Competition and Reform:
Devolved Government and
Public Sector Pay-Setting
Bob Elliott, David Bell, Anthony Scott
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In Brief
This project is concerned with public sector pay in Scotland, Wales, Northern Ireland and the regions of England. It will analyse how it is set and how much control is currently exercised – and how much could be exercised in future after appropriate reform – by devolved governments.
Context
Public sector pay is of critical concern to the Westminster government and to the governments of the territories of the UK for five reasons.
First, the public sector will only be bale to provide the public goods that the public desire if it can attract and retain well-motivated staff.
Second, public sector pay accounts for over half of government current expenditure around the UK and is therefore an important tool of macroeconomic management.
Third, and for this same reason, governments must be conscious of their revenue streams when making decisions about how well to reward their employees.
Fourth, the levels at which public sector pay is set can have a critical impact on the policy agenda of the devolved governments by placing constraints on the ability of politicians to provide enhanced public services.
Finally, public sector pay provides policymakers with a lever that can influence private sector labour markets. The interactions between public sector pay, the management and performance of the economy, and the political process are multi-layered and the effects pervasive. Devolution adds further complexity to these dynamics.
Objectives
The project will investigate the challenges and opportunities with respect to public sector pay setting that confront governments in the devolved territories and in the UK as a whole. Its central hypothesis is that existing systems of public sector pay setting are incompatible with the new devolved government structures. The project will:
• Analyse pay-setting arrangements for public sector employees to identify the pay-setting arrangements that existed prior to devolution and the pressures for reform since devolution
• Study the impact of devolution on systems of pay-setting for public sector workers
• Carry out a detailed analysis of the competitive position of the public sector in the territorial labour markets around the UK
• Develop comparisons with two sets of countries: a) a set with decentralized structures of government, so as to identify the linkages and tensions between devolved government and public sector pay-setting; and b) a set which has undertaken fundamental reform of public sector pay-setting structures.
• Identify models for the reform of public sector pay-setting
Research Plan
The research will use a range of methods. They will include case studies of the experience of public sector pay-setting in a selection of other countries and interviews with key personnel concerned with negotiating or determining strategy on public sector pay.
A second strand will build a rigorous comparative analysis of public-private pay differences by occupation in territorial labour markets. Among the data sources will be the Labour Force Survey, the British Household Panel Survey, the New Earnings Survey Panel Data Set and a number of government datasets to which the project team has access.
The third strand will concentrate on comparative analysis and pay reform, drawing on evidence from Australia, Canada, New Zealand, Spain and Sweden.
Related Projects
Heald: Financial Arrangements for Devolved Government within the UK
Keating: Devolution and Public Policy: Divergence or Convergence?
McGregor: An Analysis of National and Devolved Economic Policies
Scott: Economic Policy Coordination in a Devolved UK
| Principal Contact |
Professor Bob Elliott
Department of Economics
University of Aberdeen
Edward Wright Building
Dunbar Street
OLD ABERDEEN AB24 3QY
pec016@abdn.ac.uk
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| Project Members |
Professor David Bell
Department of Economics
University of Stirling
Ada Ma
Department of Economics
University of Aberdeen
Elizabeth Roberts
Department of Economics
University of Stirling
Dr Anthony Scott
Health Economics Research Unit
University of Aberdeen
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| Duration of Project: |
1 April 2002 - 30 September 2004 |
| Amount of Award: |
£141,775 |
| ERSC Project Number: |
L219 25 2123
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