Public sector pay is back in play

Public sector pay is at least back on the political agenda. Now we need to turn the rhetoric into action.

The decision of Jeremy Corbyn to put ending the public sector pay cap as a key element of Labour’s UK general election manifesto was a crucial factor in getting this issue back on the agenda. The conventional political wisdom would say focus on services, but he boldly ignored that. Even more boldly, he decided to put the issue centre stage in the Queen’s Speech debate.

We now have a number of Tory MPs and even cabinet ministers like Fallon, Gove and Boris Johnson calling for a rethink on the Tory pledge to maintain the cap until 2020. However, we need to contrast that with the cheers from many Tory MPs when the Queen’s Speech vote was declared. This was emblematic of politicians who have lost their grip on reality, particularly when a ‘magic money tree’ was discovered to bribe the DUP into the lobby.

The Scottish Government has also been having a rethink about its pay policy after SNP MPs supported the Labour amendment to scrap the UK version. Finance Secretary, Derek Mackay said: “The Scottish government will take into account inflation in the future pay policy."

Pay policy is largely devolved and the Scottish Government’s pay policy already has some important differences to its UK counterpart, most notably in its support for the Scottish Living Wage. However, for the vast majority of public sector workers in Scotland the 1% cap is the same as the Tory UK policy.

On average, public sector pay has been cut by around 14% in real terms since 2009. In recent years it is also falling behind the private sector. This matters at a time when the public sector is competing for staff in a tightening labour market. As our research on the ageing workforce shows, young people are not attracted to tough public sector jobs in care and elsewhere when they can get a less challenging job in the private sector on higher wages. Brexit will compound these problems. There are also jobs that have private sector counterparts those experienced and well trained staff can be poached, as our building control survey highlighted last week.

We shouldn’t also forget the economic case for better pay. Economic growth is declining not least because disposable incomes are falling and household debt is rising. The Resolution Foundation’s work on wages highlights this as a broader problem across all sectors, but the challenge is most acute in the public sector.

The recent parliamentary votes are in effect political skirmishing. The real test will be the UK autumn budget and the Scottish Government’s spending plans for 2018/19. If there is a change from the current revenue (not just capital) spending plans, then we will need to make the case for increasing pay as against other spending demands. There is little point in building roads if the workers are not there to maintain them, or hospital beds without the health care team to ensure they are used.

In Scotland, there has been some recognition of this. To address the large number of elderly patients in hospitals who don’t need to be there, ministers could have simply allocated resources to additional social care packages. However, they accepted the argument put by UNISON and the employers, that given the high level of vacancies and spiralling turnover rates, this wouldn’t work. We have to recruit and retain staff in the sector and therefore a proportion of new resources were allocated to paying the Scottish Living Wage. It is not a complete solution, buts it’s an important step in the right direction.

So, it is important to keep up the pressure on public sector pay, but also to prepare for the next budget round with the service delivery case for putting resources into pay and conditions. That will be the acid test for converting political rhetoric into action.