PUBLIC SECTOR
Pay cap unsuitable for public sector - Mercer
The 20:1 pay ratio outlined in the Hutton report on fair pay in the public sector is “arbitrary and difficult to justify" and would be "unsuitable”, according to Mercer. But it could be a useful trigger for encouraging public sector organisations to strengthen transparency and their justification for senior executive pay decisions.
Mercer urges the government to adopt the Code of Practice for senior remuneration in the public sector as recommended by the Senior Salaries Review Body and endorsed by Hutton.
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Chris Johnson, Head of Mercer’s Human Capital business, said: “Good governance, transparency and clear accountability are at the heart of creating public and political confidence in senior pay in the public sector”.
Hutton report corrects skewed perceptions of public sector pay
Mercer reckons that the Hutton report has given a valuable perspective on public sector pay in the UK. Johnson said: “The report highlights that, contrary to popular belief, the public sector has a relatively controlled pay structure that provides value for money.”
According to Hutton’s Fair Pay Review Interim Report, there are 20,000 public servants (including doctors) amongst the top 1% of the UK’s highest earners, with 4,000 of these being in managerial posts. In contrast, Mercer estimates that there are approximately 290,000 in the private sector in the same bracket.
Johnson said: “This does give a valuable perspective that, contrary to frequent news headlines, the UK’s public sector is not awash with highly-paid staff. Compared to the private sector, the numbers are relatively small. The public sector provides a much needed and valued service and senior executives need to be paid appropriately if services are to be delivered efficiently and effectively.”
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Mercer is a “leading global provider of consulting, outsourcing and investment services”. It works with clients to “solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits”. Mercer’s 20,000 employees are based in more than 40 countries. To find out more visit http://uk.mercer.com.