UK strikes: what you need to know about paycheck agencies

The government continues to use wage control agencies as a buffer when it comes to denying pay raises to public sector employees.

Health Secretary Steve Barclay has refused to talk to union leaders about raising workers’ wages, claiming the government has adopted the recommendations of independent pay monitoring agencies.

But unions are unwilling to accept this and want ministers to sit down with them to negotiate better wages as inflation has risen to 10.7%.

This deadlock has led to more strikes across the country, bringing many public services to a complete standstill in December.

What exactly are pay review agencies? Here’s what you need to know.

What is a wage review body?

There are eight pay rating agencies in the UK, accounting for 45% (or 2.5 million) of public sector employees.

They negotiate around £100bn in remuneration each year and are made up of HR experts and economists with experience in both the public and private sectors.

Those in each body are appointed by the relevant government agency.

“The appointments are made on the basis of merit and political activity played no part in the decision-making process,” the government’s website said.

The government also decides how everyone who sits on these councils is paid – it’s £350 a day for the chairman, for preparing and attending meetings and £300 for the members.

The first pay review body was set up in 1963 when NHS doctors clashed with the government over pay, before being extended to other parts of the public sector.

During earlier periods of difficult economic activity (such as the high inflation of the 1980s), wage review bodies were supported by both unions and the government.

But this shared willingness to follow the advice of the authorities seems to be fading.

What does it work?

Each agency is supposed to ensure that public sector wages are in line with comparable private sector jobs.

It takes evidence from relevant government departments, unions and expert organizations before deciding how pay should change each year. It then advises the government on these changes.

Does the government always follow its advice?

These recommendations are not legally binding, although the government usually simply adopts the recommendations.

But it’s not unheard of for ministers to reject the suggestions – then Health Secretary Jeremy Hunt did just that in 2014.

The government says this year it has adopted the recommendations on wage increases from the wage review bodies. The problem is that this is still significantly less than the increase demanded by the striking unions.

For example, unions representing NHS workers have called for a 19% pay rise, while the government has only offered a 3%.

Speaking to BBC Radio 4 on 21 December, current Health Minister Steve Barclay said: “When we failed to fully adopt the recommendations of the independent wage review body, programs such as yourself were the first to criticize us.

“If we don’t fully accept the recommendations we will be criticized for that, on this occasion we have fully accepted them.”

Here’s a quick look at how the government has followed independent pay recommendations over the past 12 years:

So are they independent or affiliated with the government?

The pay review bodies are appointed by ministers but still claim to be independent.

Yet they must operate according to government standards.

The government says what pay it is aiming for, decides when it responds to and publishes reports from wage reviewers – and always aims for the 2% inflation target designed to keep the economy going.

They are therefore unlikely to recommend something that ministers will merely reject.

So it is not surprising that Pat Cullen, general secretary of the Royal College of Nursing Union, claimed that the NHS pay assessment body “is set up by the government, paid for by the government, appointed by the government, and the parameters of the assessment are set by government.”

She added: “There is nothing independent about the independent wage review body.”

How have unions responded?

Unions are beginning to suggest that they will withdraw from negotiations with the wage review authorities over wage tensions.

Cullen said her union had “given faith in this process for years”.

“The government is using the wage control agency as a cover and that is why unions like us are seriously looking at whether we are still participating,” she claimed.

The Unite union has also claimed the bodies are “not fit for purpose”, while senior sector managers said it is “writing on the wall” for the system.

Similarly, the GMB union, which represents ambulance drivers, has already said it is withdrawing from that process and will not provide evidence to the NHS pay review body.

What is the government saying?

The Ministry of Health and Care said wage monitoring agencies were staffed by independent industry experts and is still pushing for unions to join next year.

“They base their recommendations on a variety of factors including the economic context, cost of living, recruitment and retention, morale and motivation of NHS staff,” said a spokesman.

Why then do the wage assessors not find a balance?

High inflation and years of government austerity have left independent wage assessors caught between two stools when it comes to making recommendations that are mutually beneficial.

So it is not surprising that the union actions continue.

Nurses and paramedics are already on strike, teachers’ ballots for union action are expected in January, and unions are beginning to question whether the bodies are still an appropriate means of setting wages.

Public sector unions have lost confidence and many are considering boycotting the process, calling on government ministers to sit down for negotiations instead.

The government also expresses fears about a perceived wage inflation spiral if public sector workers’ salaries are raised.

However, many economists believe that it is not wages that determine inflation, but external factors such as energy prices.

And private sector wages rose 6.9% in the three months to October, compared to 2.7% in the public sector.

“There is no reason why payroll reviewers should be fine-tuning [public sector] wages to influence inflation across the economy,” said Ben Zaranko of the Institute of Fiscal Studies.

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