I have tabled a few questions to find out more of the details behind the public sector wage freeze the government has introduced. I have no disagreement about the general thrust of the policy. One of the ways of controlling the growth in public spending is to keep pay rates level for a bit after a period of strong absolute and relative gains for public sector employees. The policy is turning out to be tougher than originally imagined, because inflation is so much higher than planned. This means a bigger reduction in real living standards for those with frozen pay.
I also agree that the lowest paid should be exempted. This is especially necessary given the high inflation, making it very difficult for people to balance family budgets from low pay.
The issues I am trying to tease out are these:
Does a pay freeze mean a freeze to all age and experience related increments?
Does it mean no bonuses, or no increase in bonuses?
What is the approach to rewards for exceptional service or for hitting tough targets under a bonus plan?
What happens to someone who gets promoted or takes on additional responsibilities?
I think the answers vary by departments. It will be interesting to see. My suggestion is a pay freeze should mean an end to age and experience increments, but should not mean a refusal to pay performance bonuses. I also think if someone takes on more responsibility and work, as part of a cost reduction or efficiency programme, they should be eligible for a pay rise. Pay rises for promotions should be looked at in the light of the overall pay of the individual but should not be ruled out in principle.
I would be interested to hear bloggers thoughts. At a time of 5% RPI inflation keeping pay increases down to say 1% would be quite an achievement. I would not expect a pay freeze to deliver zero. I would expect the overall pay bill to fall, as I would expect employee numbers to come down.