The government will hold a review on whether to introduce differing regional public sector pay deals.
During his delivery of the Budget report, Chancellor George Osborne said he wanted to make public sector pay more responsive to local pay rates.
Daniel Hibbert, a principal in Mercer’s human capital business, said: “A change to local pay deals would represent an important step along the way towards enabling the public sector to align reward more closely with the needs of local services.
“It also brings pay management into line with the localism agenda, removing the anomaly whereby pay continues to be determined through national bargaining processes, while other similarly complex and important decisions are made at a local level.
“National pay rates assume there is a national job carried out in the same way throughout the country, but the reality is that public services and the jobs within them need to be tailored to fit a wide variety of different sizes and types of organisations, responding to the needs of local services.”
Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development (CIPD), added: “We welcome the opportunity for employers to determine pay and benefits that meet the needs both of their local labour market and their budget.
“The frequent reliance on uniform, union-negotiated pay deals and length of service as a determinant of individual pay progression has ensured there is a disconnect in the minds of many public sector workers between their performance and the pay they receive.
“We need to move beyond this to an approach in which individual and collective performance and achievement of results becomes a significant determinant of public sector pay.”
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