Big freeze starts to hit public sector pay

Analysis: deflation can be good, but this isn’t

More than one million nurses, midwives and other NHS staff face losing a promised pay rise in the first sign of a salary squeeze for public sector workers, The Times has learnt.

Pay freezes, or at best minimal rises, are also expected for thousands of senior civil servants, and government ministers, as Britain prepares for its first period of deflation for 50 years.

With many companies in the private sector imposing pay freezes and some even pay cuts, Alistair Darling is under pressure to set an example by restraining Whitehall and ministerial pay. A pay freeze from the top would set the tone for the imminent round of pay negotiations for other public servants, including one million local government workers, 450,000 middle-ranking and junior civil servants, and prison officers.

NHS sources said that pay for doctors, who have enjoyed relatively high rises in recent years, would be squeezed and suggested that employers were ready to renege on the third year of a pay deal for nurses and midwives worth 2.2 per cent as hospital trusts struggled to pay bills.

Unions have previously tried to revise pay deals upwards but, with deflation looming, this is the first time that employers have used the same rules to squeeze pay. However, the Armed Forces are likely to enjoy slightly higher rises to reflect demanding deployments in Iraq and Afghan-istan and a retention crisis.

The moves to curb pay coincide with today’s figures on inflation, which some economists forecast will show that the retail price index has dropped from plus 0.1 per cent in January to between minus 0.6 and 0.8 per cent. The figures have not been negative since 1960.

An announcement on most pay deals was expected tomorrow, but such is the current uncertainty about “content and timing” in Whitehall that a final decision may be delayed for three weeks, according to officials.

Downing Street has been sitting on recommendations from the Senior Salaries Review Body covering senior civil servants, top judges and generals for weeks. Whitehall sources suggested that the Government wanted a pay freeze for the top 5,000 senior civil servants and ministers. The FDA, which represents the top mandarins, pressed for a 3 per cent rise.

The NHS employers suggested last night that under the current economic conditions it might be impossible to fund the 2.2 per cent pay award for 2010-11 to nurses and midwives, para-medics, ancillary workers and other NHS staff. “Trusts are coming under financial pressure to even cover this year’s settlement,” said Alastair Hend-erson, joint director of NHS Employers. “We have agreed the second year [at 2.45 per cent] of a three-year pay deal which is now in place but trusts beyond that will want to ensure they are able to cover the cost of pay.”

A spokesman for Unison, the public sector union, said: “Cutting pay awards of health workers will do nothing to help improve recruitment and retention, which is a real long-term problem in the NHS.”

(source: http://www.timesonline.co.uk/tol/news/politics/article5963352.ece)

Richard Reid is the founder of Pinnacle Proactive, Specialising in the Employee Assistance ProgramStress ManagementStaff Retention & Absenteeism. Take a Proactive Approach to Growing Your Organisation & its People. For more info visit http://www.pinnacleproactive.com

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