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The capital's public sector workers have closed the pay gap with their counterparts in the private sector thanks to...
The capital's public sector workers have closed the pay gap with their counterparts in the private sector thanks to increases in London weighting, according to research from IRS Employment Review published today.

Findings published in the current issue - and also published on its new website- show that while 77% of public sector workers in London saw their weighting payment increase, just 39% of private sector workers did so.

Other key findings include:

- Many organisations have increased their location allowances over the past year in response to recruitment and retention difficulties. Overall, just over half (54%) of the employee groups surveyed (see notes) received a rise in their London allowances, in the 12 months to December 2001. This represents an increase from the 46% recorded in December 2000 but with wide variations between private and public sectors.

- London-wide payments increase - almost three-fifths (59%) of the employee groups that receive payments on an all-London basis (with no separate recognition for working in inner or outer London) saw their allowances uprated over the past year.

- Allowances left on hold - just under half (46%) of staff groups that receive a London allowance did not see an increase last year. This compares with 54% in 1999.

- Beyond the capital. Almost two-thirds of staff groups (63%) working outside London enjoyed a rise in their location allowances over the past 12 months.

IRS Employment Review managing editor, Mark Crail said:

'The fact that London allowances have increased is significant news for the capital's employers. The issue of London weighting is now being investigated by a London assembly commissioned panel, so it will be interesting to see whether there will be further increases in 2002, given the uncertain economic forecasts and the effect on house prices.

'Despite the fact that the pay gap between the private and public sectors has narrowed, there is still a sharp disparity between the two. The greater increase in London weighting for public sector workers reflects the more severe recruitment and retention pressures, where the government has sought to address acute staff shortages in areas such as health, education and policing. As a consequence, many public sector employers are offering higher London weighting to attract and retain staff in one of the most expensive cities on earth.'

The survey reveals that more than three-quarters of public sector staff groups (77%) received a rise in London allowances over the past year. However, the picture within the private sector is more subdued, with just under two-fifths (39%) of employees' groups in the private sector receiving an increase.

Key developments within the public sector include:

- a 29.5% rise in the London allowance for teachers, up from£2,316 to£3,000 a year

- a 23.6% increase in the inner London weighting paid to lower grade nurses, midwives, health visitors and professions allied to medicine (ie students, helpers and clinical grades A and B)

- a 10% uplift to the greater London allowance for operational members of the London Fire Brigade, which rises to£3,072 a year

Although changes in location payments have been dominated by the public sector, some private sector organisations, particularly in finance, have also made substantial changes to their location allowances over the past 12 months. Key examples include:

- HSBC bank which increased the inner London allowance (0-3 miles from Charing Cross) by 8.1%, taking it to£4,000 pa

- insurance company Royal & SunAlliance, which provided for a 7.1% increase to its inner London weighting (0-4 miles from Charing Cross), which rises to£3,750 a year

- Barclays bank, which boosted its inner London allowance by 4.4% taking it to£3,550 pa

Beyond London

Location payments are not confined to the capital. The research reveals 32 flat-rate UK location allowances, including (listed by location and employer):

- Bristol (£18.24 per week, Co-operative Insurance Society;£500 pa, NatWest Bank;£750 pa, Royal & SunAlliance)

- Maidenhead (£655 pa, British Gas Trading;£200 pa, Customs & Excise); Reading (£800 pa, Prison Service)

- Orkney, Shetland and the Western Isles (£1,275 pa, North of Scotland Water Authority;£1,144 pa for Shetland and£572 pa for Orkney and the Western Isles, Post Office Network and Network Banking)

The IRS research shows that around three-fifths (63%) of those employee groups based outside the capital saw their locality allowance rise last year.

The full survey is published in IRS Employment Review (issue 744) ( ), available from Sue Jackson, Lexis Nexis IRS, 18-20 Highbury Place, London N5 1QP, tel: 020-7354 6742, price£30.


The full report and survey is available; please contact Selena Makepeace on 0207-221 2518 or email: for a copy in PDF format.

Survey details

The IRS Employment Review Pay and Benefits Bulletin's annual survey of location payments gives details of allowances and differentials in 98 employee groups in a variety of industries and services. As in previous years, finance, public services and retail are the most strongly represented, accounting for around three-fifths of all bargaining groups in our 2001 analysis. This is unsurprising given that these sectors are characterised by relatively large nationwide employers who need to vary national pay rates to suit local labour markets, and compensate staff for the higher costs associated with working and living in, and around, London. The research is based on telephone interviews with employing organisations and is supported by information drawn for the IRS databank. Sectors include:

ChemicalsConstructionEnergy and WaterEngineering and Metals

FinanceFood Drink and TobaccoGeneral ServicesHotels and Catering

Public ServicesPublic ServicesRetail and WholesaleTransport and Communications

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