Public Sector Pay 2007/08 Briefing No. 161 July 2007

Policy for Scottish Public Sector Pay Groups

Introduction

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.

Outline

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 pay increases.

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.

Key Issues

Basic Awards

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.

Performance Pay

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 more flexibly.

Equal Pay

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.

Local Pay

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

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.

Summary

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

Further information policy for Scottish Public Sector Pay Groups: Public Sector Pay in 2007-08 can be found at:

www.scotland.gov.uk

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.

Contacts list:

Kenny MacLaren
k.maclaren@unison.co.uk

Dave Watson
d.watson@unison.co.uk

@ the P&I Team
14 West Campbell St
Glasgow G26RX

Tel 0845 355 0845
Fax 0141-307 2572