- 19 April 2021
- 3 min read
What Does A 1% Pay Rise Mean For NHS Staff?
To work out whether a 1% pay rise is fair, one of the considerations is around the issue of what the phrase “real terms” means. Here’s our quick overview of what it means to NHS staff.
Since the government announced its intention to increase nursing pay by just 1%, the issue of nursing salaries has become one of the biggest talking points not just within the NHS, but in the country at large.
Here’s what we do know about Nursing pay as it currently stands.
Broadly speaking, the majority of people are resoundingly in favour of a higher increase.
Some unions are proposing that a rise of 12.5% is more appropriate – and early indications suggest that the public agree.
But the entire debate is shrouded in confusion, because of the repeated discussion of whether or not this would represent a ‘real terms’ increase.
And that’s where the debate becomes almost impossible to settle.
The Real Confusion Behind Real Terms Pay
Real terms is a fairly logical term that can be applied to anything in order to understand its true value.
In the context of Nurses’ wages, it takes into account how the cost of living influences the real value of earnings.
And here’s where the division begins.
Those who argue that a 1% increase represents a real terms increase point to the fact that the current rate of inflation is 0.9%. By their calculation, a 1% rise therefore is a genuine rise – albeit a miniscule one.
Those who argue that a 1% increase represents a real terms decrease look beyond current inflation, and refer to the idea that cost of living is likely to spiral in the wake of Brexit and public debt from the pandemic.
But in many ways, neither of these arguments are particularly meaningful for the average Nurse. And that’s because, while NHS pay rates are largely the same in every region, cost of living is varied – and extremely nuanced.
Trusts Lacking Flexibility To Top-Up Salaries
A study by the institute for Fiscal Studies assessed the impact of regional variances in living costs on Nurses. And its findings are enlightening.
It found that a higher cost of living leads to an increased exit rate from the NHS.
And it found that cost of living varies wildly from one region to another.
One of its main proof points was that the average house price across the UK ranges from 2.5 times to 14 times nursing salaries.
Put simply, NHS nursing salaries go a lot further in some parts of the country.
Importantly, the report also noted that although trusts have some freedom to compensate nursing salaries in areas with higher living costs, they didn’t have enough flexibility within the existing pay system to retain staff effectively.
No Simple Solution To A Complex Problem
In reality, a 12.5% increase would probably still leave some Nurses in some parts of the UK hard-up at the end of each month.
Cost of living is nuanced.
It isn’t even simply a north-south issue: living costs can vary greatly within cities like Manchester and London, let alone entire regions.
And for all the merits of the Agenda for Change pay bandings, the lack of flexibility for trusts could be a problem.
A fair pay rise is needed.
But the importance of regional flexibility should not go undiscussed.