PUBLIC SECTOR
Call for evidence on how to make public sector pay “more market-facing in local areas”
The government has published letters sent to four of the pay review bodies which ask them to consider how to make public sector pay more “market-facing” in local areas.
Following the autumn statement, Osborne wrote to each of the relevant pay review bodies explaining that “differentials between public and private sector wages vary considerably between local labour markets and this has the potential to hurt private sector businesses that need to compete with higher public sector wages, lead to unfair variations in public sector service quality and reduce the number of jobs that the public sector can support for any given level of expenditure.”
Scope
The public sector workers covered by this request are:
NHS workers covered by the Agenda for Change pay system
school teachers
operational staff in public sector prisons
very senior managers in Special Health Authorities and NHS Executive non-departmental public bodies
senior civil servants.
In his autumn statement the chancellor also announced that the minister for the Cabinet Office will review “how more local, market-facing pay could be introduced in civil service departments, for civil servants below the senior civil service”. However, the pay review bodies are not responsible for those civil servants.
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Call for evidence
The Office of Manpower Economics (OME), which provides secretarial and research support to all the pay review bodies, has already looked at “geographical pay differentiation” and commissioned research in the past*. However, the OME is now issuing a call for evidence on the specific issues raised by Osborne, to invite all those with evidence relevant to the remits to submit it.
In particular, the OME says it would welcome the following information:
Examples of where private sector employers have had difficulty in recruiting or retaining staff because of competition from the employers of the pay review body remit groups specified.
Examples of where public sector employers of the pay review body remit groups have had difficulty in recruiting or retaining staff because of competition from wider public or private sector employers.
Statistical information or other research or quantified evidence on comparative levels of public and private sector pay or, where possible, total reward in specific areas, regions or localities, or for specific occupations or jobs.
Information on how larger private sector employers operating in multiple locations within England or Britain decide on appropriate levels of total reward for those locations.
In addition, the OME says it would welcome information about:
How do private sector employers set pay in different localities, whether or not they operate in multiple locations?
What factors or information do they take into account in setting pay levels?
How important, for example, is information on local cost-of-living variations, such as the cost of housing?
What information sources are available to employers for this purpose?
Where employers pay different amounts in different locations, how is the differentiation achieved, e.g. through base pay, separate allowances or in some other way?
What are the mechanisms for reviewing and adjusting local differentiation?
The OME is also looking for comparative information on pay levels for different occupations, especially those which occur within the remit groups listed in above. Are there occupations for which the labour market is essentially national rather than local? Is there a level of pay above which the market tends to be national?
How to respond
If you are able to provide evidence likely to assist the review bodies in their reviews of locality pay, please send it, preferably electronically, by 16 March 2012 to email: omelocalpay@bis.gsi.gov.uk.
If you are unable to send material electronically, please address it to: OME Local Pay Review, Office of Manpower Economics, 6th Floor, Victoria House, Southampton Row, London WC1B 4AD.
Please indicate whether you are happy for OME to contact you if necessary for clarification or follow-up questions.
All evidence provided will be made available to the four review bodies with remits to provide advice on market-facing pay in local areas and will be placed on the OME web site so that all those with an interest in this subject can read and comment on it if they wish.
The individual review bodies with remits on local pay are contacting their parties (the relevant government departments, employer organisations and trade unions representing the remit groups) with more specific requests for evidence. Any organisation which receives such a request should respond directly to the review body rather than to this more general call for evidence. Review body secretariats will ensure that any information relevant to more than one review body is shared appropriately.
Want to know more?
The letters to review body chairmen from the chancellor of the exchequer and departmental ministers form the remits to the review bodies and are available on the Office of Manpower Economics (OME) web site at www.ome.uk.com/Article/Detail.aspx?ArticleUid=dfd0267d-9c7d-421b-80ba-71db9232f4b9.
* See, for example, Geographical pay differentiation in multi-site private organisations, IDS, 2008 - research report for OME, available at www.ome.uk.com/Cross_cutting_Research.aspx. OME is currently updating this information.