Unions threaten strike action as Chancellor looks at moves towards long-term pay deals.
Government plans to keep a tight lid on public sector pay by putting in place three year-pay deals have met with criticism from unions and threats of possible strike action.
The government announced last month that it wanted to abandon annual pay settlements and move to a three-year deal in an attempt to control public sector pay so that it falls in line with inflation targets of 2%.
Chancellor of the Exchequer, Alistair Darling, said: "Our aim is to have awards that are consistent with the achievement of the inflation target of 2%. We want to move towards a position where we have long-term pay awards because we know they are good for public service employees."
Yet according to Stephen Moir, president of the Public Sector People Managers Association, the government has undermined "strong negotiating machinery" in issuing this statement without consulting public sector employers or trade unions.
Unison, which is pushing for a 6% pay rise for the next financial year, has said that any deal must consider future rises in inflation. A Unison spokeswoman said: "The government's 2% limit is just not on. It is half the rate of inflation. We [also] need to see some kind of safety mechanism so that if inflation took off we would be able to go back to employers and renegotiate."
However, Local Government Employers, which works with local government organisations to create solutions on pay, has insinuated that the annual pay claim requested by the public sector unions is too high. A spokesman said: "The extra impact of a 6% annual pay rise is quite high but it will take a while to do the number crunching and get the views of our membership."
Some local authorities are finding that they are having to be more accommodating if they are to compete against the private sector, where pay rises are running at 4% on average, in order to attract new employees.
Surrey County Council, for example, has introduced a 'golden hello' of £6,500 for the first successful 60 social work applicants. Nick Skellet, leader of the council, said: "Recruitment and retention of key workers is an essential part of our service delivery."
However, David Piper, associate director at Hay Group, believes that public sector workers are not necessarily being paid below inflation, and employers could make more of the final salary pension scheme to attract and retain staff in the public sector.
He said: "The assumption that each individual employee is only going to get 2% per annum is strange because the majority of public sector staff are paid on salary scales so they will get an annual increment due to them as well."