Phillip Hammond urged to end pay cap that "has cost civil servants £3,400 each"
Continuing pay cap would mean up to 20% drop in average civil service earnings by 2020, union analysis reveals
Average civil service pay has fallen by up to 9% in real terms over the past six years, according to analysis carried out for the PCS union, which is urging the chancellor to lift the public sector pay cap introduced in 2010.
Hammond's predecessor George Osborne froze pay right across the public sector when he took office in 2010, with a 1% cap on payrises in force since 2012 and currently scheduled to remain in place until at least 2020.
Analysis carried out for PCS by Dr Mark Williams, lecturer in human resource management and employment relations at the University of Surrey, warns that if Hammond does not lift the public sector pay cap, real civil service wages will have fallen by 12% on 2010 levels by the end of the parliament.
The analysis shows that civil servants are already in a worse position than other public sector workers, as, across the wider public sector, wages have fallen by around 4% since 2010.
And a civil servant earning the average wage would have "lost" around £3,430 between 2010 and 2016, compared to what they would have earned had pay risen in line with CPI – the government’s preferred measure of inflation.
The real terms fall is even more stark if RPI is used to measure inflation. By this measure, a civil servant earning an average wage "lost" £7,768 between 2010 and 2016 thanks to pay restraint, and average wages will drop by 20% by 2020 if the pay cap is not lifted.
Launching the study, PCS general secretary Mark Serwotka said: “The government’s rhetoric on wanting to help ‘just managing families’ rings hollow when it comes its own workforce who are struggling to get by on ever diminishing salaries.
“The chancellor has an opportunity in the Budget to lift the 1% cap and allow government departments to end the blight of low pay and put money back into the pockets of dedicated public servants who work hard to provide the services we all rely on.”
The analysis also suggests that the loss of earnings has actually been greater than these numbers show, because the fall in wages is partly offset by the fact that the civil service has a greater proportion of staff in senior roles than in 2010.
Several rounds of redundancies and headcount reductions have seen more jobs lost in lower-paid administrative grades – recent IfG analysis showed that 38% of civil servants are now working in the most junior grades, compared to 47% in 2010.
The PCS calculates that if the composition of the civil service had not changed between 2010 and 2015, the average wage would have been approximately £2,000 lower in 2016.
It also finds that if wage cuts had not happened, but job cuts had gone ahead, the average civil service wage would actually be higher now than in 2010, thanks to the rising proportion of staff in senior grades.
Williams' research draws on ONS data from both the Annual Civil Service Employment Survey (ACES) and the Annual Survey of Hours and Earnings – a survey which employers are mandated to complete and which allowed him to accurately compare earnings both across private and public sectors and also within the public sector.
Using the ACES data, Williams was able to compare changes in average earnings within different grades. He found that staff in grades 6 and 7 lost on average around £20,000 of earnings between 2010 and 2016, while senior and higher executive officers lost around around £13,000.
Executive officers lost £12,000 over the same period, while administrative officers lost around £3,500.
Although the report does not cover the impact on the senior civil service, Williams told CSW that he had found losses for these grades to be “at least as severe” as those for grades 6 and 7.
Williams also analysed the impact of gender on pay, and found that the gender pay gap in the civil service decreased by 11 percentage points from 2007 to 2016.
He also found that this gap – which currently stands at 86% – is in part due to the low proportion of women in higher paying grades at the top of the civil service.
“The differing female-male ratios across grades likely accounts for the gender pay in overall median earnings,” the report says, “since the gap in median pay between males and female within grades is close to zero in most grades.”
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