and the government have continued their targeted approach to public sector pay increases, with larger increases for new starters in teaching and senior nurses, both groups that are vital to achieving government reforms. The Labour government is also returning to policies last seen in the economic boom of the late 1980s when there was strong policy interest in developing regional differences in pay awards. Following the decision to raise the London allowance for Metropolitan Police officers to GBP 6,000 per annum, a very high allowance in comparison with other public sector groups, the School Teachers' Review Body raised the inner London allowance substantially to GBP 3,000.
Second, the public sector continues to struggle to recruit and retain the workforce to deliver on the government's ambitious plans to modernise public services. Although there are signs that boosting pay is encouraging more applicants to enter teaching and nursing, it will take several years before these trainees enter the workforce. The nurses' review body remained cautious about nursing shortages suggesting that "it would not yet be wise to claim that the NHS has turned the corner". The NHS Plan published in summer 2000 pledged to employ an extra 20,000 nurses, 7,500 hospital doctors and 2,000 more general practitioners by the middle of the decade. These increases may only be feasible if substantial numbers of public sector workers are recruited from abroad, an approach that is being actively pursued by government and employers for teachers, nurses, doctors and social workers.
The lukewarm reception of public sector workers to recent pay awards indicates that there is still a long way to go to convince the workforce that the government's commitment to improved public services is being translated into improved pay and working conditions. This has been brought home to the government in spring 2001 as school teachers commence industrial action in London and other major cities about continuing staff shortages (Stephen Bach, King's College, London)