Public Sector Pay Policy : 2008 - 09 - Briefing 183

June 2008

Introduction

This briefing provides an overview of the Scottish Government's guidance for Scottish Public Sector Pay Groups in 2008/09.

This pay policy guidance applies to those public sector bodies whose pay requires the approval of Scottish Ministers. This includes the Scottish Government, Executive Agencies and related Departments which have their own pay bargaining units and others such as: Scottish Water, Learning & Teaching Scotland and Highlands and Islands Airports Limited

The policy for 2008/09 applies to those public bodies who will enter new pay settlements between May 2008 and April 2009 (inclusive).

Background

The Scottish Government states that it aims to keep pay settlements moderate, affordable and sustainable while allowing some flexibility to allow more money to be targeted at specific issues. These include addressing inequalities in pay and reward systems and making sure that public bodies can recruit, retain and motivate their staff.

The paper states that public bodies can negotiate their pay awards to cover more than one year, with the length of any deal being an issue for each public body and its recognised trade unions.

The paper sets out what the relevant public bodies have to do in order for the Scottish Government to approve their pay remit proposals. This includes details of what was actually paid out in their last pay award and the current remit proposals as well as a business case that provides the information and evidence supporting any proposal.

Standard Remit Increase

Excluding key priorities (see below) the general guidance is that the total limit on standard remit elements is an increase for staff in post (ISP) of 3.75%. This figure relates to the cost of the proposed increase in pay and benefits as a percentage of the baseline paybill.

However, within this amount the basic award (the inflation/ cost of living element of the pay award) is limited to no more than 2%. The current inflation rate (RPI) stands at 4.2% (April 2008).

The other elements contained within the standard remit limit include performance related bonuses and increases in overtime, allowances etc that result from the increase in pay and benefits proposed.

Key Pay Policy Priorities

The guidance highlights some specific priorities that should be addressed within the pay guidance. These are:

• inequalities within pay and reward systems and structures; and

• recruitment, retention or motivation issues that directly impact on a public body's ability to deliver outcomes.

The headline cost of the full pay award (standard and key pay policy elements) must not exceed 4.5%.

The sum of money available within a pay remit to address the above depends on the cost of the standard remit proposals. If the average increase under the standard remit is less than 3.75% there will be more available to address the pay priority issues.

A further method for funding these priorities is through recyclable savings. However any such savings that are redirected to pay will be on top of savings already planned to have been delivered or needed to deliver within the Efficiency Delivery Plans 2008-11. These savings must be delivered in the year in which they are being re-used.

The measures proposed to address the key pay policy priorities fall into one or more of the following 3 categories:

Examples include an increase in annual leave for staff or a reduction in the hours in a working week. The additional benefit for staff will not add actual costs to the paybill and will therefore not impact on the headline cost limit to all proposals of 4.50%.

1. One-off increases

These are proposals which have actual costs but these are limited to a single year. These could include one-off increases to buy out certain terms and conditions.

2. Increases with ongoing cost implications

This category covers increases which have ongoing cost implications and therefore have the potential to significantly increase paybills. They usually involve changes to pay and reward structures or increases to minima and maxima of pay ranges above the level of the basic award.

Other Issues

Harmonisation

Although there are limits on the increases in pay and benefits that can be made in any year, there is an exception for the one-off costs of harmonising terms and conditions of employment of different groups of staff as a direct result of the Scottish Government's drive to have fewer national public bodies. Harmonisation usually involves the buying-out of the more beneficial terms and conditions of employment for one group of staff.

However, this does not apply to any increases in the pay or non-pay benefits for the existing staff group. These costs will count against the policy limits.

Multi-Year Deals

For multi-year pay deal it is possible to average the basic award over the period of the pay remit deal so long as the average basic award is no more than 2.00%.

Pay Range

It is also possible for organisations to make increases to the minimum and maximum rates in their pay range. However when deciding their maximum rates, these should be compared to the medians of the maxima in the public sector labour market or a particular labour market if that is more appropriate (i.e. for specialist posts). Where the maxima is more than 5% above the comparator, any rise in the basic award must be below 2%.

Proposals to make additional increases to the minima of an organisation's pay ranges should take into account the "Solidarity" target in the Scottish Government's Economic Strategy which is "to increase overall income and the proportion of income earned by the three lowest income deciles as a group by 2017" by specifically considering your lowest paid groups of staff.

Action for Branches Further Information

This briefing paper is intended to update members on the Scottish Government's Public Sector Pay Policy 2008-09 and to encourage debate within branches.

UNISON Scotland

http://www.unison-scotland.org.uk

Scottish Government: Public Sector Pay Policy 2008-09

http://www.scotland.gov.uk/Publications/2008/05/22162216/0

Contacts list:

Dave Watson

d.watson@unison.co.uk

Kenny MacLaren

k.maclaren@unison.co.uk

@ the P&I Team

14 West Campbell St

Glasgow G26RX

Tel 0845 355 0845

Fax 0141 307 2572