NJC Pay Offer – NJC Trade Unions position and other requested information17/01/2018
Sent on behalf of Linda Boyer, Chair NW RLGSG, and Carl Greatbach, Vice Chair NW RLGSG
This email contains information in response to questions and queries raised at the RLGSG meeting on 11th January.
As you are aware from the recent email of 15th January the UNISON North West Service Group’s position, from its meeting of 11th January, is that the current NJC Pay Offer should be rejected. The basis of this was as follows:-
- The North West Regional Local Government Service Group believes the current NJC pay offer should be rejected as it would mean a further two years of real term pay cuts for a majority of NJC members, given inflation forecasts for the period covered by the offer.
- Aside from some bottom loading in this and previous NJC pay settlements this offer would represent over 10 consecutive years of NJC pay awards being lower than inflation.
- We should campaign thoroughly to seek to secure a rejection of the offer in membership consultations.
- The timescale for membership consultation should be sufficient to enable Branches to fully engage directly with all members and should allow for half-term school holidays.
- We should campaign for a revised offer that ensures no member suffers a real term pay cut, alongside the campaign for fair funding.
- Materials should be produced to show the impact of the offer on all pay points including reference to statutory minimum pay levels that employers have to pay anyway, the Foundation Living Wage rate that many employers already pay, and the value of each pay point which would be necessary to meet forecast inflation for the period covered by the offer. This is necessary for members to take a fully informed view on how the offer affects them and the real term value of their pay.
At the RLGSG meeting some colleagues asked about the consultation process and the position being taken by the other NJC Trade Unions, Unite and GMB. The current positions of all three unions is set out below.
Questions were also raised about the impact of inflation and what the offer means where the employer currently pays the ‘real’ Foundation Living Wage (or a local variant). Some initial information in answer to these queries is also set out below, though further detailed work will be needed to provide a comprehensive assessment of the impact at every Spinal Column Point (SCP) of the NJC Pay Spine. Further questions were asked about the numbers of members who would ‘gain’ or ‘lose’ from the offer.
UNISON Position on the Pay Offer
UNISON’s NJC Committee is meeting on 23rd January to determine its recommendation to members. The consultation will be undertaken by Branches who can use a variety of means, but all are strongly encouraged to hold briefing sessions for members (open to non-members) in advance of the branch ballot process. UNISON Branches and Regions can legitimately take their own positions on the offer, even if that differs from the UNISON NJC Committee position, but the actual consultation question that is put to members is the one determined by the UNISON NJC Committee.
Unite Position on the Pay Offer
Unite’s National Industrial Sector Committee for Local Authorities met on 11th January (as we held our regional briefing and RLGSG) and voted unanimously to reject the offer. Unite will now be consulting its NJC membership on the clear basis of recommending rejection.
Echoing many of the sentiments expressed at our RLGSG meeting Unite’s reason for recommending rejection includes the following:-
“Since successive Conservative government’s introduced a series of pay freezes and pay restraint policies in 2010 the pay of local government workers has fallen by 21 per cent in real terms.
The current CPI inflation rate is 3.1 per cent while the RPI rate which includes housing costs is 3.9 per cent.
The current pay offer will result in a further real terms pay cut for most of Unite’s local government members. Our members simply do not believe that the offer will result in enough members receiving a pay increase which is at least in line with inflation”.
Further information can be found at http://www.unitetheunion.org/news/unite-to-recommend-local-government-members-reject-pay-offer
GMB Position on the Pay Offer
GMB held a meeting of lay reps on 13th December to receive and consider the offer. They are undertaking their membership consultation from late January through a centrally administered postal ballot.
The official GMB position on the offer appears to be neutral, in terms of not making a specific recommendation to members on how to vote.
A series of documents that form an “NJC Pay Pack” can be viewed and downloaded at their website and a Powerpoint presentation states:-
“GMB position – It was agreed to present the facts to the members; explain the new pay offer and pay spine; a full postal, secret ballot for everyone would follow.”
Further information can be found at http://www.gmb.org.uk/campaigns/local-government-pay/overview
Inflation Forecasts and the Pay Offer
As mentioned by the National Officers at our Regional briefing the current Retail Price Index (RPI) measure of annual inflation is 3.9% and the current Consumer Price Index (CPI) measure of annual inflation is 3.1% so the current offer would be a real term pay cut for many members (a significant majority as it turns out).
Inflation can be a complicated thing to understand but basically it tracks an increase in prices (based on “a basket of goods and service costs”) over a year. So in simple terms, if something cost us £10 this time last year it is now costing us £10.39 under the RPI measure and £10.31 under the CPI measure. Inflation is measured on a month-by-month basis, hence it goes up and down or stays the same, and the overall impact of inflation in any given calendar year (or any 12 month period) is the annual average over that 12 months.
The two most commonly referenced inflation measures are RPI and CPI. RPI has been the UK standard since just after WWII (although it has changed during that time in terms of methodology). CPI was introduced in the wake of the 1992 Maastricht Treaty and designed solely to allow international comparisons of certain expenditure factors because of the inflation linked factors required in the criteria for satisfying monetary convergence to the Euro. In that respect it was largely designed as a measure of governmental inflation rather than household inflation affecting ‘real’ people. This is why, in nearly all circumstances, CPI produces a lower inflation figure than RPI; because CPI excludes virtually all housing costs (due to their huge variations across the EU) but includes the expenditure of all households. On the other hand RPI includes virtually all housing costs but excludes the expenditure of those households representing the top 4% by income as well as pensioner households where 75% of income is derived from state pensions and benefit.
Because of the above, RPI is widely accepted as being the more accurate inflation measure for working people - and therefore determining the link between inflation and wages as a comparative reflection of whether earnings , in real terms, are rising, falling, or staying the same. Of course, the fact that CPI is nearly always the lower figure of the two measures is the exact and disingenuously expedient reason why Government made the change in 2011 to using the CPI measure to uprate benefits, tax credits and public service pensions (affecting millions of ordinary working people and low income households) but kept RPI as the measure for the indexing of private contracts, tax allowances and government gilts..
For more detailed information on why UNISON, like most organisations, uses RPI as the wage related inflation measure see https://www.unison.org.uk/content/uploads/2013/06/Briefings-and-CircularsInflation-Indicators3.pdf
Although RPI is currently running at 3.9% we need to look at forecasts that cover the timeline of the pay offer to make an assessment of its impact. Whereas the monthly inflation figures track actual changes over the previous 12 months, forecasts (self-evidently) look ahead and, not surprisingly, there are a multitude of organisations that make forecasts producing, also not surprisingly, a range of forecasts. Helpfully (for once!) HM Treasury publish monthly inflation reports which include an average of all independent forecasts and these are widely accepted as the general forecast. Some months the reports include forecasts only for the year ahead on a month-by-month basis and others also include a medium term forecast covering 2 to 3 years on a quarterly basis.
So here goes...
- The current pay offer covers the period 1st April 2018 to 31st March 2020.
- The most recent HM Treasury reports show that cumulative RPI inflation over that two-year period will be 6.45%.
- The cumulative effect of the two-year pay deal at SCP 20 and above would be 4.04%.
- This means that over the two-year lifetime of this current offer ALL members paid at SCP 20 and above will see their pay fall in real terms by a further 2.41%.
- That is on top of a real term decline in NJC pay value of 21% (average) since 2010.
- Which, in summary, would mean more than 10 successive years in which your pay values have fallen in real terms.
- This offer means your pay will have fallen in real terms by a total of nearly 25% since 2010.
- Or in other words:– in 2010 you were earning £300 per week but in 2020 you are only earning £225 per week in exactly the same job.
- Plus the impact of all this on your pension when you retire – an impact that will be felt for every single day of your life after you retire.
- We all know that local government has been starved of funding by the Tory Government and previously, even more so, by the coalition with the discredited Lib Dems.
- But do not, for one minute, believe the myth that poor pay has saved jobs. It hasn’t. It won’t.
- Local Government has shed nearly a million jobs at the same time as paying basement wages to its remaining staff picking up the work left behind after the stampede to the fire exit.
- Most councils and NJC bodies are now at skeletal staffing levels even after a decade of unprecedented paybill reductions that YOU have paid for.
- In strictly legal terms a local authority cannot become bankrupt – so a decent wage rise for you is not the tipping point you may get misled to believe.
- The employers should be marching to Whitehall with their employees to demand fair funding for local government and local government workers . Because despite all the goodwill in the world the employers and the unions are not going to resolve the structural problems with the NJC Pay Spine on a sustainable basis – but more importantly to us, a just basis - by implementing yet further pay cuts on the vast majority of their employees.
- And, at the end of the day, no matter how you spin this offer out, it is simply that – yet another significant pay cut, hopefully not dressed up in misdirection.
In the interests of balance, and for the ultra-sceptics out there, the HM Treasury forecast for the same period shows cumulative CPI at 4.65%, whereas the Bank of England forecast is 5% cumulative CPI in that period. But whatever the forecast, the current offer is a pay cut is a pay cut is a pay cut, however you choose to look at it. The inflation forecasts may change with the next HM Treasury report as we move into the membership consultation and we will update Branches as appropriate.
The Offer and The Living Wage
This is the least easy bit in terms of impact on members as a good number of our Branches have employers that pay a minimum “Local Living Wage Rate” as well as others that pay a minimum of the ‘real’ Foundation Living Wage Rate.
When assessing “the Living Wage” in terms of the offer we have to look not only at the offer and the living Wage rates but also how those Living Wage rates may rise in the period covered by the offer, to 31st March 2020, which are not necessarily linked strictly to inflation rates.
More work will need to be done to assess this but there are a few general ‘rules’ that prevail regardless:-
- A proportion of the higher % increases at the bottom end of the pay spine in the offer are necessary to maintain the minimum NJC pay rates at, or just above, the level required to meet the Statutory Living Wage and its forecast increase.
- If your employer pays you at the ‘real’ Foundation Living Wage rate (or a local variant of it) then the offer would give you a cash rise if its impact on your specific SCP took the value of that SCP above your current pay rate. If it did not do that then you would not gain any cash value from this offer.
Gainers and Losers?
At present this is an educated guestimate based on local knowledge (in national and North West terms), inflation forecasts, Living Wage assessment and information from other unions.
- At basic SCP value levels, less than one-third of members will gain in real terms from this offer when inflation is factored in.
- That “less-than-one-third-of-members” who gain under the offer will reduce further numerically where employers pay minimum wage levels at Foundation Living Wage rates or local variants thereof, unless the impact of the pay offer takes wage rates at their current substantive SCP above “Living Wage” rates after the offer impact is applied (and going forward, with whatever increases to the “Living Wage” rates are applied in the period 1st April 2018 to 31st March 2020).
- ALL members currently paid at SCP20 or above will see the real value of their pay reduce by 2.41% under current HM Treasury RPI forecasts
- From all the above at least two-thirds of NJC employees will see a real term cut in pay from this offer.
The information in this email is accurate to the best of our knowledge, with reference sources provided. It will require far greater analysis to provide an impact assessment of the current offer as it relates to every SCP, given the various factors, but hopefully this update provides Branches with sufficient material to provide some key messages. If there are any particular questions that Branches have on the offer or related matters please let us know. Our intention is to share as much information as necessary on a factual basis, as well as expressing opinion, so that Branches can consult members on the most informed basis possible.
Linda Boyer, Chair NW RLGSG
Carl Greatbach, Vice Chair NW RLGSG