Monday, March 23, 2009

Public sector pay in the news

We live in interesting times – and pay is always interesting. Public sector pay is news-worthy too. Last Thursday’s Times had a couple of articles about pay in public services.

In the first article, the Times reported that public sector pay rose by 3.7% in the year to January 2009 while private sector pay fell by 1.1%.

In the second, the paper surveyed the remuneration packages of university vice-chancellors. One earns more than £500,000 including benefits. Almost two thirds are on salaries of over £200,000. Their average pay in 2007/8 rose by 9% on the previous year.

If the public and private sectors respond differently to falling RPI inflation, the whole issue of public sector pay could become a political minefield in an election year. (And don’t forget the toxic issue of public sector pensions – with triennial valuations next Spring.) On the other hand a public sector pay freeze could raise the temperature of industrial relations.

I think we’ll be seeing some business risks appearing in this area before too long

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