Public-sector pay rises lag behind private sector

Expected pay rises in the public sector climbed to 3.3% between 21 March and 12 April 2023, but are still lower than the 5% rises typical among private-sector employers, according to the CIPD. 

The expected public-sector pay rise is the highest since CIPD records began in 2012. 

Jon Boys, senior labour market economist at the CIPD, said public sector employers lag behind as they have to work within government budgets. 

Speaking to HR magazine, he said: “To a large extent, this is therefore a political decision that weighs up public finances against the quality and provision of public services.” 

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Pay rises in both the public and private sectors are likely in response to the recruitment challenges employers are experiencing.  

More than half of public-sector employers (52%) reported finding it hard to fill vacancies. 

The sectors struggling the most are education, with 60% of employers struggling to fill vacancies and healthcare at 55%. 

The problems are predicted to persist as 45% of public-sector employers expect significant problems filling vacancies to continue over the next six months. 

Boys said employers need to take additional measures to attract more candidates. 

He added: “While any increase to pay will be welcome in the cost of living crisis, we know there is a broader issue with job quality that employers must also address, for instance, challenging workloads and working environments.  

“Improving pay is important, but employers need to think about the reality of working life for their people and where changes can be made to improve things.” 

Besides increasing pay, employers are addressing recruitment issues through upskilling staff, increasing duties of existing staff and introducing flexible working. 

Public employers are more likely to upskill staff as 55% currently train staff, compared to 49% of private employers. 

Conversely, 21% of public-sector employers increased flexible working compared with 32% of private-sector employers. 

Boys said the nature of many public-sector roles makes it difficult to increase flexibility. 

He said: “There are limitations on how flexible some public sector roles can be, especially for those on frontline services where they must be in a place of work or be part of a 24/7 public services, such as hospital workers 

“However, there can still be opportunities relating to flexibility on hours and working contracts which can benefit many staff.” 

Steve Herbert, wellbeing and benefits director at insurance advisory Partners&, said employers need to improve their overall offering including flexible working, pensions and benefits, to attract more candidates. 

Speaking to HR magazine, he said: “Flexible working is of huge appeal to many employees and may help some employees reduce their regular expenditure on items such as peak time commuting or childcare.   

“A pension scheme that exceeds the minimum legal requirements will also carry significant appeal to many experienced workers.   

“And offering employee benefits that are not universally available elsewhere may land well with both existing employees and potential recruits.” 

Herbert said employers need to focus on retention as well as recruitment to overcome labour shortages. 

He said: “It is often far less expensive to retain existing employees than to attract new ones. 

“Staff retention avoids the extra time and costs involved in undertaking interviews, the recruitment process, lost productivity whilst the position is unfilled, and the period until a new employee achieves their optimum productivity in their new position.”    

The total sample size for CIPD’s research was 2,019 senior HR professionals and decision-makers in the UK. Fieldwork was undertaken between 21 March and 12 April 2023.