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Public sector pay claims
The government should resist the latest pay claims being made by Unite the Union
The current round of public sector pay claims by Unite the Union are both excessive and unaffordable.
At budget time each year the Chief Minister makes a virtue of how much his administration has raised the minimum wage since being elected in 2011. The current tally is by over 65 per cent. The fact that many of the workers who are on the minimum wage are cross frontier workers and thus do not have the vote is beside the point. The burden of these increases affects all businesses in the private sector as they have to pay for them and maintain the pay differentials which accompany them. There are the associated annual increases is social insurance as well.
The latest public sector pay demand by Unite for a 21.4% increase may sound reasonable as it reflects the rate of inflation over 5 years since 2019. But it omits the fact that civil servants have received tax free cash free bonuses, euphemistically referred to as public sector support payments, for the last 2 years. In 2023 and 2024 civil servants who were paid less than £50,000 per annum received a tax free cash sum of £1,200 each year. Civil servants who were paid more than £50,000 received lower payments but they still received them. Unless of course, their civil service pay exceeded £100,000.
These payments have cost the taxpayer £6.5m each year.
Having received the money Unite now chooses to ignore these payments and wants a pay rise equivalent to 21.4% and expects the private sector to pay for it.
Average pay in the civil service is already 40 per cent above average pay in the private sector. Why should the private sector be squeezed to widen the gap even further? Unite needs to show some restraint and some responsibility.
In his budget speech of 2022 the Chief Minister said that public sector pay rises would decrease once the overall cost of the public sector payroll fell as a result of efficiency gains. There is little sign of any of the efficiency gains which have been promised and the payroll costs just keep on rising: in 2024 the Chief Minister announced that during the GSLP administration the public sector had grown from around 5,000 employees when elected to 6,279 in October 2023.
Parity abandoned
In 2022 according to the Chief Minister, Gibraltar’s civil servants were paid 40% above their UK counterparts for the same grade. According to a government source, workers in Aquagib’s desalination plants are currently paid £8,000 each month and they are looking for a 27% increase. The average pay of all Aquagib’s employees is £62,000 per annum.
Unite is also pushing for a Living Wage, a new pay category which was developed because the cost of living in London is so much higher than the rest of the UK. With subsidised utilities, free public transport, very afffordable public housing and salaries which are 40% above the private sector, the need for an extra tier is hard to justify in Gibraltar. Most of Unite’s members work in the public sector and as we can see they are already extremely well provided for.
Over time these pay claims become inflationary and so provoke claims by other workers who see the purchasing power of their own pay being eroded by higher prices. Gibraltar becomes less competitive as a result.
The Principal Auditor’s report for the years 2016/17 and 2017/18 highlighted the huge number of additional allowances which public sector workers claim each year. Many of these are for tasks which most people would consider to be part of their job such as handling empty mail bags or proficiency in typing. (Who in the private sector gets paid an allowance for being able to type?) In the public sector, workers get an additional allowance for these. These allowances added up to £11.4m in the year 2018/19.
We are already having to deal with covering the unprecedented costs which the pandemic placed on the economy. Looking ahead, Gibraltar is facing some very challenging times which will place further burdens on government revenues. We can ill afford to increase recurring expenditure at the levels being demanded by the Union.
Given that public finances are decidedly stretched, the current pay claims need to be strongly resisted until the efficiencies and improvements in productivity from e-government and family-friendly working hours can be clearly demonstrated. These improvements have been promised by the government for many years but so far there appears to be little sign of either.