1. Pay and the Living Wage 2016 onwards Simon Pannell Principal Adviser (Employment & Negotiations) South East Region 19 November 2015 www.local.gov.uk

2. Regional pay consultation Claim seen as largely irrelevant in light of NLW issue Wide support for across the board increase NLW not an issue in 2016 Recognition of structural issues at the bottom end of the pay spine caused by NLW rates up to 2020 Preference to avoid piecemeal progress towards 2020 – initial deal for 2 years? Early work on longer term structural changes Huge impact of NLW on procured services: £1b adult social care by 2020 www.local.gov.uk

3. The Living Wage Foundation rates 175 councils in England, Wales and Northern Ireland 25 in South East region – including 14 with local bargaining arrangements A further 14 in SE where pay structures start above the LW – unlikely to be above the NLW by 2020 without further intervention London rate (£9.40) will clearly outstrip NLW National rate (£7.85) almost certain to outstrip NLW LWF rates likely to increase faster if WTCs are cut

4. National Living Wage (1) £7.20 from next April – only requires 2% on spine point 6 to be compliant 60% of median hourly earnings by 2020 OBR estimate of £9.35 per hour by 2020 ‘Simple’ compliance within NJC will cost £110m+ by 2020 If introduced now £9.35 would exceed the bottom 13 pay points Allowing for 1% increases bottom 11 points would still be below NLW by 2020

5. National Living Wage (2) About 83,000 FTE are employed on those pay points This is about 10% of FTE workforce and a far bigger proportion of headcount Those pay points are likely to capture bottom 3 or 4 grades in council structures Almost certain to capture 1 st line supervisors of lower skilled roles Reduction in differentials (e.g.23% to 6%?) What approach have councils faced with similar issues due to LWF rates taken?

6. Responses to the challenge A new national pay spine? –Longer? Shorter, Even steps? –Delete all pay points below NLW? –Keep most/all of them and apply higher increases? –Restructuring rarely cost-neutral: difficult in ER terms if headline cost of living increases remain low No suggestion that NLW in local government is to be paid via supplements or limited to workers aged 25+ Knock-on to premia rates? Job redesign – national, regional or local activity? Links to DMA?