An end to national pay bargaining?

An interesting report was launched to day by the think tank Centre Forum.

In More Than We Bargained For, Professor Alison Wolf argues that national wage bargaining in the public sector is damaging and should be replaced by individual contracts.

The argument in essence is that public services in wealthy areas are unable to recruit quality staff who prefer to work in poorer regions where the cost of living is lower and their salaries go further. Conversely, economically disadvantaged regions suffer because the private sector is forced to compete with high, nationally set public sector salaries.

The recommendation that national pay scales should be scrapped is certain to generate a great deal of debate and indeed there has already been a rather heated discussion between Professor Wolf and the TUC on the Today programme this morning.

I’ll leave it to more expert colleagues to comment on the economics of the labour market, but for me the report raises three important questions about the nature of public sector work:

1)    Is there is distinctive public service ethos?

2)    Is it coterminous with working in the public sector

3)    How should we value public service?

It would be churlish to deny that many, many people perform difficult, dull or dangerous jobs, motivated not by the size of their pay packets but by a desire to do good in the world.

Not all of these people work in the public sector however. There are huge numbers of charities, co-operatives, social enterprises, businesses and yes, think tanks, that have explicitly public service aims but which operate in a variety of ways and with a variety of pay scales. The current trend towards diversity of provision and more demand led public services means that these organisations will be greater in number and importance.

So while the valuation of public service work is a complex – we can and do argue about the role that wage markets and ideological valuations of the public good should play in this process –  the key point is that we are already modelling multiple approaches to this question as different institutional forms and forms of remuneration proliferate.

So in one sense we are already moving towards the sort of world Professor Wolf advocates. The existence of a thriving third sector seems to show that national wage bargaining (whatever other merits and demerit it may have) is not in and of itself essential to the maintenance of a public service ethos.