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Variable Pay Rates

Community Veteran
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Registered: 02-08-2007

Variable Pay Rates

The Government are considering the introduction of Variable Pay Rates for Public Service Workers based on the cost of living index for where they live.
Payments in London would be higher than say some areas in the North.
The thinking behind this (apart from saving Money) is that rates of Pay vary in the Private Sector and this should also apply to the public Sector.
Do these proposals sound fair ? Are they likely to be implemented ? What is your opinion.
17 REPLIES
Community Veteran
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Re: Variable Pay Rates

Well there was for many years a London Weighting in many jobs both public and private. So it could be seen as a refinement of that.
I know many people in public sector jobs in London and the South-East who are very jealous of the living standards (and in some cases easier life at work too) that their colleagues enjoy in other parts of the country.
So you can see the logic behind it. And it presumably distorts the job market with different biases in different areas of the country.
I comment as someone who has always worked in the private sector (in the SE if it's relevant) and who's "other half" is in the public sector but in a job that is totally "tied" to central London with absolutely no option of moving out of commuting range.
Community Veteran
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Re: Variable Pay Rates

It seems logical that there should be a reflection of the cost of living in wages.  I always enjoyed a London allowance when I worked in the private sector.  Many of my colleagues were happy to work well away from London and take a smaller salary. 
Community Veteran
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Re: Variable Pay Rates

We live in a rural community (between Sheffield and Manchester), cost of living is higher than in London (22 miles round trip to nearest supermarket, today petrol at the nearest pump was £1.45, no public transport to speak of, Council tax is higher than an equivalent house in Barnet (compared with relatives), no choice of supermarkets, no gas, hence heating is more expensive).
If it were based on local cost-of-living index, I’d guess it would be fair, but who decides the local cost-of-living index?  According to what boundaries?
If public sector pay could be awarded according to a local cost-of-living index, do you think it may only a matter of time before state pensions and benefits are based on the same regional criteria?
Are they likely to be implemented?, think not, too difficult to administer.
annerimmington
Grafter
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Re: Variable Pay Rates

This is nothing new.  I remember when I was in the civil service (from 1980-1992) colleagues down south got an allowance called London Weighting Allowance because of the increased cost of living. 
Community Veteran
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Re: Variable Pay Rates

In the London area the London weighting was given to people working within a certain radius of Charing Cross, normally 25 miles.  Once the M25 came along this was used as the boundary.
@ journeys,  you are right about costs.  In the rural areas where competition is non existent prices tend to be higher. Good to a large town, introduce competition and prices tend to fall.  As a matter of interest petrol in my part of Essex today was £1.379 to £1.409
Community Veteran
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Registered: 30-07-2007

Re: Variable Pay Rates

The government may be talking about applying this to the Civil Service, but local government workers have always had differences in pay for doing the same job (could people please try to get out of the habit of lumping all public sector workers into the same pot - pay and conditions are very different).  Local authorities have always had a certain amount of competition.  So neighbouring authorities may pay Social Workers (or in my case, Trading Standards Officers) very different rates. If people don't like it, they can move to an authority that pays more.
In the case of Essex County Council, this has gone further, and many employees are no longer covered by national terms and conditions. They were given a couple of years' notice of the change, and then taken out of nationally negotiated rights.  The unions took the view that, since it was only (at that time) people on around £25 000 pa, and above, they weren't bothered.  It's only a matter of time (I expect within the next couple of years) before Essex takes all of their employees out of national pay bargaining, and the unions won't have a leg to stand on.  Undecided
alanf
Aspiring Pro
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Re: Variable Pay Rates

In the NHS there were (are?) national pay scales but Inner London weighting, Outer London Weighting and also additional payments for "ROSEland" (Rest Of The Southeast). There may have been other big City allowances.
While the pay for each grade was fixed nationally there was some flexibility in the grades that various employers offered for the same job .
I suppose that if services are to be run by local consortia then logically they should be given the power to pay as much (or as little) as is required to be able to provide a satisfactory service at a price that will not be undercut by private businesses that are competing with them.
One downside of  reducing the wages of staff in low wage areas is that they will have less money to spend locally and poor areas will become that much poorer.
Community Veteran
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Re: Variable Pay Rates

London Weighting Allowance doesn't get included in pension calculations.  The current proposals are essentially kite flying to see how the workforce will react to a national reduction in the salary bill. It is poor management. They'd get much better results by paying the good people a reasonable salary while getting rid of the wasters and non-jobs in the organisation
Now Zen, but a +Net residue.
Community Veteran
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Re: Variable Pay Rates

One of the reasons for variable pay rates was to address the difference in mortgage payments. I've just looked at some figures which show the differences. The median house price in Essex is £242k whilst in Birmingham it's £152k. South Yorkshire is £132k and Suffolk £197k.
Mortgage payments are perhaps the biggest expenditure for most workers, even at today's low interest rates, and has to be reflected in salaries if employers want to encourage staff to move.
Community Veteran
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Re: Variable Pay Rates

Quote from: artmo
One of the reasons for variable pay rates was to address the difference in mortgage payments.

Which is presumably why things like London Weighting were not included in pensions - the theory being that you've paid the mortgage off before you retire.  Smiley
Community Veteran
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Re: Variable Pay Rates

I thought cost-of-living increases were calculated from RPI. Don't think mortgage payments are included in RPI calculations?
Community Veteran
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Re: Variable Pay Rates

So are they also going to raise the national minimum wage in areas where the cost of living is higher?
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Community Veteran
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Re: Variable Pay Rates

Quote from: journeys
I thought cost-of-living increases were calculated from RPI. Don't think mortgage payments are included in RPI calculations?

A number of factors are taken into the setting of a London weighting.  Most companies would take account of mortgages when deciding the weighting. It is the single most expensive difference staff have to pay.
alanf
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Re: Variable Pay Rates

Quote from: HPsauce
Which is presumably why things like London Weighting were not included in pensions - the theory being that you've paid the mortgage off before you retire.  Smiley

Are you sure about that? It certainly used to be the case that NHS pensionable earnings included a  number of things other than basic pay and London Weighting was one of them.