Two year Scottish Government pay policy announced

The Scottish Government 2014-15 Public Sector Pay Policy will be a two-year policy for pay settlements over the period 2014-15 to 2015-16. While it only covers a limited number of public service employers, it is persuasive in other sectors.

The key features of the policy in each year are:

• A 1% cap on the cost of the increase in basic pay for staff above £21,000.
• The pay freeze on salaries over £80,000 is lifted and the 1% cap will apply. 
• All staff earning less than £21,000 per annum should receive a minimum pay uplift of £300 in each year, excluding any increase that may be paid for progression. Pro-rata basis for part-time employees.
• The Scottish Living Wage will continue to be applied. Details of how it is to be calculated will be in a later technical guide.
• Nothing in this policy is intended to interfere with pay progression arrangements and the cost of these is outwith the 1% cap. The Scottish Government is therefore not following the Chancellor on this issue.
• No Compulsory Redundancy agreements remain for the duration of their pay settlement in return for continued and, where appropriate, additional workforce flexibilities or efficiencies.

While it is a two year policy, agreements can be for one year. They can also be front or backloaded as long as within the overall cap.

It is of course disappointing that the Scottish Government has yet again followed the UK Government pay policy for most staff. This means a further 2% cut in real pay with the consequential impact on local economies. It is real wage cuts that have slowed recovery from the recession and resulted in a unprecedented shift of income from average wage earners to profits and the super rich.

It does have to be recognised that with wages making up 55% of the Scottish budget, that itself is suffering a 9% real terms cut, John Swinney's room for manoeuvre is limited. Some improvement in the weighting at the bottom end of the pay scale is welcome as is the ongoing commitment to the Scottish Living Wage. The no compulsory redundancy policy, all be it with strings, is also welcome, as is the refusal to follow the Chancellors planned attack on contractual salary progression in England. 

However, not all of these apply automatically to the largest pay groups in local government and the NHS. Local government is suffering from another real term budget cut that will no doubt be used as an excuse, yet again, not to apply the underpinning to low paid council staff.