The public sector pay increase cap, announced by the Chancellor yesterday, is likely to stall recruitment into the sector, according to Kieran Ryan, managing director of The Synergy Group.

Ryan says: “As expected, the Chancellor confirmed in the 2010 Budget Report that public sector pay rises will be capped at 1% for the next two years and that the sector will have to make efficiency savings of £11bn.  
 
“This will undoubtedly result in a hold on recruitment for many public sector departments that are not frontline services. It is likely, however, that the council services which are proven revenue sources for local authorities will see an increased level of investment and expansion.
 
“I would anticipate that many local councils will now devise contingency plans to gain back the funds they have lost from central government, and it is likely that they will invest in the departments which are proven income generators such as the revenue and benefits departments, parking services and traffic management.”

Charles Cotton, CIPD performance and reward adviser, calls for tougher action on the public sector pay bill to help protect jobs and services.  “Freezing public sector pay for top earners and endeavouring to ensure that public sector pay awards in general are not higher than 1% from 2011 is not enough, we need a freeze in the overall pay bill. 

“And a radical rethink of how we link pay to individual and collective contribution and organisational success in the public sector is also necessary if government, post-election, is to have any hope of delivering more with less. 

“No public servant should get a pay award or a bonus if their organisation is not performing, but the chances of the public sector delivering on political and public expectations would be enhanced by an intelligent and well-targeted approach to performance-related pay and bonuses.”