Ever since the Labour government announced its 1% public sector pay cap in December 2009, civil service salaries have flatlined whilst inflation and pension contribution increases attack their purchasing power. And there’s more austerity to come: with the spending review envisaging cuts until 2017-18, Treasury perm sec Nick Macpherson recently signalled his desire to maintain the pressure on public sector pay.
The result is the challenge framing this week’s CSW round table: how can departments field expert specialist professionals and brilliant organisational change managers, when private employers offer much better salaries? Lead non-executive Lord Browne and former cabinet secretary Lord O’Donnell have warned that pay restraint is weakening recruitment; whilst chief of defence materiel Bernard Gray has explained that his desire to commission out defence procurement is motivated partly by a desire to escape Treasury pay controls.
Cabinet Office minister Francis Maude argues that the public sector mission and reformed civil service career paths will keep talent on board; and so they may – as long as the recession continues to limit people’s options. But if the nascent recovery turns into something more substantial, creating new jobs and wage inflation in the private sector, then – as NAO chief Amyas Morse has warned – civil servants will have greater opportunities and incentives to jump ship. Meanwhile, a housing- and consumption-led recovery threatens to put renewed upward pressure on prices; whilst the government’s outsourcing programmes are set to boost suppliers’ interest in recruiting civil servants.
So if the recovery takes hold, the civil service offer will really be put to the test; and over recent years, that offer has weakened substantially. The public sector’s pensions, holidays, and terms & conditions used to compensate for lower pay; but those benefits are now much less generous. Meanwhile, growing media scrutiny and tighter accountability are exposing officials to more risk, whilst a stream of media stories and ministerial comments whittle away at civil servants’ morale and status.
Optimistic observers believe that those media stories and ministerial comments aren’t symptoms of a deep hostility to the public sector, but tactical devices designed to build support for efficiency reforms. We will soon find out the truth. For as stronger private jobs markets further weaken civil service recruitment and retention – and as rising tax takes enable the government to pay a little more – ministers will have to play their hand. If the recovery takes hold, as the election looms ministers will have to explain whether civil servants face a future of never-ending pay caps and growing workloads, or whether their standards of living and staffing levels will strengthen as the national income begins to grow again.
Two years ago, head of the civil service Sir Bob Kerslake reminded CSW that civil servants are not “locked into their jobs”. When labour markets recover, he warned, departments might “turn around after a little while and say: ‘Hang on a minute, where are all these people going?’” The solution, he argued, is to “constantly think: ‘Why do people choose the civil service? How do we attract them?’” It is time for ministers to ask that question – and, loudly, to answer it.
Matt Ross, Editor. matt.ross@dods.co.uk