In today’s Sunday Telegraph, Christopher Booker is taking a swipe at rising levels of public pay, bonuses and benefits, in these times of public sector austerity. He is of course right to be seriously concerned on behalf of the public. It cannot be right that, whilst everything else in the public sector is shrinking, the wealth of those at the highest levels continue to inflate.
However, targeting those benefitting from a corrupted remuneration system, is hardly going to achieve the desired outcome – the wholesale realignment of public sector pay. The present system has evolved over many years of negotiation between recruitment bodies, unions and even individuals seeking senior positions. Much of this negotiation, especially involving unions, has been based on claims that public sector workers are poorly paid, because they have greater job security and receive earlier pensions than those in the private sector. Unfortunately for the taxpayer, and this is where Christopher Booker is right to voice his concerns. Public sector pay has not just caught up, it has, especially at the more senior levels, surpassed the private sector, whilst all other benefits have stayed the same. It is this increasing disparity between the public and private sectors that is creating the current media outrage.
There is also one group that tends to be overlooked when it comes to responsibility for pay inflation – local government elected members. I myself have sat through more than a few debates and subsequent votes on decisions related to the chief executive’s next pay rise. Invariably discussions always focussed on how we needed to pay at least the going rate, having taken soundings from what was called our family group. This family group was based on councils of the same type and size as ours and was supposed to ensure that we didn’t loose a good CX, because we were not paying the going rate. The problem with this approach, is that it automatically builds in inflation which is then made worse by members often unfounded concerns at the possibility of loosing the devil they know. Also, somebody will often throw in a comment about the high cost of seeking a replacement for a senior management post and Bob’s your uncle, you’ve added 5 or even 10% to the cost of employing your chief executive.
Some councils have attempted to justify pay inflation within it’s senior management team, by introducing performance related bonuses. This farcical approach is also widespread across Whitehall and only adds to the outrage felt by those in the private sector, when reading reports such as Christopher Booker’s. If you can’t measure somebody’s performance against a well understood outcome such as profit, you’re stumbling around in the dark, basing your decision on personality and not performance and inviting the sort of pay inflation now common across the public sector.