Public-sector pay freeze ‘justified’, official impact assessment finds

Two months after Spending Review, 19-page report says 0% rise for most civil servants is fair in its equalities effects
Chancellor Rishi Sunak clutches a copy of November's Spending Review. Photo: Xinhua News Agency/PA Images

By Jim Dunton

29 Jan 2021

The government’s official equalities impact assessment on chancellor Rishi Sunak’s bombshell pay freeze for most public sector workers has insisted a new era of pay restraint will not have “unjustified” consequences for protected groups of the workforce.

Published two months after Sunak ruled out pay rises for civil servants earning more than £24,000 a year until at least 2022, the document says ministers consider the policy will not create new earnings differentials based on age, gender, disability, ethnicity, religion, sexual orientation or marital status.

The 19-page assessment acknowledges that the policy, which does not apply to the NHS or workers currently earning below the public-sector median of £24,000, is intended to restrict pay growth among “relatively higher-earning individuals”. But it says that earning above £24,000 a year is “not itself a protected characteristic” and that the Treasury believes this differential impact is "justified".

“Public sector pay should be set to meet the recruitment and retention needs of public sector workforces, whilst also reflecting the economic and fiscal context and developments in the wider labour market,” the document says.

“Covid-19 has had a significant impact on the economy and the public finances. In order to further protect jobs and ensure fairness, pay rises in the public sector will be restrained and targeted in 2021-22. 

“Pay bill represents 25% of total government expenditure: temporarily pausing headline pay awards for some workforces allows us to protect public sector jobs and investment in services as Covid-19 continues to impact the public finances.”

The report cited Office for National Statistics figures published last year that suggest public sector workers “currently benefit from a 7% total remuneration premium”. 

It said private-sector pay growth was negative in the six months to September 2019, down by nearly 1% on the same period of 2019. The report added that while private-sector employment had fallen by 500,000 since March 2020, public-sector headcount had grown.

“The policy is intended to broadly maintain the differential between public and private-sector earnings growth,” the report said.

The Prospect trade union argued last year that comparisons between public sector pay and private sector over the past decade lacked credulity.

The equalities impact assessment acknowledged that 65% of the public sector workforce is female – although the civil-service figure is slightly lower at 50-60%, according to the Institute for Government’s latest Whitehall Monitor report.

The document added that the public sector was also “marginally more likely” to employ people with disabilities. 

But it said the pay freeze policy was “not expected to have any unjust differential impact to individuals with protected characteristics, relative to their private sector counterparts”.

The document said that while providing an annual uplift of £250 to those earning below £24,000 could be described as “positive discrimination” towards the lower paid, earnings was not a protected characteristic under the Equality Act 2010.

It accepted that women were “relatively overrepresented” in the subset of the public-sector workforce earning below the median wage – it said the split was 79% female to 21% male – but said being exempt from the freeze would not fuel any new inequalities.

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