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The landscape for public sector pay in 2018

by Alan Hurst.

Has anything really changed?

Seven years’ pay restraint, plus prices rising, suggests something of a pressure cooker ready to blow. Yet, other than some fuss in the late summer about Prison Officers and others being offered some relief, silence as we head into the 2018 round.

Our article in the autumn talked of a ticking time bomb, with no sign of a coherent, post-restraint public sector pay strategy and the risk of an unjustified and unmanaged pay explosion.

Our expectation at the time was that there would be some clarity coming from the November 2017 Budget – and there was. A low key, unexpected, blanket lifting of the 1% pay cap.

What’s really going on?

Astonishingly, the blanket lifting of the pay cap gained little publicity – indeed some of our clients in the sector did not get notice of it. Others didn’t believe it would make any difference given the lack of additional funding and ongoing controls over pay settlements.  So, the issue is still in the long grass.

What’s really going on here?  Yes, there is political noise and a lot of public sympathy for key groups, such as Nurses, yet the real issue is a supply problem, with EU workers leaving the UK after Brexit.  Pay over the period since 2010 across the public sector has broadly kept pace with price and wage inflation in the economy as a whole. And, outside of the political and media circus, how much appetite is there for a debate over public sector pay?

On a broader canvas, the anti-austerity mood is likely to loom large but there is still no magic money tree to fund public sector spending increases. So, public sector pay restraint is in all probability here to stay, and the absence of private sector pay and benefits racing ahead will dampen the case for change.

On the other side of the argument, the supply-side issues will not go away. A rising, aging population and ever increasing expectations for public sector service delivery will place continuing pressure for pay improvements. The review bodies, with the 1% cap lifted, will inevitably raise expectations big time!!

The unknown in all of this is the extent to which investments in technology and other reforms will be enough to crack the supply side challenge. Our ailing Health service – the biggest employer of public sector workers – needs this oh so much. It may happen, but in time?

So what for 2018?

Public sector pay is a big issue – as is the wider wellbeing of our public services. The Budget announcement pushed the problem into the long grass until the spring.  The government’s focus on Brexit and survival will inevitably mean, as before, there will be no time for a post- restraint pay strategy.

This will result in the political and media circus having a field day – sense and good order lost.

The really sad and worrying issue in our view is that those with the real insights to what is going on and what the sensible way ahead would be are the direct employers of the various public sector groups  We need to hear their voice – and we will be out there ready to help them through in 2018!