Is it the case that IDS research on private sector approaches to regional pay is flawed? On the BBC Radio 4 Today programme this morning Evan Davis interviewed Mr John Cridland, Director General of the CBI, about private sector approaches to regional and local pay. Evan Davis said that ‘Incomes Data Services says that most large multi-site private sector companies have national pay structures’.
In response, John Cridland said: ‘No, I don’t think that’s right. I think that Incomes Data Services may be looking at base pay, but in reality what local managers at local outlets are able to do is (use) significant variance through premia to reflect local circumstances’.
So Mr Cridland thinks that most large multi-site private sector companies do not have national pay structures. He has clearly not been studying the regular issues of the IDS Pay Report which publishes national pay structures which exist at the large multi-site supermarkets, retail banks and national organisations such as BT. They all have national pay structures with London and South East allowances paid on top. Or they have developed zonal pay systems which are based on London and South East allowance, with labour market ‘hot spot’ allowances in addition.
In almost every case there is a national structure which generally covers large swathes of the country without local variation in parts of the North East, or parts of the North West, or parts of the South West.
It is also not the case that in these large multi-site companies that local managers can vary pay with significant amounts. Zonal pay systems do have some flexibility but it is strongly controlled from Head Office. If staff turnover in a supermarket in Surrey gets too high then the manager can apply for the store to be re-zoned to a higher paying zone, such as outer London. There are checks and balances on this, as senior management would check that the staff turnover is for labour market reasons and not bad management.
There is far too much commentary on regional pay at the moment which is based on poor knowledge of private sector pay systems. And there is sometimes poor knowledge of existing flexibilities in public sector pay systems. Last Saturday the Today programme asked the question: ‘Why should a teacher be paid the same in Sunderland as in Surrey? Unfortunately the person who asked the question did not realise that they are not paid the same. School teachers have a four band/zone pay system. Teachers in Sunderland are in Band D and teachers in Surrey are in Band C.