The Growing Problem of Public Sector Pay?
| Published date | 01 April 1986 |
| Date | 01 April 1986 |
| DOI | 10.1177/095207678600100203 |
| Author | R.F. Elliott |
| Subject Matter | Articles |
33
The
Growing
Problem
of
Public
Sector
Pay?
R.
F.
Elliott,
University
of Aberdeen
The
research
on
which
this
paper
is
based
was
supported
by
a
grant
from
the
Aberdeen
University
Advisory
Committee
for
Research.
Thanks
are
due
to
The
Treasury
and
Local
Authorities
Conditions
of
Service
Advisory
Board
for
information,
to
Grant
Jordan,
Ceri
Thomas
and
Peter
Sloane
for
comments
on
an
earlier
draft
of
this
paper,
to
Hector
Williams
for
help
with
the
considerable
computation
necessary
to
produce
Table
2
and to
all
those
who
typed
the
manuscript.
Introduction
Due
to
its
desire
both
to
contain
public
expenditure
and
to
avoid
a
public
sector
pay
explosion
the
Conservative
Government
of
Mrs
Thatcher
has
to
date
stood
firm
on
the
issue
of
public
sector
pay.
In
the
three
years
to
the
last
half
of
1985
it
has
enforced
a
level
of
public
sector
pay
settlements
well
below
the
levels
of
those
achieved
in
the
private
sector.’
It
has
most
spectacularly
secured
acceptance
of
similarly
low
settlements,
together
with
reductions
of
manpower,
by
the
miners.
While
this
is
being
written,
the
Government
shows
no
sign
of
conceding
the
pay
claim
of
school
teachers
in
a
long
running
dispute.
If,
unlike
earlier
administrations,
this
Government
is
not
in
retreat,
is
this
be-
cause
it
has
developed
policies
which
have
at
least
solved
the
problem
of
public
sector
pay,
or
is
it
merely
containing
the
problems?
The
argument
of
this
article
is
the
latter 2
.
It
will
be
shown
that
by
the
mid-nineteen
eighties
the
majority
of
white
collar
workers
in
central
and
local
government
had
reached
the
top
of
their
salary
scales
and
they
therefore
stood
to
receive
no
further
increases
in
salary
due
to
the
award
of
increments.
In
addition
to
this,
promotion
opportunities
diminished
sharply.
In
the
past,
non-manual
workers
in
the
public
sector
enjoyed
three
sources
of
salary
growth:
the
annual
pay
settlement;
the
annual
increment;
and
in
the
longer
run,
promotion
to
a
higher
grade.
For
the
majority
of
employees
the
annual
wage
award
now
represents
the
only
source
of
salary
growth.
Thus
we
enter
a
period
of
considerably
slower
growth
in
the
earnings
of
most
public
employees,
a
period
in
which
it
seems
likely,
therefore,
that
increasing
attention
will
focus
on
the
annual
wage
negotiations,
for
these
now
represent
the
sole
means
of
protecting
the
real
34
incomes
of
a
majority
of
public
employees.
In
general,
the
relationship
between
reward
and
performance
in
the
public
sector
has
been
much
weaker
than
in
the
private
sector,
for
in
the
latter
discretionary
increments
and
merit
pay
are
commonplace.
In
recent
years
developments
in
the
public
sector
have
weakened
still
further
the
relationship
between
pay
and
perform-
ance
so
that
remuneration
structures
in
this
sector
are
in
urgent
need
of
reform.
In
addition
the
’firm
line’
of
the
Conservative
administration
of
the
early
nine-
teen
eighties
has
had
a
dramatic
effect
on
the
relative
pay
of
public
employees.
Public
sector
pay
settlements
have
in
general
been
less
than
those
in
the
private
sector,
with
the
result
that
pay
levels
throughout
wider
areas
of
the
public
sector
appear
once
again
to
have
fallen
behind
those
of
employees
elsewhere
in
the
economy.
In
the
depressed
labour
markets
of
the
nineteen
eighties,
such
a
deterioration
in
relative
pay
may
have
no
substantial
impact
on
the
ability
of
public
employers
to
attract
and
retain
sufficient
employees,
and
it
may
therefore
be
tempting
to
defer
the
difficult
task
of
reform.
It
can
be
argued
that
the
general
deterioration
is
similar
to
that
which
occurred
in
the
mid-seventies
and
early
eighties -
and
that
it
can
be
resolved
by
’catch-up’
awards
in
much
the
same
way
as
occurred
at
these
times.3
However,
large
pay
rises
for
all
public
employees,
if
unrelated
to
product-
ivity,
will
not
solve
all
the
problems
identified
here,
and.
moreover
they
would
prove
prohibitively
expensive
for
any
administration
in
the
next
few
years.
The
way
forward,
therefore,
must
lie
in
improving
performance
as
well
as
pay;
that
means
strengthening
the
links
between
an
individual’s
pay
and
the
level
at
which
they
perform.
In
turn,
this
implies
a
downgrading
of
the
formal
procedures
which
compare
public
and
private
sector
pay,
and
which
still
play
an
important
role
in
this
area,
for
these
fail
to
take
account
of
the
level
at
which
employees
perform
in
the
two
sectors.
The
Relative
Pay
of
Public
Employees
in
Recent
Years
The
relative
pay
of
public
employees
remains
a
subject
of
considerable
controversy.
Early
studies
focussed
on
the
average
weekly
earnings
of
manual
workers
in
the
public
sector,
and
suggested
there
had
been
a
substantial
improvement
in
the
level
of
their
pay
relative
to
that
in
the
private
sector,
in
the
period
from
1950
to
1975.
(See
Dean,
1975
and
1977).
The
studies
showed
that
the
improvement
in
relative
pay
had
been
concentrated
in
the
period
1970
to
1975,
by
which
date
average
earnings
in
the
public
sector
were
10
per
cent
higher
than
those
of
similar
employees
in
the
private
sector.
This
was
attributed
to
the
‘break-out’ from
the
Heath
incomes
policy,
to
the
aftermath
of
the
three
day
week
and
1974
miners’
strike
and
to
the
substantial
pay
awards
conceded
by
the
incoming
labour
administration.
Average
earnings
figures
for
manual
men
show
a
further
improvement
in
relative
pay
in
the
period
to
1980,
and
while
this
advantage
has
been
eroded
somewhat
sub-
sequently,
it
remains
the
case
that
the
earnings
of
male
manual
workers
in
1984
showed
a
relative
gain
of
10
per
cent
over
the
period
since
1970.
The
Clegg
awards
and
other
’blank
cheques’
inherited
by
the
incoming
Conservative
administration
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