Public sector pay policy 2021 to 2022: equality impact assessment (revised)

Executive summary

The public sector pay policy is driven by the Scottish Government's Purpose "to focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth". The policytakes cognisance of the 2020-21 Programme for Government commitments on fairness, equality and helps mitigate the detrimental impact of the on-going health crisis. The 2020-21 Programme for Government acknowledges the impacts of the pandemic have not been felt equally. It is expected the on-going economic impact will be felt disproportionally by women as well as those from minority ethnic communities, disabled people and young people. There is a tangible risk that the current health crisis could increase both the gender employment gap and the gender pay gap in the short to medium term.

The primary purpose of the 2021-22 Public Sector Pay Policy is to set pay increases in a way which is fair, reflects the real life circumstances people face and promotes wellbeing, while helping to sustain public sector jobs and protect public services. This is set within the challenges of responding to the health crisis and the tight financial position to ensure pay rises are affordable now and in the future.

The Equality Impact Assessment of the 2021-22 Public Sector Pay Policy proposals concludes that maintaining the commitment to supporting paying at least the real Living Wage and the £800 cash underpin will positively benefit lower paid staff and in particular those with one or more protected characteristic. From the data available, there is a higher proportion of women, disabled people, individuals from a minority ethnic group, younger employees or a combination of one or more of these protected characteristics as well as part-time workers among lower paid employees. Therefore the measures proposed in the pay policy protect these employees from pay restraint and in many cases provide a positive benefit - underpinning Ministerial objectives for a wealthier and fairer Scotland.

The introduction of the £40,000 threshold provides the opportunity for awarding a higher increase for those earning between £25,000 and £40,000, determined by overall affordability constraints. This will help ensure the majority of public sector employees receive an above inflation award supporting the policy aim of pay restoration without introducing any detriment for those with a protected characteristic.

The continued progressive approach proposed in the 2021-22 Public Sector Pay Policy will also help to reduce overall income inequality. It may also help in positively working towards reducing the gender pay gap within the public sector as it should increase the overall base levels of pay for those at the lower end where women are overly concentrated. This is further supported by the continued restraint applied to higher earners, including senior appointments, where there are higher proportions of men.

The Equality Impact Assessment concludes that the risk of indirect discrimination, as a result of capping the pay for higher earners, can be justified by the overarching aims of the pay policy. It will still be necessary for individual employers to ensure that they do not introduce or perpetuate any direct or indirect discrimination for individuals in their application of the policy. Employers covered by the pay policy are also subject to the statutory public sector equality duty. It is their responsibility to ensure their pay systems are fair and non-discriminatory and that they are expected to undertake their own assessment of their pay proposals prior to submitting them to the Scottish Government.

The introduction of the discretion for employers to consider work towards standardising to a 35 hour working week can be seen to provide a benefit to all impacted employees. It is possible there could be a greater benefit for part-time employees, particularly for the many who are lower paid and as such more likely to be a woman, a disabled person, an individual from a minority ethnic group, a younger employee or a combination of one or more of these protected characteristics.

The pay policy will set the overarching framework within which public bodies can make individual choices on the impact of the policy on their own circumstances. Public bodies have the flexibility to draw up their own pay proposals to take into account local pay issues such as recruitment and retention, equality and the impact of the lower pay measures on other staff. The pay policy actively encourages employers to take into account their own staffing profile, local evidence, views of staff and unions and equality issues in framing their pay proposals.

The continuation of the commitment to the No Compulsory Redundancy policy provides job protection for all employees covered by the pay policy. There is no evidence to suggest this creates any negative direct or indirect discrimination.

There is no evidence to suggest that the cap on increases for higher earners would adversely impact the take-up of Board Appointments among those with a protected characteristic as the level of daily fee rate may not be the key driver for taking up an appointment but rather to provide the opportunity to represent and raise awareness. The pay policy for Senior Appointments makes it explicit that the main objective of remunerating Board Members is to increase diversity but is not intended to meet in full the market rate that the individual may otherwise expect or command.

The supporting Technical Guide to the pay policy will continue to remind public bodies of their duty to ensure their pay systems are fair and non-discriminatory and that they have due regard to their obligations under public sector equalities duties in considering their pay proposals.