Planned payrises for public sector staff continue to lag behind those in the private sector, new research shows – but public sector employers report a greater willingness to take on new staff than they did last year.
The Treasury froze public sector pay in 2010, with a 1% pay rise cap coming into force in 2011, and set to remain in place until at least 2019-20.
The latest Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD) finds that public sector employers now expect to award a mean basic pay increase of 0.8% in the next 12 months, down from 1% three months ago. Pay expectations in the private sector have also seen a marked dip since the CIPD's last survey, with the organisation saying "wage growth may be weakening" across the board.
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“With inflation expected to remain low during 2016 and labour supply remaining strong, we shouldn’t be surprised to see pay expectations staying low,” said CIPD analyst Gerwyn Davies.
However, while mean basic pay expectations in the private sector have fallen to 2.4% from the 2.9% recorded in the previous study, they remain well above expectations in the public sector.
A quarter of the public sector employers surveyed by the CIPD said they had implemented a pay freeze as a result of pay reviews carried out in 2015, while 68% said they had increased pay. Seven percent of those asked did not know.
In the private sector, one-fifth (20%) of employers said they had frozen pay; 68% said they had increased it; and 10% said they did not know.
The net employment balance – measuring the difference between the proportion of employers who expect to increase staffing levels and those who expect to cut them – also continued to weigh in favour of redundancies in the public sector, at -7%. That figure was, the CIPD said, "broadly consistent" with previous reports.
In the private sector, the net employment balance stood at +30%, although that was down sharply from +41% in the previous quarter.
Meanwhile, the proportion of public sector employers who said they planned to take on staff in Q1 of 2016 increased to 80%, up from 75% in the last quarter. That was ahead of the private sector, where 65% of employers said they were planning to hire staff, although the CIPD notes: "The differences between sectors are partly the result of differences in the size of distribution of organisations: the public sector contains few micro and small employers which, at any point in time, are less likely to be recruiting than organisations with hundreds or thousands of employees."