Pay perspective over job fears

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IT does not matter whether individuals are working in the public or the private sector. The refrain is normally the same; they are under-valued by their employers and are not paid enough.

However this is where the common ground ends. People working in private business accuse the bloated public sector of holding the country back – while those on the local authority payroll contend that their pay remains historically low because of spending restraints.

It does not end here. A leading think-tank claims that national pay agreements should be scrapped because these deals, negotiated by the trade unions, are holding back private enterprise in the North.

The Policy Exchange’s argument will not win any popularity contest with its implication that teachers and nurses in Yorkshire should not be paid as much as their counterparts in the South where the cost of living is higher. At a time when public sector is frozen, it can be argued that geography should not be a factor – teaching a class of 30 pupils is a challenge in any part of the country.

Yet, on the other hand, the rigid inflexibility of national pay deals makes it difficult for outstanding work, above and beyond the call of duty, to be rewarded. Greater freedom may help public bodies recruit the best staff to challenging areas, though others will contend that annual pay settlements are too important to be left to the mercy of town hall bosses, and their ability to run their authority in a prudent manner.

It is an approach that is already being introduced in academies and the Swedish economic model suggests that local pay bargaining, backed by a culture of meritocracy, can help to drive growth.

However, with pay pegged in the public sector and private firms only able to afford very modest salary increases, the more pressing priority is an economic strategy that creates new jobs.

While Britain’s prospects continue to remain closely allied to the EU’s crisis talks on the euro’s future, and how the likes of Greece and Italy come to terms with their enormous debts, pay settlements will take on secondary importance until David Cameron’s government can identify, and implement, a lasting growth strategy.