Northern Ireland Civil Service Pay.

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Fay Lindsey
6 years ago
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1 Northern Ireland Civil Service Pay

2 THERE is a long history to Governments imposing unfair pay policies on their own employees as an example to the rest of the economy. As well as causing civil servantsʼ pay to fall behind counterparts in the rest of the public sector and in the private sector it inevitably results in conflict between Government and the Civil Service trade unions. All the indications are that the UK Government is intent on taking this same course of action by severely restricting pay increases for civil servants in the 2010/2011 financial year. Behind this is an assumption that civil and public Servants should be expected to pay the price of the economic crisis, a crisis not of their making, by having their wages cut in real terms. But civil servants are likely to be particularly hard hit on account of the treatment of their incremental progression costs. The economic crisis has already hit Northern Irelandʼs block grant to fund expenditure by the devolved administration. In response to this the NI Executive Ministers are considering the options on public servantsʼ pay in Northern Ireland with the potential for a public sector pay freeze. Northern Ireland Civil Service (NICS) Management Side has already taken the unprecedented action of unilaterally withdrawing from the well established NICS Pay Agreement. Since this decision a further 128m has been targeted as part of Northern Irelandʼs contribution to the UK cut of 6.25bn. The measures introduced in the 22 June 2010, Emergency Mini Budget included a two year pay freeze for staff earning above 21,000. This leaves Northern Irelandʼs civil servants facing double jeopardy. Having endured a cut in their rates of pay in real terms compared to Retail Price Index Introduction (RPI) inflation over the last eight years, they now face the prospect of their pay falling even further behind. This is grossly unfair treatment on pay. A demoralised Civil Service workforce is not in the interests of the public, efficiency in public services or good government. This paper aims to ensure that all political representatives know the facts about Civil Service pay in Northern Ireland. NIPSA is calling on Ministers to determine policies that provide fair pay treatment of civil servants. Background The NICS employs approximately (26,000) non-industrial civil servants. Who are they? They are the staff who provide a wide range of public services day and daily for the people of Northern Ireland here as just some examples: ensuring the unemployed, pensioners, the sick and those with disabilities get their social security benefits, getting people into work, paying grants to farmers and to help private sector companies, making sure roads are safe for travel in winter, that all cars are tested road worthy, issuing driving licences. They are not the pen pushers and bureaucrats of media fiction. The notion that civil servants are highly paid and have been receiving bumper pay rises is also false. More than 40% of NICS staff were earning less than 17,000 in the 2008/09 financial year. Senior civil servants (just over 1% of the NICS workforce) did qualify for performance pay bonuses on the basis of a parity arrangement with the Home (UK) Civil Service but those payments were ended in Average earnings growth in the last 10 years for the vast majority of civil servants has lagged behind other sectors. The repeated claims that Civil Service and Public Service pay rates in Northern Ireland have a 20% plus lead over their private sector counterparts is unfair and grossly misleading. The NI Governmentʼs own published pay data reveals that public/private sector pay differentials are present in all regions of the UK and that there is no reason to believe that the differential is significantly greater in Northern Ireland than say in the North East of England or similarly deprived regions where the public sector for a variety of reasons plays a greater role in the local 1 economy. Moreover when pay of occupational groups is examined the lower paid civil servants (the majority of the NI Civil Service workforce) only have a mean pay differential of just over 1%. Furthermore, the Department of Finance and Personnel (DFP) 1 confirmed that with respect to occupational groups, public sector differentials that exist in Northern Ireland are broadly consistent with those in Scotland, Wales and the North East. In addition the latest DFP report confirms the problem lies with private sector wages not public sector pay. Royal Commission Historically, the pay of Home Civil Service staff had been determined under principles laid down in a report by a Royal Commission published as far back as The Priestley Commission concluded that:... the State had a categorical obligation to remunerate its employees fairly... the end to be served by principles of pay in the Civil Service may be stated as the maintenance of a Civil Service recognised as efficient and staffed by members whose remuneration and conditions of service are thought fair both by themselves and by the community they serve. A correct balance will be achieved only if the primary principle of Civil Service pay is fair comparison with the current remuneration of outside staffs employed on broadly comparable work, taking account of differences in other conditions of service. The aim was to take the determination of Civil Service pay and conditions out of the political arena. To achieve this objective the Government established a Pay Research Unit (PRU) to obtain data on the pay and conditions of comparable workers employed by good employers outside the Civil Service. PRU reports provided the data for Government and the Civil Service trade unions to negotiate and agree revisions of Civil Service pay rates to keep pace with pay levels in the private sector. Note: 1 This approach generally succeeded in achieving these objectives. While Governments occasionally breached the pay agreements, the above principles underpinned the determination of Civil Service pay through to the early 1980s. But then the Thatcher Government arbitrarily suspended the Civil Service pay arrangements, scrapped the Pay Research Unit and provoked a prolonged industrial dispute with civil servants. Northern Ireland parity principle Historically NICS pay rates were determined on the basis of the principle of parity of pay with the Home Civil Service - that a civil servant in Northern Ireland should have the same rate of pay as a counterpart in the rest of Britain doing the same job. It should be noted that staff employed in Northern Ireland by UK Civil Service departments, for example in the Ministry of Defence, Passport Office or HMRC, retain the same pay rates and structures as their colleagues across England, Scotland and Wales. 2 - Northern Ireland Civil Service Pay Northern Ireland Civil Service Pay - 3

3 In fact this was in keeping with the determination of pay for all Public Service staff. For staff in all other sectors - Health and Social Care, Education, Housing and Local Government - either by statute or collective agreement - their pay rates are the same as their counterparts in the rest of the UK. This principle was accepted as being fair to all public service staff and taxpayers. In summary, by maintaining the parity principle across the board, all public servants in Northern Ireland, including NICS staff, were being treated no more or no less favourably than equivalent staff elsewhere in the UK. The parity principle for NICS pay was maintained with the agreement of the Thatcher/Major Governments, notwithstanding their decisions to end the Pay Research Unit arrangements and the subsequent implementation of pay delegation to HCS Departments in In the subsequent 2002 NICS Pay Agreement the principle of parity was incorporated in the following terms: (2002 Pay Agreement) Para 14: The pay of NICS staff covered by this agreement, taken as a whole, will be set within the constraints of public sector pay policy. The following factors may be taken into account: (i) The remuneration of Home Civil service staff and Para 15 : Within the context set out in clause 14 above, rates of pay will be revised annually through negotiation. Incremental progression As explained above there was a clear collective agreement that NICS staff would have their rates of pay revised annually by negotiations. In addition to that it is long standing practice, in both the public and private sectors, to use pay scales (or pay bands). On appointment staff are normally paid on the minimum point of the pay scale and then subject to satisfactory performance receive annually an incremental pay step to progress to their pay scale maximum. This is standard practice in the public services across the UK; staff are contractually entitled to receive an incremental pay step annually within their pay scale to progress to the pay scale maximum subject to satisfactory performance. This annual increment is payable in addition to any increase in pay rates negotiated to meet changes in cost of living. It is also understood that the maxima of pay scales represent the rate for the job. This had also been standard practice in the Civil Service until the Government enforced performance related pay systems in the early 1990s; but those systems were in turn abandoned proving to be unworkable and divisive. Consequently, as well as providing for rates of pay to be revised annually, the NICS 2002 Pay Agreement stipulated that staff would receive an annual progression increase of one fixed step up their pay scales specifically the agreement stated: Para 9: Those individuals whose performance is deemed as satisfactory or above, i.e. Box three or better, will be eligible for an annual progression increase of one fixed step up their pay band. The underpinning principle of the agreement was to separate entitlement to annual incremental progression from annual pay negotiations on rates of pay. Across the public services, incremental progression is not a factor in the pay negotiations which solely take account of cost of living increases. Unfair treatment However, principles of the NICS Pay Agreement were not honoured by the Government. From 2003 onwards Direct Rule Ministers refused to negotiate annual increases in the pay rates for NICS staff to reflect Home Civil Service remuneration or the prevailing rates of inflation. Instead Ministers insisted that HM Treasuryʼs arbitrary earnings growth metrics were applied rigidly. For 2003 the metric was set at 3.7% and for 2004 at 3.5%. To make matters worse Ministers also insisted that for civil servants the costs of incremental progression must be taken into account within the Treasuryʼs arbitrary remit limits. It was Government insistence on this fundamental difference in the handling of pay arrangements for the Civil Service and linked bodies, when compared to other parts of the public sector, that results in unfair treatment. There was therefore no level playing field in relation to the funding provision for the cost of standard incremental pay progression within the Civil Service and this has caused a major disparity in treatment of civil servants. This is grossly unfair treatment of civil servants resulting in staff being denied reasonable increases in their rates of pay. With incremental progression assessed 4 - Northern Ireland Civil Service Pay Northern Ireland Civil Service Pay - 5

4 as costing an additional 2.5% per annum on the pay bill, Direct Rule Ministers refused to negotiate on any fair increases in rates of pay to take account of inflation. In fact it took a prolonged industrial action campaign running from 2003 into 2004 to achieve only a 2% increase in rates of pay covering the period from April 2002 through to August This meant that civil servantsʼ pay rates were cut in real terms. The same inflexible stance was maintained by Ministers for the 2005/06 pay round. HM Treasury imposed a new earnings growth limit of just 3.49%. year 2003/ /05 NICS pay RPI increases inflation } } 2.0% } 3.1% 3.5% (Mar 03) 3.8% 2.75% (Mar 03 July 04) NJC pay NHS Pay increases increases (wef (wef 1 April 1 April annually) annually) 3.225% 3.225% 2005/06 0.2% 2.9% 2.95% 3.225% (July 04 - July /07 2% 3.3% 2.95% 2.5% 2007/08 2% 3.8% 2.475% 2.5% 2008/09 2% 5.0% 2.75%* 2.75% 2009/10 1% * -1.4% 1.0% 2.4% Totals 9.2 % 20.5% % % Average % amount received by staff as a result of flat rate increase of 270 Intensive representations were made to secure fairer pay increases but Ministers eventually imposed a pay settlement that provided just a 0.2% increase in rates of pay. The only positive point was a commitment from the Secretary of State to submit a business case to HM Treasury for higher pay increases for the 2006/07 year. That business case was put to Treasury for a three-year pay offer covering the period from 1 August 2006 to 31 July This included pay scale restructuring but the annual revalorisations of rates of pay (cost of living increases) were generally limited to just 2% per annum. The cumulative negative effect of this on Northern Ireland Civil Service pay rates is evident from the table shown. These figures exclude the cost of incremental/progression pay. The data (left) confirms that over the last eight years, the increases in the pay rates for Northern Irelandʼs civil servants totalled only 9.2% in comparison with the RPI rate of inflation of 20.5% over the same period. Consequently it can be argued fairly that civil servantsʼ rates of pay have fallen by a factor of 14.3% in real terms measured against RPI inflation since Furthermore the data also confirms that over the same period the Government approved increases in rates of pay totalling % for all National Health Service staff that aligned more closely with the RPI rate of inflation. Similarly Public Service staff in Local Government, Education and Library Boards and Housing Executive obtained increases in rates of pay of %. Two other points need to be recorded. Firstly, a number of NICS grades did not receive the consolidated 2% per annum increase in the rates of pay under the three year settlement. Management Side claimed that this restriction was justified on grounds of equal pay vulnerability. The consequences were that many civil servants suffered a real cut in their rates of pay of greater than 14.3% over the last eight years. Secondly, the recent equal pay settlement for NICS staff does not remove the unfair pay treatment. That agreed settlement dealt only with longstanding valid equal pay claims for the lowest paid grades. Indeed the comparators for the equal pay settlement were among those grades whose pay increases were curtailed as explained in the preceding paragraph. Restoring fairness in 2010/2011 It is against the background of the above facts that civil servants face new attacks on their pay levels. HM Treasury has insisted that the cost of all pay increases for civil servants in the 2010/11- year (revision of pay rates and incremental progression) must be restricted to range 0%-2%. The NI Executive committed to adopting Treasury policy on public sector pay and has contemplated going further with a public sector pay freeze in Northern Ireland. The recent announcement by the Chancellor, George Osborne, in his budget statement has introduced a two year freeze on public sector pay for staff earning less than 21,000 but it is likely that civil servants in all grades will be disadvantaged on account of the treatment of incremental/progression costs in the Civil Service. The Governmentʼs different and unfair treatment of incremental progression costs has led the NI Civil Service Management to serving notice to withdraw from the NICS Pay Agreement. It is claimed that the recent NICS equal pay settlement has resulted in the cost of incremental progression rising to 3.03% per annum to the pay bill. However this claim is baseless as the cost of progression before factoring in the equal pay elements was already 2.5%, a figure also in excess of the HM treasury limit. As this cost exceeds the Treasuryʼs pay range limit, NICS Management claim they are unable to maintain the Pay Agreement. Civil servants have not only been denied pay rates that keep pace with inflation but effectively Management Side is taking the unprecedented step of suspending payment of incremental progression within pay bands. This is yet further unfair treatment of Northern Ireland civil servants in comparison with the rest of the public services. Effectively civil servants are being asked to pay for the global economic crisis, which is not of their making. Creating a low paid demoralised Civil Service workforce is in no-oneʼs interest and will only damage public service efficiency. Trade unions cannot stand by and allow civil servants to lose out again. Those demanding that civil servants must tighten their belts need to understand the years of unfair treatment that civil servants in Northern Ireland have experienced. This is not just about protecting standards of living for Civil Service staff vital though that is. It is also about standing up for our public services. NI civil servants deserve fairer treatment than the scrapping of their pay agreement and suspension of their agreed entitlement to incremental progression. There is a compelling case for redressing the real term cuts in pay rates as evidenced above. Consequently NIPSA urges MLAs, Executive Ministers and others to recognise the justice of the case for adequate and fair annual pay and progression increases for NI Civil Service staff. 6 - Northern Ireland Civil Service Pay Northern Ireland Civil Service Pay - 7

5 Working together

FINANCIAL SERVICES (BANKING REFORM) BILL

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