With skies threatening and my 11-year-old son Jack in tow (having been bribed with pizza and the chance to be the FDA’s photographer for the day), on 18 October I joined nearly 100,000 people marching from Embankment to Hyde Park as part of the TUC’s ‘Britain Needs a Pay Rise’ march. ‘Why?’ would seem like a good question; certainly, it was one Jack kept asking as we trudged along Piccadilly past temptingly-warm coffee houses.
It’s difficult for marches of this type to achieve anything directly, but they do give a sense of the public mood. Britain Needs a Pay Rise is the title the TUC is using to articulate the pressure on people’s pockets. Despite the upturn in the economy, few are feeling the benefit in pay increases, while the cumulative effect of years of pay stagnation is biting into living standards.
In September Mark Carney, the governor of the Bank of England, told the TUC Congress: “Wage growth has been very weak. Adjusted for inflation, wages have fallen by around a tenth since the onset of the crisis. To find such a fall in the past, you would have to look back to the early 1920s”.
Carney predicts a return to real pay growth by the middle of next year, to be maintained over the next three years. Yet while there is no hierarchy of misery here, nor is there any sign that this real-terms pay growth will extend to the public sector. What’s more, for much of the last two decades the civil service has lagged behind even the rest of the public sector, both in terms of pay levels and pay increases.
Writing in The Guardian recently, Peter Smith, the director of public sector consulting at Hay Group, said our senior civil servants have “the lowest-paid leadership jobs in the public sector.”
He also reported that pay in the SCS is “60% of the remuneration on offer in the private sector when salary, bonus, long-term incentives and benefits are taken into account – a difference worth about £60,000 a year.” At the top levels, this differential can be even greater: “At pay band 2 the figure is about 45%, and at band 3 it is about 35%”, Smith wrote. And he should know: for more than a decade, the Hay Group has been routinely commissioned by the government to analyse pay comparability.
No-one doubts that the country still faces a huge challenge over the scale of the deficit, or believes that – whatever the shade or shades of government we have in 2015 – there will suddenly be an opening of the purse strings on public sector pay. Any government can argue that pay increases come at the cost of jobs; and it’s still easier to do so when austerity bites. Yet like any employer, the government must balance a number of competing forces. Pay increases clearly have cost implications, but the government also has to ensure that its workforce is suitably skilled; that it’s motivated to perform well; and, importantly, that talent can be attracted in the jobs market.
I have been negotiating pay in the civil service since delegated bargaining was first introduced. It’s hard to believe that was 20 years ago – though the photograph on this page confirms it. In all that time, through good times and bad, I have never known a period of greater long-term pay decline and, crucially, such bleak prospects for the future.
I was once told by a wily old union official to watch out when the employer tells you that there’s light at the end of the tunnel, as usually this means there’s a train coming. But two questions remain. What is the longer-term message on pay for civil servants? And where is the analysis of the consequences of getting this wrong?
Austerity hit people’s pockets hard. It was hard to take even in the depths of recession, though then there was generally a greater understanding – if not acceptance – of the need to save money. But attitudes can change, and change quickly. The civil service, like any employer, needs to ensure that the message it sends to its dedicated workforce – the people routinely working an extra week a month in unpaid overtime – is not that pay issues will only be addressed after there’s been a major exodus of talent. If such an exodus does occur, the civil service will have lost not only the skills of those who have moved on in search of better rewards, but also the engagement of remaining staff who feel undervalued and taken for granted. Once broken, that emotional contract with an employee is very hard to repair.
The civil service needs to address these issues, and quickly – difficult as that is with politicians as the paymasters. In the short term, that will require more resources; but in the long term, the costs of not doing so would be much greater.
Dave Penman is the general secretary of the FDA union