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Thursday, May 25th, 2017

Possible 4.5% to 6% increase in the schools pay bill, SBMs need to be aware.

NJC pay negotiations.

As part of the 2016-2018 pay negotiations, it was agreed that a review of the pay spine would take place in order to comply with the introduction of the National Living Wage. Negotiations have yet to start, but preliminary modelling has taken place. To see how that could impact on pay agreements for 2018-2020.

The review of the national pay spine remains in the technical stages and as yet neither the National Employers nor the Trade Unions have adopted a formal negotiating position. The joint technical review group has been meeting monthly. The key drivers in discussions to date have been for the NJC to devise a reformed pay spine that meets the following criteria:

  • is legally compliant with the National Living Wage and that will be ‘future proofed’ to absorb yearly increases in the rate
  • has equal differentials between each spinal column pay point
  • does not cause equal pay / ‘Single Status MkII’ problems for employers
  • requires the minimum amount of time and effort for employers to implement and assimilate staff onto a new spine
  • can be the basis for an agreement between the National Employers and the Trade Unions

It is clear from the modelling that has taken place that the cost of meeting the NLW in 2020 – and the other criteria - cannot be achieved at a total cost of a 3% cumulative increase in national pay bill over the settlements for 2018, 2019 and 2020. For illustrative purposes only the review group has calculated the range of costs over the three years are likely to be at least 4.5%-6.0% increase on the national paybill, but with the lower end of that cost estimate resulting in significant future problems with regard to the maintenance of differentials and therefore proving to be something of a false economy. The cost impact will likely be less for those councils that have fewer staff on the lower pay points and/or are paying the voluntary Foundation Living Wage.

Councils have been warned they need to plan for an increase in their pay bill of up to 6% over the next few years as a result of reforms to the local government pay spine and schools who employ their staff on the NJC pay spine need to plan for the same.

Previous LGC analysis found almost a third of the points on the current pay spine will be wiped out by the end of the decade when the national living wage is set to reach about £9 an hour.

Speaking at a conference, Mr Pannell, the LGA’s principal adviser on employment and negotiations, said: “We recognise there’s a need to warm up our audience, by which I mean senior politicians and finance directors… If you’re planning for 1% [pay bill increase] in each of the next few years you need to think again and think higher than that. The message that’s gone out is to plan for 4% to 6% over the next two to three years.”

We have been discussing with several of our clients how to tackle this issue for a year or more and have come to similar conclusions. We will keep you informed of the national discussion and feedback when there is some hard news.

 In the meantime if you want to talk through the options then please contact us.

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