Private sector leads the way in latest pay round
The new pay offer for NHS staff and the local government pay offer that members of GMB, UNISON and Unite have been voting on are the latest moves in what has been hailed as the end of the public sector pay cap (see page 3). Average earnings and private sector pay settlements seem to be on the move too but it is too soon yet to declare that the long-awaited pay recovery had finally arrived.
To test the current climate, Workplace Report has taken a close look at the 300-plus negotiated deals so far recorded by LRD Payline in the 2017-18 pay round (with effective dates between August and the end of March).
Table 1: The pay round so far
| Bottom quarter | Median increase | Top quarter | |
|---|---|---|---|
| All agreements lowest basic | 2.0% | 2.5% | 3.5% |
| All agreements standard | 2.0% | 2.5% | 3.4% |
| Private sector lowest basic | 2.1% | 2.8% | 3.9% |
| Private sector standard | 2.0% | 2.6% | 3.5% |
| Public sector lowest basic | 1.0% | 1.1% | 2.3% |
| Public sector standard | 1.0% | 1.0% | 1.8% |
That survey reveals that 2.5% is currently the median increase on lowest basic rates and the increase for most grades or workers, that is, the “standard” increase. The middle half of deals was between 2.0% and 3.5% (see table 1).
Last year at this time, the median was 2.2% and the standard increase 2.0%, with the middle half of deals worth between 1.75% and 3.0%, so it looks like settlements are up a bit.
Within these figures there’s no overall improvement yet in public sector pay. The median is still in familiar territory — a 1.1% median rise on lowest basic rate and a 1.0% standard increase. There were bigger pay rises for a minority of deals (the top quarter of public sector deals were worth 2.3% or more on lowest basic rates and 1.8% as the standard increase), in particular with a 2% rise for school teachers, but the effects of the pay cap are still clearly being felt.
Private sector deals delivered a healthier 2.8% median increase on lowest basic rates (and a 2.6% standard increase) and that is clearly where the overall trend towards higher settlements is currently coming from.
Public sector
If the pay cap is ending, why aren’t these public sector pay figures more buoyant? Cabinet Office pay guidance for 2017-18, which limited pay awards to “an average of up to 1%”, may be one explanation. Civil service and related settlements are well represented in the survey. Some public sector deals had bigger increases for the lowest paid staff but only a small minority increased pay for most grades or workers (the standard increase) by more than 1%.
The settlement for school teachers in England and Wales, affecting almost half a million workers, was an important exception. From September 2017 it added 2% on the minima and maxima of the main pay range (but 1% on all other pay ranges and allowances). The annual increase for school teachers in Scotland notched up to 2% with a second stage 1% rise from 1 January 2018.
Skills Development Scotland had a 3.1% rise including progression, with a £400 underpinning increase for staff below £22,000 a year, reflecting the Scottish Government’s public sector pay policy.
The Natural History Museum awarded a 1.8% increase, while the Imperial War Museum awarded 1.5%.
For the Police service settlement in September the Police Remuneration Review Body (PRRB) recommended a consolidated increase of 2%. However, the government decided that it should be a 1% increase to base pay plus a further 1% paid as a non-consolidated lump sum, so that opportunity to properly relax the pay cap was missed.
Some public sector groups have been more immune to UK government pay restraint than others, however. Network Rail (maintenance) and the Scottish ferry company Caledonian MacBrayne both saw RPI inflation-linked pay rises of 3.9% (awarded on a performance-related basis for some Network Rail staff), while George Best Belfast City Airport had a 2% pay award.
Higher and further education, officially part of the private sector, have also been hit by austerity. The Higher Education JNC agreed a 1.7% increase to pay spine points 17 and above from 1 August 2017, with increases of up to 2.43% on spine points from 16 to 2.
Private sector
The private sector continues to generate higher pay rises, and the link to RPI inflation has certainly helped some groups of workers (see table 2). And next month’s 4.4% increase in the statutory National Living Wage (taking it to £7.83 an hour for workers aged 25 and over) will put more money into the pockets of the lowest paid, but won’t necessarily help middle and higher paid workers.
Table 2: Private sector pay deals worth 3.5% or more
| % rise on lowest pay rate | standard % rise | Comments | |
|---|---|---|---|
| Heathrow Express (drivers) | 12.23% | 12.23% | Basic uplifted to £51,000 a year and then increased by £1,500 from 1 Jan 2018 |
| Manpower UK (BT Contract) | 18.0% | 6.25% | Voice Services review, 6.25% for all PBA team members, rate increased to £8.50 an hour |
| Axis Cleaning Services (Arriva Trains Wales) | 6.0% | 6.0% | For all staff from 1 October 2017 |
| Poundland Distribution (Transport) Bilston and Willenhall | 5.5% | 5.5% | Second-stage increase to all basic rates (premium payments unchanged) |
| Suez (Doncaster Metropolitan Borough Council) | 5.4% | 5.4% | 2.7% from 1 September 2017 plus a further 2.7% brought forward |
| First South West (Kernow) | 6.25% | 5.26% | Staged, 7.4% on basic rates and 6.6% on overtime rates over the course of the deal |
| Tesco (retail) | 5.25% | 5.25% | Staged deal, a 5.25% increase to hourly rates from 1 November 2017 |
| Rio Cinema | 5.0% | 5.0% | For Front of House and Cleaning staff raising rate to £8.50 an hour |
| Pirelli Tyres | 4.5% | 4.5% | From 1 February 2018, an additional £1,500 a year for production workers |
| Ford (salaried staff) | 4.5% | 4.5% | 4.25% with 0.25% PRP paid in April 2018 backdated to November 2017 |
| Ford (hourly paid) | 4.5% | 4.5% | From 24 November 2017 |
| Aston Martin | 4.43% | 4.43% | From 1 January 2018, based on the average RPI plus 0.5% |
| Sainsbury’s Retail | 0.0% | 4.4% | 4.4% increase on Standard RGS base rates, non RGS rates unchanged |
| JaguarLandRover | 4.4% | 4.4% | From 1 November 2017 based on RPI plus 0.5%. |
| DHL Automotive (Jaguar Land Rover contract) | 4.4% | 4.4% | From 1 January 2018 based on RPI plus 0.5% |
| Facility Management UK | 4.35% | 4.35% | From 1 January 2018 based on RPI plus 0.25% |
| Essar Oil UK (Stanlow Refinery) | 4.2% | 4.2% | From 1 January 2018 based on RPI plus 0.2% |
| Merseyrail (drivers) | 4.15% | 4.15% | From 29 January 2018 based RPI plus 0.25% |
| Kraft Heinz (Wigan) | 4.15% | 4.15% | From 1 January 2018 |
| British Airways (pilots) | 4.1% | 4.1% | From 1 January 2018 based on RPI; other groups received the same |
| British Airways (cabin crew — Mixed Fleet) | 4.1% | 4.1% | Increases of £1,404 to £2,908 a year subject to experience and inflation |
| Wightlink | 4.1% | 4.1% | Increase based on RPI, minimum £625 for full-time employees |
| Legal & General | 4.0% | 4.0% | Fom 1 January 2018 for all staff covered by bargaining unit |
| Rolls Royce (Rotherham) ABCF | 4.0% | 4.0% | From 1 March 2018, based on average RPI |
| Northern Gas Networks (operational staff) | 4.0% | 4.0% | Increase to base pay and allowances based on RPI |
| Isle of Man Steam Packet (Manx Sea Transport Guernsey) | 4.0% | 4.0% | From 1 January 2018 |
| Churchill (Tyne & Wear Metro Contract) | 4.0% | 4.0% | From 1 October 2017 (a 15p per hour premium for all vehicle drivers) |
| First Tram Operations (drivers) | 4.0% | 4.0% | From 1 November 2017, based on RPI |
| East Midlands Trains (former Central drivers) | 3.9% | 3.9% | Fom 1 January 2018 based on RPI |
| Argyll Ferries | 3.9% | 3.9% | Fom 1 October 2017 |
| Futamura | 3.9% | 3.9% | From 1 January 2018 (equates to an additional £1,000) |
| JCB | 3.9% | 3.9% | Fom 1 January 2018 based on RPI |
| Serco Northlink Ferries | 3.9% | 3.9% | From 1 October 2017 |
| BMW (Mini plant Oxford) | 3.9% | 3.9% | Based on RPI |
| Virgin Atlantic (cabin crew) | 3.8% | 3.8% | Based on average RPI plus 0.5% |
| Castle Cement (drivers) | 3.7% | 3.7% | After the threat of strike action |
| Old Bushmills Distillery (Casa Cuervo) | 3.7% | 3.7% | Based on RPI |
| Husqvarna | 3.7% | 3.7% | Based on RPI plus 0.2% |
| Tesco Distribution Middlesbrough (‘New New’ sites/single sites) | 3.65% | 3.65% | Staged increase to the day rate over the course of the year |
| BMW (Roll-Royce Motor Cars) | 3.5% | 3.5% | From 1 January 2018 |
| Hoyer Petrolog (BP Oil drivers — Greenfleet contract) | 3.5% | 3.5% | Increase to all elements of pay from 1 January 2018 |
| Tesco Distribution (Avonmouth) | 7.1% | 3.5% | Second stage 1% plus 33p an hour ‘Local Market Rate’ adjustment, and 48p an hour to consolidate driver rate |
| London Theatres (SOLT) Prospect | 3.5% | 3.5% | From 1 October 2017 |
Sodexo Justice Services runs private-sector prisons at Peterborough, Northumberland, Forest Bank, Bronzefield and Addiewell. The Community trade union recently negotiated a one-year 2.5% increase on all rates, effective from 1 January.
National officer Adrian Axtell told Workplace Report: “The driving factors are the uncertainty of Brexit (hence the one-year element) and also recognition of the difficult circumstances employees within the sector find themselves in. Part of the deal is also to work jointly on the retention issue due to a relatively high attrition rate. This will involve leading reps from the prisons as well as senior Community officers.”
A report published last November jointly between Community and the Howard League for Penal Reform concluded that action on staffing levels, rates of pay, and officer development is urgently required (see box below). The need for significant pay rises at all levels, to undo the squeeze on wages, is by no means limited to the justice sector.
Pay pressures on private prison staff
Research by the Howard League for Penal Reform has taken the temperature among prison officers in England and Wales.
A number of officers interviewed took the view that starting pay was reasonable in most areas of the country, but needed to rise as staff became more experienced and took on more responsibility. One officer said: “Starting salary is not the issue – lack of progression and support is the key issue around pay. There is no incentive to stay.”
However, others thought that the starting salary needed to be higher and commensurate with police officers and social workers in the area. One officer said: “You can go and work in Aldi for £18,000 a year without having to deal with the things we have to deal with. It’s nowhere near to what we should be paid for [what] we’re doing.”
The problem of “static” or unchanging pay was a major source of frustration. Experienced of officers felt that their length of service and the skills they had acquired were not reflected in their pay packet. The majority thought that they would be better paid if they were working in public sector prisons.
The frustration was exacerbated by recent improvements to starting salaries and increments for new staff, but without any corresponding changes to more experienced officers pay or benefits.
“There is no reward for service – this means that officers who started a long time ago have lost money since starting – this is unfair. You now only have to work three years to get to 25k. Older officers have had to work 15 years to get to 25k and have no further benefits,” said one officer.
While officers understood that both the private and public sector needed to try and make the job more attractive to new people, many felt that the recent changes to some starting salaries were unfair and short term. It was clear that different levels of prison officer grade, which allowed development and pay increases, were needed to both improve recruitment and retention as well as allow prison officers to professionalise.
Plans to create 2,000 new senior roles for experienced officers in the public sector, with additional specialist training and salaries of up to £30,000, along with pay rises above the public sector pay cap, showed that the public sector are starting to acknowledge the importance of workforce development and beginning to act to introduce better career paths and pay for officers.
“If the companies running private sector prisons fail to act to ensure parity, this will widen the gap between conditions and career prospects in the two sectors further, exacerbating the staffing issues and outcomes in private prisons,” the Howard League said.
Report is available at: https://howardleague.org/wp-content/uploads/2017/11/The-role-of-the-prison-officer.pdf
In transport, bargaining groups at British Airways including pilots went into the third year of their three-year deals in January. The commitment to pay 2.5% or the December 2017 RPI (whichever is the greater) delivered a rise of 4.1%. Mixed Fleet cabin crew also secured a pay settlement after industrial action.
A long-term deal at East Midlands Trains delivered a 3.9% increase based on the November 2017 RPI. Bus workers at First South Yorkshire had a 25p an hour increase, worth up to 3.32%. But at Forth Ports (Grangemouth) a one-year deal provided a 3% rise in basic pay and responsibility payments.
Some parts of manufacturing have benefitted from stronger international trade but it’s not all plain sailing. The 2 Sisters Food Group suffered job losses and adverse media allegations, and was accused by Unite of management heavy-handedness. Negotiated pay rates rose by 2.1% at its Carlisle plant last October and 2.0% at Holland’s Pies from 1 December.
Pay rises of 2.5% to 2.75% were applied at Bombardier sites in Derby, Crewe and the Central Rivers train maintenance depot, under separate two-year deals. At the aerospace plant in Belfast (which was at the centre of a row over US import tariffs) pay rose by 2.0%, under a four-year pay deal.
Pay settlements have been stronger in the car industry, despite deep anxiety about recent sales figures, and Ford, Aston Martin, JaguarLandrover and BMW Mini are all in the 3.5%-plus bracket.
Manufacturing has very few multi-employer agreements left (even fewer now that negotiations have ended in Flat Glass) but the Corrugated Packaging agreement is one survivor. Its 2016 settlement provided for a 2.5% uplift on basic pay from 1 September 2017 (accepted by Unite members but rejected by GMB members, on aggregate it was accepted overall).
For contractors like DHL, pay rates can reflect the businesses that they cover. Under its contract with retail group Nisa, DHL staff at the Livingston warehouse received a 1.8% increase from 1 October 2017, taking the day rate to £8.09 an hour. In the car industry, DHL Automotive’s workers at JaguarLandrover received an RPI-based 4.4% rise (plus a one-off payment of £525) and operators’ rates now start at £10.33 an hour. Staff on the DHL Virgin West Coast Trains contract had a cut in hours from 1 August that topped up their earlier pay settlement.
IT services company Fujitsu has seen extended industrial action over a range of issues taken by Unite members (see page 4), but its pay deals (with three different unions) were part and parcel of the pay round. With Unite, it agreed a 1.2% consolidated increase underpinned at £225 and capped at £565 (1.07% of the pay bill), plus 0.4% awarded on the basis of performance and progression.
CWU members saw a staged increase of 3.55% to the voluntary Living Wage level from 1 November 2017.
The Living Wage also provided a baseline for the PCS settlement at Fujitsu, which applied varying salary increases depending on pay level. For members paid 99.99% of its benchmark (the IRS median) or below, there was a 1.75% increase, underpinned by a minimum of £375 but capped at £1,000. There were also in-role progression increases for eligible staff up to a maximum of £1,500.
Retail has been plagued by job losses at the likes of New Look, while Maplin and Toys R Us have gone bust. However, the statutory National Living Wage and voluntary Living Wage have continued to influence settlements.
Last year’s pay deal at Tesco (which is facing what could be the largest equal pay claim in history) will involve “re-investment” from premiums later this year, but provided a substantial 5.25% increase in November.
Shop Direct applied performance-related pay rises of up to 4% from 1 October 2017, but with a core award of 2%, while pay range increases in line with the market added 3.23% to the lowest pay rate.
Meanwhile, Wilko increased the minimum hourly rate for staff aged 25 and over by 1% from £7.65 to £7.73, but rates went up by as much as 7.74% for younger staff as the minimum hourly rate rose to £7.38.
In the finance sector, HSBC clerical staff saw an across the board increase of 3.1% for those with “good”, “strong” or “top” ratings from 1 March 2018. Staff rated “unsatisfactory” will not receive an increase. Pay scales increase by 2.5% (with one exception where the increase was 3.03%).
Among the utilities companies, Northern Gas Networks applied a staged 4% RPI increase to base pay and most allowances from 1 January.
Finally, a range construction industry deals came in at exactly 2.5% in line with the overall trend: Electrical Contracting (JIB/SJIB); Engineering Construction (NAECI); Environmental Engineering, Plumbing (JIB); and Thermal Insulation (TICA).