PUBLIC SECTOR PAY
More transparency needed in setting top pay in local government
Despite intense criticism over perceived high levels of top pay in local government, analysis by PricewaterhouseCoopers shows CEO reward packages in local government are around half of their private sector counterparts.
Even if private sector reward variables such as bonuses are reduced to zero - taking into account the economic downturn - the local government package would still only be 81% of the private sector equivalent. As Steve Beet, partner and head of local government, PwC, explained: “Public perception of local government pay is an issue but, in reality, their packages are considerably lower than their counterparts in other sectors. The is an issue of public perception and more transparency is needed when setting and reporting local government executive pay.”
Factors such as job security, a desire to be of public service and the absence of profit motives have a significant impact on the levels of pay for senior posts in local government.
Analysis was conducted using PwC’s proprietary Monks Job Evaluation System (JES), an analytical job evaluation system used in both the private and public sectors. The elements of compensation included in the analysis were basic salary, pension and bonus.
The overall package of the local authority CEO is marginally ahead of a similar sized job in the senior civil service which is perhaps reflective of lower job security in local government senior roles.
The roles for which PwC made comparisons are:
CEOs of large local authorities, where the total package is typically worth £228,000.
Senior civil servants at director general level, where the total package is typically worth £210,000.
CEOs of subsidiary companies/divisions in the private sector with turnover of between £500 million and £1,300 million, where the total package is worth an average of £447,000.
A final word
“Local government leaders must establish more robust and transparent governance processes for making decisions on levels of pay so that more emphasis is placed on showing how pay is benchmarked and linked to performance. They need to get on the front foot in disclosing rationale for remuneration policies and decisions to the public. Pay is generally set at a national level with top-level position reward packages often being negotiated by headhunters who have an evident conflict of interest. There may need to be a local government equivalent of a private sector remuneration committee to advise on pay and total reward elements.” - Steve Beet, partner and head of local government, PwC.
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PricewaterhouseCoopers provides “industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders”. For more details visit www.pwc.co.uk.