Belfast Telegraph

Analysis: How pay differs across Northern Ireland public and private sectors

Pay offer: health chief Richard Pengelly
Pay offer: health chief Richard Pengelly
John Simpson

By John Simpson

Managing public sector pay questions has become more complex as the UK government now tries to move away from the austerity constraints of recent years.

Superimposed on UK policy questions, there is now a Northern Ireland dimension, as inherited difficulties reach the desks of permanent secretaries in the absence of local ministers.

Add to this description the political constraints of the status quo during a general election.

Industrial action by some health sector employees, during an election campaign, is a management nightmare.

The negotiating and decision-making vulnerabilities of the NI administration have been exposed.

Faced with the harsh reality of industrial disruption in the health service, the Permanent Secretary Richard Pengelly offered a 2.1% increase in the pay bill to staff affected by the Agenda for Change initiative.

That offer was rejected. It was an offer that bypassed an argument that that type of decision needed a local minister.

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However, in a shifting of the scope for local action and almost conceding the merits of a higher claim, Mr Pengelly added that he wanted to offer a 3% overall increase to match the award in England, but the funding for that increase is not available.

That conclusion needs to be justified. Is the logic of a 3% increase accepted policy?

Is this now a statement of the local priorities within the Stormont budget?

Could the NI Budget block be expected to provide this amount, possibly by reallocation of funds in a monitoring round?

There is now an uncertainty about the management objectives to settle the dispute. In a further dimension to the pay claim, the Permanent Secretary to the Department of Finance, Sue Gray, has widened the agenda.

Ms Gray has recently commissioned an independent study of the labour market and other issues affecting public sector pay.

The full terms of reference for the study are a critical unknown.

Will this study ask questions about pay relativities, public versus private, UK versus NI? These are critical questions.

The current pay disputes are a serious test of the collective management of the public sector in NI. David Sterling, head of the Civil Service, says "there are no easy fixes… dialogue is the best way forward."

He and his colleagues now need a purposeful strategy for dialogue.

People employed in the public sector in Northern Ireland typically earn about £625 per week.

This is nearly the same as public sector average earnings across the UK. That comparison is no accident. It is a reflection of the application in the public sector of pay parity across the UK, including NI.

Pay parity in the public sector, with some limited exceptions, was formerly an unchallenged principle of the devolved administration.

However, the parity principle has consequences for the wider NI labour market.

Typical average earnings in the public sector in NI are 30% higher than earnings in the private sector.

This contrasts with the public/private relationship across the UK where the average advantage for people in the public sector is about 11%.

That 'gap' in earnings differences, public v private, is large and tends to distort the local labour market, making recruitment by private sector employers more difficult if assessed on their ability to compete for employees when they are facing tighter profit margins as they trade in the private sector.

The pattern of earnings differences, public v private, is not new.

In the last 20 years, the evidence is that an overall difference of 30% has been consistent, if not in some years slightly higher.

Typical earnings levels in the public sector are higher than those in the private sector for several reasons.

The public sector recruits a higher proportion of staff with 'third level' qualifications.

Just comparing typical earnings without taking account of different skills and qualifications is simplistic but should not be completely dismissed.

Today's pay disputes are posing serious political questions for a non-political administration.

Belfast Telegraph