Council backs pay freeze as ‘least negative’ for staff and economy

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COUNCILLORS were given a stark choice last week: implement a pay freeze on your 5,000 non-teaching staff, regardless of their previously agreed terms and conditions, or consider “other options which are likely to include signficant job losses and/or pay reductions”.

And they gave a unanimous thumbs-up to the former option after considering a candid and ultimately persuasive report from two of their senior officials.

As revealed in these columns last week, Scottish Borders Council has begun discussions with trade unions over placing a moratorium on all incremental wage rises over the next three years in a bid to save more than £4million.

In a quid pro quo arrangement, the local authority will strive to give an assurance it will make no compulsory redundancies over the same period during which the current policy on voluntary severance, in which more than 600 council staff recently expressed an interest, will remain open.

And a total of 626 low-paid, mainly female staff, earning as little as £6.41 per hour, will be elevated onto the so-called Scottish Borders Living Wage of £7.15.

One of the trade unions involved, Unite, has already indicated it will ballot its 800 plus members on the proposals next month.

The options were outlined at Thursday’s full council meeting in the no-holds barred report compiled by Paul McMenamin, business partner (finance), and Ian Angus, from personnel.

They claimed the SB Living Wage specifically addressed an issue which unions in Scotland have been seeking to resolve nationally: a view endorsed by Eck Barclay, Unite’s senior shop steward at SBC, who believes the minimum wage element, combined with the no-sackings assurance, will find favour with his members.

Around 85 per cent of the 626 who will quality for the minimum wage are female and their pay hike will result in the maximum ratio between the lowest wage rate at SBC and the highest falling below 1:10 which, the authors claimed, was in line with best practice.

They revealed that this was not currently the case, with top-earner and chief executive David Hume on £65.51 per hour, assuming a 35-hour week, to produce a ratio of 1:10.21 against the £6.41 earners. The £7.15 wage for the lowest paid would reduce that ratio to 1:9.16. Further ratio reductions would be achieved against directors, currently paid a calculated £54.67 an hour, and heads of service on an hourly pay rate of £38.63.

Underpinning the report, along with a frank assessment of a fragile Borders economy in which the council has a crucial role, was a call for a commitment for elected members to implement the new measures while still fulfilling their equal pay responsibilities and ensuring lower paid staff are, as far as possible, “protected and not unfairly disadvantaged”.

And the report stressed: “What must be highlighted is that the proposals represent as positive a move as can be made by the council.”

The new arrangement is an add-on to the public sector freeze on inflationary or cost of living pay rises already negotiated by the Convention of Scottish Local Authorities (CoSLA) with the support of the Scottish Government for 2011/12 and 2012/13.

The council wants to effectively suspend its contractual obligations to pay incremental increases to employees who would automatically move up the pay-scales. If agreement is reached with the unions, this freeze will affect all staff on more than £21,000 a year from April 1. Staff on lower incomes will be entitled to incremental progression in 2011/12 but, like their higher-paid colleagues, they will face a total freeze in the following two years.

Even with the new minimum wage, the upshot will be a saving to SBC of £4.36million over the next three years: an indication of the huge employee costs borne by the council. Indeed, in the next financial year, £149million will be spent on the wages of staff, including teachers: about 60 per cent of SBC’s total revenue budget. In addition, the council spent one-third of its £45million supply budget in 2009/10 on 2,300 separate suppliers based within the Borders.

The report confirmed SBC’s role as the region biggest employer with a headcount of 5,813, excluding 1,301 employed on a casual/relief basis. NHS Borders has a workforce of 4,316.

But noting that 500 private sector jobs were lost in the region last year, the report stated: “The ability of the local economy to absorb these job losses is limited ... additionally the range of private sector businesses operating in more resilient sectors of the economy is narrower than in other rural areas of Scotland.”

Stressing the real-term cut in the coming year’s SBC revenue budget of £13million and an 18 per cent cut in its capital grant from Holyrood, the report stated that SBC, as a major employer, customer and service provider in the region, had “key responsibilities to fulfil”.

“Social, economic, responsible-employer and equality considerations must feature strongly when assessing the future implications of any financial planning decisions, not least when making recommendations affecting pay levels or reductions of staff.”

The authors cautioned also that the average wage in the region was already 18 per cent lower than the national average, alternative job opportunities were limited, and large-scale job losses could have a negative impact on school rolls, the housing market, Council Tax revenue, welfare benefits, economic development and net migration from the Borders.”

With these factors in mind, the report said the council “must consider how best to protect jobs with the resources avaiable”.

And it admitted: “Delivering a policy of no compulsory redundancies will be a challenge for the council over the period of the freeze on incremental progression. With the options available, however, some assurance can be provided that this can be achieved.

“It is hoped that, given the widespread and well-publicised financial pressures on the economy and measures of austerity put in place by central government to meet them, all key stakeholders, but in particular trade unions and staff, will appreciate these proposals ... will have the least negative impact on staff, the wider community of the Borders and its local economy.

“If these proposals are not progressed quickly and ultimately implemented, the council will undoubtedly be required to consider other options which are likely to include signficant job losses and/or pay reductions.”

After backing the strategy, the council charged director of resources Tracey Logan to further negotiate with unions and staff “and agree a strategy for containing the total costs of pay over the medium term”.