As the recession continues, so-called ‘recession-proof’ public sector employers are being affected just as much as the private sector, feeling the squeeze in pensions, pay and employee wellbeing.
The latest Chartered Institute of Personnel and Development/KPMG Labour Market Outlook survey, published last month, found that one in five public sector employers have frozen pay for the time being – the same proportion as in the private sector. A further 6% of public sector employers are deferring pay decisions until later in the year, while 10% of private-sector employers are making deferrals.
Alan Downey, partner and head of public sector at KPMG, said decades of growth had seen public sector employers get used to having large budgets, so it had taken longer for attitudes to pay to change. “Many private sector employees are now willing to enter pay arrangements to avoid redundancies,” he said. “It would be short-sighted if this was dismissed in the public sector.”
Saving on employment costs
Jim Savege, lead officer for pay and reward at the Public Sector People Managers’ Association (PPMA), said there had also been some signs of organisations reducing hours or encouraging flexible working to save on employment costs. “There is a clear desire from public sector employers to make these changes as part of efforts to beat the recession. Due to the huge national debt, the sector is probably in for a longer-term sustained impact and is therefore also taking costs out on a permanent basis.”
Adding to reward managers’ workload is the government’s attempt to close the gender pay gap, which includes a requirement for public authorities to set out their overall gender equality objectives and to consider the need to have objectives to address the causes of any pay differences between men and women related to their sex. Dan Wilson, director of consultancy at Northgate Arinso, said equal pay continued to be a major issue. If an individual’s pay was above their job grade, it could be frozen for a period of time in a bid to close the pay gap while others caught up, but with all pay frozen, this was no longer effective, he said.
“Pay freezes certainly do not help,” said Wilson. “Organisations are caught in the trap of doing what is right for their staff and trying to meet the [equal pay] obligations.”
NHS employees’ health and wellbeing
Public sector employers came under more pressure last month as the Department of Health, led by occupational health expert Steve Boorman, released details of an independent review of NHS employees’ health and wellbeing in order to improve effectiveness and efficiency.
On average, an NHS employee is off sick for 10.7 days a year, compared with an average of 6.4 days in the private sector. This equates to 10.3 million working days lost in the NHS in England each year, at a cost of £1.7 billion. Sian Thomas, director of NHS Employers, said the NHS needed preventative wellbeing measures in place to help boost employee engagement and performance.
But Karen Jennings, head of health at trade union Unison, said the findings were unfair on the public service organisation. “You must look at the underlying causes for absence,” she added. “Almost 56,000 NHS workers were physically assaulted, in England alone, last year. That will obviously have led to staff needing time off.”
Public sector pensions
Meanwhile, the spotlight on public sector pensions, which are effectively guaranteed by the taxpayer, shows no sign dimming. Last month, The Times reported that the government had drawn up plans to overhaul the pensions of two million public sector workers. Alison Murray, partner at Hymans Robertson, said pressure has been building for some time, compounded by the divide between the way schemes in the public and private sector were funded. “With changes being made to defined benefit [DB] schemes in the private sector, there is more pressure on the public sector to gets its house in order,” she said.