Public sector pay ‘an increasingly significant source of budget pressure’
There is a “structural tension” between how Stormont is funded and the cost of maintaining the public sector workforce, a report has suggested.
The discussion paper launched by the Northern Ireland Fiscal Council comes as the Stormont Executive continues to struggle to keep up with public sector pay awards each year.
Ministers are currently in negotiations with the Treasury pressing for further funding in order to agree a budget for Stormont for this financial year.
Now the council has published a discussion paper, examining why maintaining public sector pay settlements in Northern Ireland is becoming increasingly difficult within existing funding arrangements.
The paper contends the gap suggests a “structural tension” in the way the Executive is funded and the cost of maintaining its public sector workforce.
Its analysis suggests that the public sector pay bill for services comparable with those funded in England may be around 35% to 45% higher per head of population in Northern Ireland, while funding per head is around 24% higher than England.
The paper further suggests that public sector pay pressures in the region are driven primarily by higher workforce numbers and differences in how services are funded and delivered, rather than by higher pay levels or a more senior workforce.
Sir Robert Chote, chairman of the Northern Ireland Fiscal Council, said the Executive faces difficult choices when it comes to trying to match public sector pay awards in England.
“Public sector pay is the single largest element of day-to-day spending funded by the Executive and an increasingly significant source of budget pressure,” he said.
“This discussion paper examines why the cost of maintaining public sector pay in NI appears to be rising faster than the funding generated through existing arrangements.
“We are not taking a view on whether pay parity with England is desirable.
“Our role is to examine the fiscal implications of policy choices and to assess what they mean for the sustainability of the Executive’s finances.
“Our initial analysis suggests that the challenge is not primarily about public sector workers in Northern Ireland being paid more than their counterparts elsewhere.
“Rather, the evidence points towards the size and structure of the workforce and the way public services are organised and funded.
“When funding generated by pay awards in England is insufficient to cover the cost of matching those awards in NI, the Executive faces difficult choices.”
Sir Robert added: “We view this report as the start of a conversation rather than its conclusion.”
The paper is to be presented at the Northern Ireland Fiscal Council’s annual conference on September 25 as part of a wider consultation process aimed at gathering views from stakeholders and informing the next phase of the council’s work.