17 January 2013

By Roger Jeary

New policy announcements on state pensions and performance-related pay for teachers shows the government is not easing off on its attack on workers.

Only two weeks into the new year and already workers are on the receiving end of yet more announcements from the Coalition designed to undermine collective bargaining and diminish living standards.

I have read with some interest the proposals for the new state pension. Of course there is something attractive about the idea of a universal benefit where everyone knows exactly what they can expect to receive from the state when they retire. That is the myth that has been spun by Pensions Minister Steve Webb when he presented his proposals to the House. The reality, after a few days of everyone poring over the details, is somewhat different. Most alarming of all is the acknowledgement that over half the population will be worse off under this scheme than under current arrangements, pointed out with some authority by the Institute of Fiscal Studies. Anyone born from 1980 onwards will now receive a pension less than they might have expected based on current provision. With this announcement comes the decision to review the retirement age every five years with effect from 2017, raising the prospect that the proposed increase to 67 in 2026/28 and 68 by 2046 could be introduced sooner. Oh, and by the way, for this new state pension of £144 per week you will now have to have an NI contribution record for 35 years as opposed to the current 30.

In addition for workers in the public sector and those with contracted out occupational final salary pension schemes, the new scheme will remove the contracted out provision, thus increasing National Insurance contributions by 1.4%. Employers will also see NI contributions rise, thus bringing into question the future of those few remaining defined benefit occupational schemes.

All in all, these proposals mirror the attack on public sector pensions – pay more for longer for less – only this time the coalition has targeted the entire population.

The second announcement this week came from the Education Secretary, Michael Gove. To follow up on his ‘consultation’ on teachers' pay he has decided that salary progression in this profession will be linked to performance. Well what’s wrong with that, I hear you say. Well, apart from tearing up existing pay structures and aspirations of the teaching profession, the proposal introduces the idea that pay increases will be determined based on the outcome of an annual appraisal. For anyone in the employment relations field, such a proposition is fraught with unfairness and goes against all the advice provided by bodies such as CIPD and ACAS. Appraisals, if done fairly and properly, are time consuming, need to be performed at least twice a year and should never be related to pay increases. ACAS states in its advice that "all organisations can benefit from appraisal schemes provided they are prepared to invest the necessary time and money to set them up properly".

Assessment of appraisal schemes suggests that linking it to rewards spoils the appraisal process because it then makes the process judgemental, punitive and frightening. This is reflected in the response to the consultation from unions representing 90% of the profession who stated that the system will create division and uncertainty rather than incentives for better performance.

I have negotiated and participated in a wide variety of appraisal systems in both the public and private sector. I have found them to be extremely time consuming, rarely consistent and viewed with great suspicion by workers. They are inevitably finance led and, therefore, the application of results to rewards is skewed by the funding available rather than the performances of the workers. Teacher unions - beware, and head teachers - be careful what you wish for!

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