Local government executive reward worth half of that in the private sector

The reward packages of chief executives working in local government are worth around half (51%) of those enjoyed by their private sector counterparts according to research conducted by PricewaterhouseCoopers.

The research found that even if bonuses in the private sector were slashed as a result of the downturn the local government package would still only be 81% of the private sector equivalent. The elements of compensation included in the analysis were basic salary, pension and bonus.

It was also found that 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.

The overall package of a 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 total reward package of the CEOs of large local authorities is typically worth £228,000, compared to the package offered to senior civil servants at director general level which is worth around £210,000.†

Meanwhile, CEOs of subsidiary companies/divisions in the private sector with turnover of between £500 million and £1,300 million enjoy a total package worth an average of £447,000.

Steve Beet, partner and head of local government, PricewaterhouseCoopers said: “Public perception of local government pay is an issue but, in reality, their packages are considerably lower than their counterparts in other sectors.†

“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.”