Huge civil service pay hike needed to match 2010 levels, PCS research finds

Wages will need to rise by 18-62% to counteract falls in real-terms pay since 2010, union says
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By Tevye Markson

20 Mar 2024

PCS has called for the government to “level up” civil servant pay after research commissioned by the union estimated pay rises of 18-61% are needed to restore pay to 2010 levels.

The report also found that the civil service has “gone from an above average-paying occupation in the 1970s and 1980s, to a below-paying one thereafter”.

General secretary Fran Heathcote stated PCS would be demanding an “inflation-proofed” pay increase in 2024-25 along with “pay restoration” to reflect the decline in real-terms wages in the civil service.

Ahead of this year’s delegated pay remit decision, PCS has published details of a report, seen by CSW, which analyses the change in real-terms pay in the the last 50 years. 

PCS commissioned Dr Mark Williams, a researcher at Queen Mary University, to carry out the research.

The report puts much of its focus on the real-terms drop in wages since 2010, saying this was “when pay freezes came in and kicked off a decade long stagnation and erosion in pay thereafter" (see box for more details), but also takes a longer term view to show that civil service pay has declined in relative terms over the last five decades.

The report estimated that civil servants’ salaries were 5% above the average UK wage in the 1970s and 80s but today are 10% below the average. It says real-terms wages in the civil service are currently at a similar level to the late 1990s – if using the Consumer Price Index – or the mid-1970s if using the Retail Prices Index.

“At best (according to the CPI), civil service real wages are now back to what they were during Tony Blair’s first term in Downing Street (late 1990s),” the report says. "At worst (according to the RPI), real wages are back to what they were when James Callaghan was in office (mid-1970s).”

Commenting on the findings, Heathcote said: “Successive governments should hang their heads in shame at the way they’ve treated their own workforce over the last 50 years.

“We hear a lot of talk from ministers saying how much they value our members’ work. Now is the time for them to put their money where their mouth is and level up their pay.

“We won serious concessions from the government last year as a result of our industrial action, including a £1,500 bonus, but there’s still a long way to go before we get back to the comparative pay of the 1970s.

“Civil servants play a huge role in making sure the country runs smoothly and it’s about time the government recognised that by giving our members a well-deserved pay rise.”

The report also looked at the level of pay restoration that would be needed to return wages to 2020 levels. It said since that year, “inflation has been very high while pay rises have been stagnant in nominal terms, leading to the steepest pay cuts for half a century in the civil service, and so these few years alone account for up to half the total pay erosion since 2010”.

Just to reach 2020 levels, the report says pay rises of 11-18% would be needed if using CPI, or 19-27% if using RPI.

The drastic falls in real-terms pay at all grades  is not reflected in the median decline in wages across the civil service since 2010 – between 7% (CPI) and 19% (RPI). This is due to the increasing seniority of the civil service in this period.

The report points this out, stating that “the overall median is a somewhat misleading statistic which understates the depth of real terms pay erosion due to the changing composition of the civil service over this period”.

The estimated real-terms pay decline shown in the research is higher than in the Institute for Government’s Whitehall Monitor report, the think tank’s annual data-driven assessment of the civil service. The 2024 report, published in January, found real-terms pay has fallen by between 12% and 26% since 2010. The IfG uses a different measure – the GDP deflator – which measures economy-wide inflation. Like the PCS report, the Whitehall Monitor notes that median pay of the whole civil service has fallen far less than that of individual grades, saying this is because “the composition of grades has shifted substantially over time, with the civil service becoming more top heavy”.

A Cabinet Office spokesperson said: 

A Cabinet Office spokesperson said:  "It’s important that civil service pay awards are both fair and affordable for the taxpayer.

"The 2023/24 pay award for non-senior grades represents the biggest pay increase in over 20 years, alongside a one-off payment of £1,500 – recognising the hard work and vital importance of Civil Servants – and public sector workers benefit from some of the most generous pension schemes available.

"This year's pay remit guidance will be published in due course and we will continue dialogue with unions."

They added that: "In the Civil Service People Plan 2024-27, we commit to developing a strategy that will define the longer term approach to pay and reward through a more coherent and individualised framework by 2030. This structure will reward civil servants to deliver better productivity across Government and better outcomes for taxpayers."

Fall in real-terms wages since 2010 

The report finds there has been a fall in real-terms wages since 2010 of between 15% and 38%, depending on grade and inflation measure, as shown in the table below, while the overall civil service figure is lower due to the aforementioned shift in grade composition.

Grade-by-grade decline since 2010

Grade CPI % fall RPI % fall
SCS

-28.4

-38.2

6/7

-25.2

-35.4

Senior and Higher Executive

-21.5

-32.3

Executive Officers

-22.2

-32.9

Administrative Officers

-15.1

-26.8

Overall civil service

-6.4

-19.2

Why is the amount the report says is needed to restore pay, between 18% and 61%, higher than the real-term falls calculated?

Taking administration officers as an example, if we assume pay in 2010 was £100 in today’s money, pay being 15% less than in 2010 implies pay is now £85. To get pay back to £100, a pay rise of £15 is needed, which is 17.6% of £85 (rounded to 18%). 

For the SCS, using the same example, a 38% drop in RPI reduces pay from £100 to £62. A £38 increase is needed to bring that back to £100, which would mean a 61% increase to return to £100.

Read the most recent articles written by Tevye Markson - Unprotected departments face cuts of up to 2.9% under Labour's plan – IFS

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