This week’s briefing that another public sector pay freeze is under consideration is going to prove to be a serious blow to morale. And yes, I get that, as a Government, you feel that you want to be setting an example for the rest of the economy. But, as I’ve noted in the past, the cost of bad governance far exceeds the price you pay to attract and retain quality staff.
Yes, the economy is going to take a hit, but it is already evident that, especially in more technical areas of the Civil Service, we just aren’t competitive in terms of pay and conditions, even allowing for an increasingly non-gold plated pension scheme. And recruiting people to fill the gaps left by people who you recently recruited and couldn’t retain is a very expensive thing to do - the initial cost of training and low productivity in the early years of employment is thus repeated over and over again.
And the comparison between earnings of public and private sector employees is increasingly distorted by the fact that most low-paid public sector employees have either been made superfluous by technology, or contracted out to the private sector. Thus, the average increases whilst the rate of individual pay falls in real terms.
And, at the same time, whilst Ministers bewail the fact that civil servants are less innovative, they entirely overlook the point that the mid-range civil servant is earning 15% less in real terms than he or she did a decade ago, and thus the temptation to seek pastures new is that much greater for the ambitious and those whose skills are in demand in the private sector. You can’t, as Margaret Thatcher said, buck the market.
I’m a minor bureaucrat in a technical field somewhat sought after in the outside world, and I know that my equivalent in the private sector is earning considerably more than I am. Luckily for everyone concerned, I’m nearer the end of my career than the beginning, I’m mortgage free and have no big financial commitments. In short, finances are not particularly pressing.
Now look at it from the perspective of a colleague in their mid-twenties. They’ve probably got student loans to pay off, they would like to find somewhere to settle down, someone to settle down with, and might want to raise a family. They have a choice - earn a salary which isn’t competitive, is becoming less so each year, and will possibly never allow them to have the sort of life we are encouraged to aspire to, or work in the private sector, with an element of vulnerability, but with enough extra income to probably have a decent lifestyle. It isn’t a difficult choice, when you think about it.
It is a difficult choice if you’re trying to run an efficient organisation, a Brilliant Civil Service, if you will. If you can’t recruit and retain the best and the brightest, you limit the aspirations you might have. You need to reduce the scope for error by process-mapping decision making because those who might be able to apply legislation imaginatively but properly are less likely to be a part of your workforce. You end up with “the computer says no” administration - unimaginative, unable to innovate, likely to make choices which are legally sound but contrary to Parliamentary intent.
And that’s how you end up with Windrush, the Grenfell Tower, Baby P. Everyone did what they were required to do, yet the outcomes were catastrophic. Nobody was able, or willing to say, “hang on, if we do this, the consequences might be injurious, and this is why.”, and be taken seriously.
At the other end of the organisation, a lot of older colleagues have strained sinews during the pandemic, keeping the show on the road, enabling the Government to support the economy. The sense of gratitude engendered by then cutting their pay (again) might be difficult to locate, and given that it will impact negatively on their eventual pension too, they may (will, in truth) decide to retire earlier than might otherwise have been the case. I’ve got colleagues who retired with a pension representing 50% of their then salary who are now catching me up year on year in actual terms, not just real ones. It doesn’t go unnoticed...
So, if there are any Government ministers reading this (admittedly highly unlikely), might I politely suggest that you think long and hard before freezing public sector pay again, and not just about the short term impact. And, if you think it’s the right, or only, thing to do, then go ahead. But don’t then complain about the quality of the advice you get or of the implementation of your policies - there is a correlation between the value you place upon something and what you’re willing to pay for it.