Government commitment to senior public sector pay

Mercer, public sector pay, government, pay freeze,Chris Johnson


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Contact: Mags Andersen
Tel: +44 20 7178 3513

Government commitment to senior public sector pay freeze welcomed, but longer-term reform needed

UK
London, 12 October 2009

Pay freeze is a short term measure; long term challenge is to create a coherent, consistent and transparent pay strategy for the public sector

Mercer has welcomed the government’s proposal to give senior public sector employees a one-year pay freeze.

The Chancellor, Alistair Darling, announced on 6 October that there would be a pay freeze for senior members of the judiciary, senior civil servants, senior NHS managers, GPs and other senior public servants. According to the government, the more junior public sector employees will receive a nominal pay increase of between 0 and 1 percent.

“The government’s proposal is in line with experience in the private sector through 2009. According to our data, over half of the companies in the UK have frozen pay during 2009 and the perception is that the public sector has yet to shoulder its share of the burden,” commented Chris Johnson, head of Mercer’s human capital business. “In light of pressures on public spending, it’s no surprise that the government is taking this approach.

“Long term, the government can learn from the private sector,” he continued. “After pay freezes in 2009, private companies are now more focused on developing sustainable pay policies that reflect the needs of their businesses. It is important that the public sector, too, has sustainable, stable reward policies that will enable it to recruit, motivate and retain its fair share of talent.”

With executive reward in the public sector currently set and monitored through different mechanisms such as pay review bodies, remuneration committees, management processes and political decisions, Mercer believes the process has little coherence, consistency or transparency.

“What appears as a piecemeal tactical approach to public sector pay will encourage the false impression of ‘fat cat’ pay, will weaken its ability to attract the best people and will fail to convince the public that senior public servants are delivering value for money,” argued Mr Johnson. “Pressures on public expenditure and the need to deliver services at reduced cost to the taxpayer require more than a freeze in pay; what is needed is reform of public sector pay. That is the big challenge.”