• One per cent pay rise ‘will keep talent out of the public sector’

  • 10 Mar 2016
  • Comments 5 comments

Recruiters and unions predict widening gulf with private sector; permanent NHS staff ‘could opt for agency work’

The public sector is facing a recruitment and retention crisis that will affect everyone from senior leaders to switchboard operators, recruiters and unions have warned in the wake of a 1 per cent pay rise that has caused widespread anger.

The salary increase, which was confirmed this week, will apply to more than one million people, including NHS staff in administrative and back office roles, doctors, dentists and armed forces personnel.

Only prison service staff will see a slightly higher increase of 1.36 per cent as an exceptional award reflecting an overhaul of the prison system.

Janet Davies, chief executive of the Royal College of Nursing, said nurses and healthcare assistants were being "forced to consider their future in the profession they love", while Simon Crichton, executive director of specialist public sector recruiter Badenoch & Clark, said opportunities for bringing in talent from the private sector were likely to be further constrained.

“It gives us an additional challenge when attempting to recruit from larger businesses such as banks,” said Crichton. “And it also gives public sector organisations a negative employer brand, which is really problematic and means we may have to rely on the idea of doing something good for the community [to attract talent]. Brand is key when pay is low.”

The announcement follows recommendations from pay review bodies, but has been made in line with the chancellor's July 2015 budget announcement that public sector pay rises would be capped at 1 per cent for four years. The government cited figures from the Office for Budget Responsibility that suggested the 1 per cent average increase had protected 200,000 public sector jobs from being cut.

Sara Gorton, deputy head of health at UNISON, the public service trade union, pointed to a disparity between the rises and an average salary hike of 2 per cent in the private sector. "First, we are worried about the ability of the NHS to retain staff with the relevant skills and, second, how will this affect the ability of the NHS to attract the best new graduates into healthcare professions?" she said.

A big concern, she added, was that staff in administrative roles would leave for more lucrative positions in the private sector. "There has been an upturn in the external labour market that isn't reflected in NHS pay and, over time, that might have a particularly devastating effect on the NHS," she said.

"There is an issue with jobs where there is an active external market, including some of the administrative functions that are so core to freeing up clinical staff for dealing with patients. Switchboard staff, for example – if you have a big call centre down the road and they are offering double the pay increase, what is to stop you opting to take your labour elsewhere?"  

Both Gorton and Crichton pointed out the potential for the rise to trigger further increases in spending on agency and temporary staff, particularly in the NHS, which has seen large numbers of full-time employees leaving to work for agencies, according to the union.

Gorton said UNISON would like to see the “handcuffs" taken off the pay review bodies, whose remit she said had been "artificially constrained".

In their reports, all of the pay review bodies recommended the 1 per cent pay increase, but also highlighted their concerns.

The Armed Forces' Pay Review Body report, for example, said: "We are concerned about the effect of continued pay restraint on the morale and motivation of personnel and their families over such a long period.

"Continued pay restraint could also impact negatively on the Armed Forces’ ability to compete with the private sector, since pay in the private sector is widely forecast to increase by 2 per cent per year or more up to 2020. This could particularly affect the recruitment and retention of highly skilled individuals such as engineers, IT specialists and pilots."

Similar concerns were noted by the NHS Pay Review Body, which said it had opted for a 1 per cent increase across the board, rather than apply a lower rise or a pay freeze to some groups. It added: "There are some shortages, particularly in paramedics, adult nursing and some nursing specialties, such as mental health and paediatrics. Turnover rates appear to be manageable at present, largely because joining rates either match or outstrip them, but nevertheless the turnover rates are increasing, and this causes us some concern.  

"While pay may not be the central driver, it will certainly have a role as part of any attraction and retention strategy."  

Additional material by Marianne Calnan

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Comments (5)
  • This is very unlikely to materialise, scaremongering at its best! Very unlikely to be the case. In terms of total remuneration the public sector is significantly ahead of the private sector.....in some organisations I have seen 14%, 17% and even 19% pensions paid over on basic salary in the public sector and even before you take into account defined benefit salaries....compared to the often 3% and even on the very rare occasions 8% pensions paid within the private sector....if you are lucky that is and it is not just auto enrolment relevant rates!! Been privy to this as I have worked in both public, private and voluntary sector, seen the disparity first hand from working in finance/accountancy!!

  • I work in the public sector in HR and my pension is a career average pension and I earn less than £21,000 so not a NHS fat cat

  • nick most public sector employees are being put on a career average pensions scheme which is based on each years pay not on final salary. Also I am paid less than £21,000 despite being in HR in London in the public sector, this is despite the fact I have CIPD and BPS qualifications.

  • One thing puzzles me.

    The government states that 200,000 jobs were saved from being cut by restraining the increase yet the expectation of everyone is that there will be a flow of talent towards the private sector....

    If that is the case the government might think it is being smart as it will have slimmed the public sector but limited the pay rise anyway...

    The one thing that puzzles me is why would the government want to hang on to 200,000 jobs it could have let go and yet let go of the top talent (as I am sure these will be the ones that will find it easiest to leave) that it needs to deliver a superior service with a slimmed workforce?

    I am sure that the issue is not as simplistic but sometimes simplifying helps clarify.

  • Until the public services seriously address their ongoing pension costs it will be unable to compete on base pay. However, in total reward terms they are, in most cases, well ahead of the private sector.