RECENT 7.9% pay awards to large sections of the civil service were set below the inflation rate to ‘slightly dampen’ potential demands from private-sector employees and to reduce some ‘inflationary pressure’, the Chief Minister has said.
Deputy Kristina Moore said that there were several ‘economic considerations at play’ when negotiating 2023 pay awards for the public sector, including the long-term affordability of housing, the ongoing cost-of-living crisis and labour market competitiveness.
She admitted that some of these factors led to ‘conflicting conclusions’.
Last month, members of the Prospect and Unite unions – which represent around 3,500 civil servants – overwhelmingly voted in favour of the 7.9% increase.
However, some public-sector employees – including teachers – have not yet reached an agreement.
This was against a September inflation rate of 10.4%, although this has since increased further to 12.7%.
The 7.9% pay awards prompted concerns that the private sector may be pressured into offering similar increases that may not be affordable or could lead to additional inflationary pressures.
Responding to a written States question from Deputy Moz Scott, Deputy Moore – as chair of the States Employment Board – said: ‘To reduce some of the inflationary pressure in the future, it was advisable to increase salaries below the current level of inflation.
‘This would remove the risk of any demand-pull inflation and slightly dampen other pay demands across the economy and therefore mean other costs do not rise adding to inflationary pressure.’
She added that discussions were held with both private and the government’s arms-length organisations to feed into the pay negotiations.
The Chief Minister said: ‘Information was sought from finance institutions, companies with manual worker workforce, engineering and retail.
‘Intelligence was also sought from Guernsey, the Isle of Man, and the United Kingdom. The economic advisers within government provided information and consulted with the Treasury and Exchequer in respect of economic forecasting.
‘We regularly benchmark professional salaries against the UK and receive intelligence through public-sector employers in the UK and pay bodies.’