Public Sector Pay 2007/08 Briefing
No. 161 July 2007
Policy for Scottish Public Sector Pay Groups
This briefing provides a summary of a report by
the Scottish Executive, 'Policy for Scottish Public Sector Pay
Groups'. This paper sets out the key considerations that Scottish
public sector bodies should take into account in framing their
pay proposals for 2007-08.
The Scottish Executive expects to continue to see
lower levels of settlement in 2007-08. They claim the forthcoming
Spending Review, tight financial outlook, the Consumer Price Index
(CPI) inflation target of 2.0%, and the low headline increase
of 1.4% for the Senior Civil Service should all set the tone for
Public Sector Pay Policy applies to those public
sector bodies whose pay requires the approval of Scottish Ministers.
This includes the Scottish Executive and associated Departments
which have their own pay bargaining units, Executive Agencies,
Non Departmental Public Bodies (NDPBs), Public Corporations and
Nationalised Industries. It has a wider implication in that it
will underpin the budget settlement for the whole public sector.
Public bodies determine what account, if any, to
take of inflation when submitting their pay remits.
The Scottish Executive has decided to follow the
Treasury's pay policy in limiting basic awards to no more than
2%. This is based on the Treasury's inflation target of 2% (based
on the Consumer Price Index). The current CPI rate (as at June
2007) is 2.4%. However inflation in the real world is based on
the Retail Price Index (RPI) which is currently at 4.4%.
Recycling New Savings
Baseline savings are general savings within the
paybill (e.g. from reduction or removal of allowances).
From 2007-08 a business case can be made to recycle
any such new savings to be made within the paybill to fund variable
pay (non-consolidated payments) without counting against the increase
for staff in post. Any such proposals must not increase the paybill,
in other words they must be cost neutral.
The Pay Policy does offer further encouragement
for performance pay through non-consolidated bonus payments.
Public bodies are encouraged to consider non-consolidated
pay, for individuals and teams, as an integral part of their pay
strategy to enable them to target performance and use their paybill
Employer bodies have been reminded of their legal
obligations with regard to equal pay and other equality duties,
in particular the importance of reviewing their pay systems annually.
The pay policy highlights a particular concern over the length
of pay ranges stating that there is no assumption that five years
is the correct solution.
Proposals to address pay inequalities will require
a full risk assessment and a strong hint that the costs of equal
pay should be taken into account in general pay increases. There
is no additional provision made for historical pay discrimination.
There is encouragement for local pay to reflect
different market conditions rather than a national approach.
The policy highlights that there are different labour
markets for different staff, depending on factors such as location,
grade and occupation. Remits will be judged on the extent to which
levels of pay for particular groups of staff reflect, and are
responsive to, the relevant labour markets in which they operate.
Where a public body has multiple locations or sites, they should
use the data and information that is available and group together
staff as appropriate.
The Scottish Executive expects public bodies to
demonstrate how they intend to target pay awards to where they
are most needed to address particular problems or issues, and
restraining pay where staff are relatively well placed in their
relevant labour market, within the overall affordability envelope
that is agreed.
Similarly, any proposals to address market conditions
should take a 'total reward' approach. While the policy emphasises
the positive public sector benefits such as pensions, it not surprisingly
ignores private sector benefits such as share schemes.
Multi-year deals can provide public bodies, and
individual employees, with greater certainty over their pay levels
for the period of the deal and are a way to ensure that increases
are paid on time. The policy allows for public bodies to submit
multi-year proposals of up to three years.
The 2007 Spending Review will set the affordability
envelope that public bodies will need to operate within for the
years 2008-9 to 2010-11. As this affordability envelope is currently
unknown, public bodies seeking multi-year deals will be expected
to confirm that proposals are affordable within existing resources
or clearly set out the additional resources that would be required
over the duration of the remit.
This is a very disappointing policy published without
any prior consultation with the trade unions. It provides for
pay increases well below the rate of inflation and offers little
to address long standing equal pay issues.
Further information policy for Scottish Public Sector
Pay Groups: Public Sector Pay in 2007-08 can be found at:
Action for Branches
This briefing is primarily for information purposes
to allow branches and service groups to assess the implications
of the Scottish Executive's Policy for Scottish Public Sector
Pay Groups in the current pay round.
@ the P&I Team
14 West Campbell St
Tel 0845 355 0845
Fax 0141-307 2572
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