Ministers lack a vision for reforming public-sector pay and pensions in a way that could offset major recruitment and retention problems faced by the civil service and other employers, the general secretary of the FDA union has said.
Dave Penman made his comments at a Labour Party conference fringe event earlier this week that was hosted by think tank the Institute for Government.
Penman, whose union represents senior leaders in the civil service and other parts of the public sector, said FDA members had expressed mixed views on the potential for flexibilities to enable pension contributions to be traded for better pay.
However, he told the event in Liverpool that exploring changes to make the combined pay-and-pensions offer work better for officials had the potential to reduce the civil service’s churn problems and improve public services.
Penman said it would be crucial for ministers to be able to convince public-sector workers that their motivation was not to reduce the overall package being offered to individuals – but stressed they would also need to have a strategy for reform.
“We are talking about this, but no-one in government is really talking about it,” he said. "We haven’t got a strategy from government thinking about either what are those big pay-and-reward issues, including pensions, across the public sector, and what are we going to do about it?”
Penman said he would have expected a new government to take office and produce a strategy outlining the extent to which pay and reward is fundamental to improving public services.
“If you’re going to do something about this, you need to get on with it,” he said. “And these things take time. I think that’s the biggest challenge we’ve got.”
Penman told the session that current pay levels are a block to keeping staff in post and that reforms that could give officials the opportunity to choose between increased salary and reduced pension entitlements could help.
“It makes no sense for any bit of the public sector to have the sort of churn that we see,” he said.
“At the moment you spend tens of thousands of pounds training public servants who can’t afford to stay and [who] change mid-career. Or, if you want the sort of talent to deal with the big issues we’ve got in the civil service, you simply cannot recruit that kind of talent from anywhere else – not the private sector, even elsewhere in the public sector or a small charity.”
Penman told the session that people could build up quite a big pensions over a 30-40-year career in the public sector. He said that could be an “over-provision” for some.
He said a more flexible pay-and-reward offer could give people the option of choosing to have a slightly smaller pension in return for additional pay at a time in their life when cash was much more important to them.
“A number of people would look at that conceptually and say – actually – if I had those choices, I would exercise those choices,” he said.
IfG chief economist Gemma Tetlow noted that because many public-sector pension schemes are “unfunded”, allowing workers such as civil servants to sacrifice future pension entitlements for current pay would drive up public spending.
She said that additional borrowing or service cuts would be required to fund boosted pay, whereas future pension entitlements did not pose such near-term problems.
Penman said HM Treasury had blocked public-sector unions’ calls for greater pension scheme flexibility in negotiations that took place in 2011.