Government Social Research
Professor Robert Elliott - University of Aberdeen and the Health Economics Research Unit
Professor David Bell - University of Stirling
Dr Tony Scott - Health Economics Research Unit
Ada Ma - University of Aberdeen
Elizabeth Roberts - University of Stirling
The primary focus of the research is on the labour market and the competitiveness of public sector wage structures. It distinguishes the degree to which the current pay structure within the public sector respond to local prices and wages. In some parts of the UK the delivery of public services are more affected by recruitment and retention problems than in others. Devolving the negotiation of pay agreements would give local government agencies more power and autonomy to solve problems that affect them especially. The appropriateness of this model of pay setting depends among other things on the nature of the labour markets in which different groups of public sector employees operate. Thus the first part of the research has focussed on the labour markets for the largest groups of public sector employees.
One of the first studies examines the markets for nurses and whether or not the national pay agreement for nurses has been responsive towards local market conditions. As the costs of living and the attractiveness of working in different geographical areas - both of which are reflected in the wages of alternative occupations for nurses - differ across the UK, those health authorities in high cost low amenity areas will find it hard to fill vacancies if all nurses were paid equally irrespective of location.
In the study we compare the wages of NHS nurses with workers with similar qualifications in the private sector. We control for all the differences in composition of the nursing workforce and that of the comparator group to ensure that this is a 'like-for-like' comparison in order to construct what we term the 'adjusted wage gap'. The results indicate that while the wages of private sector workers vary a great deal across health authorities in different parts of UK, the same cannot be said about the wages for NHS nurses. A measure of the wage difference between NHS nurses and private sector workers in each health authority district is constructed and we find that this difference helps to explain why some health authorities have higher hard-to-fill vacancy rates than others. The more the private sector workers are paid relative to NHS nurses, the higher the vacancy rates for nurses. Whereas in those areas where the NHS pays above its comparators, vacancy rates are lower.