Fair Pay in the Public Sector 2

Following a successful event at the Labour Party Conference, The Equality Trust continued the debate on fair pay in the public sector at the Conservative Party Conference in Manchester.  Our speakers included Will Hutton (author of the Hutton Review of Fair Pay in the Public Sector), Charlie Elphicke (MP for Dover and Deal), Ryan Shorthouse,  (Director, Bright Blue and researcher for the Social Market Foundation) and Duncan Exley (Director, The Equality Trust).     All provided interesting and well-founded insights on pay in the public sector and stressed the corrosive effect of large pay ratios in both the public and private sector. 

Will Hutton stressed that while high pay in some parts of the public sector was problematic, the private sector should now be seen as the key area of concern.  The past couple of decades has seen the UK’s private sector  experience the biggest rise between top and bottom pay of any OECD country, and yet it is very hard today to identify any link between private sector pay and company performance.    Will outlined measures to track top pay against median pay and ‘earn back’ bonuses, stressing both the importance and inevitability of such initiatives.  He ended on the note that fairness is neither a left nor a right idea but a “fundamental human instinct”; it should be recognised as such and should underpin pay ratios in both the public and the private sectors.

Ryan Shorthouse continued the theme of fairness in pay policy stressing the importance of linking reward to effort.   People on the lowest wages are paid far too little given the effort they put in, he said.  Low pay should be addressed via skills and education policy, raising the minimum wage, implementing a regional living wage in the public sector and linking pay to performance in both the private and public sector.   However, he closed by noting that while “pay differentials in the public sector can sometimes be grotesque” there are many examples of good practice.

Charlie Elphicke echoed Will’s comments about attitudes to pay in the private sector, arguing that that culture of ‘get what you can’ in the boardroom is now unacceptable.   Corporate boardrooms have not yet had the rebalancing of pay that is needed in order to restore fairness and it is imperative that bonuses in the public and private sector are justified.   Indeed Government itself, he argued, should be about putting a sense of fairness back into the country.

The Equality Trust’s Duncan Exley drew the discussion to a close by suggesting that the public view large pay ratios as pernicious and want to see pay ratio requirements expand into other sectors, including areas like higher education and the public services industry.

In the Q+A session some participants admitted surprise about the extent of pay ratios in the public and private sectors and the nature of irresponsible behaviour in corporate boardrooms that had been highlighted by the panel.  All comments noted the importance of the issue of fair pay and there was a strong desire for action to address this.

Despite examples of good practice, the link between fairness and pay in the public and private sectors is still weak.  Our events showed support from representatives of all parties and among the public for action to address fairness in pay.  Over the coming months we will be undertaking research to further inform and progress the debate, campaigning to raise the profile of this issue and offering policy solutions to take forward.