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NHS Pay Increase Agreed - Will Other Industries and the Private Sector Follow Suit?

BY Donald MacKinnon
Employment Law & HR
BG Purple

Politics is all about perception, and rightly or wrongly the public perception largely seems to be that the Conservative government of Theresa May ...

Politics is all about perception, and rightly or wrongly the public perception largely seems to be that the Conservative government of Theresa May (and David Cameron for that matter) doesn’t care about the NHS or public services in general. One of the main arguments for this has been the 1% pay cap across the public sector, suggesting that the employees in this part of the economy are not valued by central government. We are also aware of the squeeze on real wages across the whole economy as a result of sluggish wage growth and rising inflation.    

Things may be set to change however as the Health and Social Care Secretary Jeremy Hunt has announced a pay increase for over 1 million NHS staff, which is almost all with the exception of doctors, dentists and senior leaders. This pay rise will vary from 6.5% to 29% over the next three years with the highest rises going to those on the lowest rates of pay. For example, the NHS starting salary will go from £15,000 to £18,000 and the starting salary for nurses will go up more than 12%. It will cost the exchequer £4.2bn. The deal still needs to be voted on by NHS staff and will be backdated to April if it is agreed by the summer. As this has been backed by all but one of the health unions, it is overwhelmingly likely that this will be approved.  The GMB Union, the only union not to back the deal has said that the deal does not go far enough to make up for years of real term reductions due to the 1% cap since 2010. For those working in the NHS outside England, it will be up to the devolved administrations to decide if they want to implement the deal.

Danny Mortimer, Chief of the NHS Employers organisation, has said that he hopes that it will make the health service an attractive employer once again and help relieve some of the problems that have come about as a result of staff, particularly nurses leaving the service in recent years. It is important to remember however, that pay is not the only reason people were leaving, and this amounted to 33,000 people in 2017. Stress and workload have often been cited as causes for these staff departures. It may have indirect effects in this area, however if more people join the service and there is boost in morale it will be interesting to see the overall effects of the pay rise over the coming months and years.

An interesting element of the Health Secretary’s announcement is his hope that this pay increase is in part an attempt to reduce the sickness absence issue in the NHS. He stated that currently sickness rates in the NHS in England are a third higher than other public services and that a 1% decrease will save the NHS £280m.  

You may be asking how this story is related to your business given that this is such a large organisation. The issues raised however, can be applicable to almost all businesses and a pay rise, if possible, can impact on staff retention, morale and sickness rates amongst other things. It is often said that when the government shows confidence in the economy and takes action it can lead to businesses in other sectors including the private sector following suit. It will be intriguing to see whether it happens in this instance.

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