Pandora's box on pay?

The Welsh government has been given a baptism of fire in settling pay disputes.

It's never really had to do it before.

The pay talks for all the big beasts of the public sector - health, education and local government - have always been carried out at a UK-level and everyone else follows suit.

But something interesting has happened in the NHS.

Up until now, pay in the NHS for everyone other than doctors and dentists has been resolved by an independent Pay Review Body (PRB). Its recommendation has been followed by the UK and the devolved governments.

But this year the recommendation of a 1% rise by the PRB was rejected by the UK and Welsh governments. It was accepted in Scotland.

Living wage

There's already been strike action in England but it was suspended in Wales on Monday after the Welsh government put forward a two year offer. No such negotiation is happening in England.

I'm told Mark Drakeford has found around £25m to put together an offer that includes a 1% rise next year. He's also going to bring in the living wage for the lowest paid workers in January.

That means laundry workers and hospitals porters, for example, will no longer be earning less than £7.85 an hour.

The 1% and the living wage are not being offered in England.

What's happening in England is that those at the top of their pay bands in the NHS are being offered cash payments. It's been rejected by the unions and the situation remains unresolved.

Unions don't like cash payments, they prefer consolidated pay rises because a 1% pay rise is permanent, as opposed to a cash payment which is a one-off.

Union paradox

The unions are faced by a paradox: they are wedded to UK-agreements on pay because it's a fundamental belief for them that they're stronger together and easier to pick off if they become fragmented into the devolved nations.

But at the same time they find the cuts imposed by the Conservative-led coalition at Westminster unpalatable.

The key question will be whether they will call for the permanent devolution of pay if David Cameron is back in Number 10 after the general election.

And it's an interesting one for the Welsh government as well which will now be entering the tortuous world of public sector pay negotiations for the first time.

It's the nature of the beast that on the first occasion it puts together a Wales-only deal it's immediately embroiled in a dispute.

Pandora's box

There's an enormous test over the next week when the unions decide whether to accept the offer from Cardiff.

Has a Pandora's box been opened up?

Even if pay talks return to Westminster, the unions will now always be able to go to the Welsh government and ask it to intervene knowing that a precedent has been set.

And what about the rest of the public sector? The teaching unions remain opposed to pay being devolved but attitudes appear to be softening in some quarters. The NUT has held informal talks on the issue with the Welsh government.

There is a case for saying that teachers' pay is more suitable to being devolved than health as the education system has become so different in Wales than in England.

A final thought on health. The Welsh government is under intense pressure to invest more in the NHS. If you add pay into the equation, it will have to deal with the question of whether extra money for the NHS goes on wages or on medical resources.

With a workforce of around 80,000 in the Welsh NHS, it was no surprise that Mark Drakeford told Huw Edwards on the Wales Report on BBC One last night: "The real money in the health service is always in staff."

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