Public sector pay falls by 3.1% since 2005

Public sector workers such as NHS staff, teachers and police officers, whose salaries are subject to Pay Review Boards, have seen an average 3.1% fall in their real earnings since 2005, although some such as radiographers have seen much steeper declines, according to a report commissioned by the Office of Manpower Economics.

The report tracks average real earnings within each of 394 occupations over the period 2005-2015. This includes NHS staff, school teachers, doctors and dentists, police officers and prison service staff who are subject to Pay Review Boards. The report compares earnings growth in PRB occupations directly with that in similar non-PRB occupations. It paints a picture of earnings stagnation or decline for most occupations, PRB and non-PRB, since 2005.  The findings show:

• Median real gross hourly occupational earnings have fallen by 5.8% since 2005
• The decline was steeper among non-PRB occupations (6.1%) than it was among PRB occupations (3.1%)
• Changes in real median earnings varied considerably between PRB occupations, even among those whose pay was set by the same PRB
• Eight of the 10 largest PRB occupations experienced a drop in real median earnings.

The National Institute of Social and Economic Research, a co-author of the report, says the findings challenge the popular misconception among commentators and politicians that a 1% cap on pay settlements has a uniform impact on the earnings of those covered by the settlement.  This is due to factors such as overtime, shift work premiums and regrading.

The report shows, for instance, that nurses subject to a PRB saw their earnings rise by 1.4% on average in the 2005-2015 period, whilst nurses not subject to PRB, saw their wages fall by 7.4% on average. However, NHS radiographers saw their pay fall by 19.4% compared to a a 7.4% decline for those not subject to a PRB.

The NIESR says: “The big difference between PRB employees and those in non-PRB occupations in the private sector is that PRB employees are public servants.  As such, the government can determine their annual pay settlement, and so the decision has a political as well as an economic dimension. When deciding what to do, the government will have to weigh public concern over pay equity for groups like nurses, and experts’ concerns regarding public employers’ ability to recruit, retain and motivate staff, against the potential costs of lifting the 1% cap for the public purse, which could be considerable.”

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