Select Committee on Defence Appendices to the Minutes of Evidence


Annex B

PAY COMPARISONS

  1.  Broad comparability. We aim to recommend pay levels broadly comparable to those outside the Services for jobs at similar levels. Comparisons with civilian jobs are not made on a job for job basis but by comparing a sample of representative jobs at each rank, or rank and band, within a range of broadly similar posts outside. Job for job comparisons would not be appropriate for most Service posts as there are no precise civilian equivalents. The process of applying broad comparability involves judgement and is neither simple nor mechanistic.

  2.  Job evaluation. Job evaluation techniques are used as the basis for the broad comparisons outlined above. These enable the size of a post to be determined by measuring its work content against a number of key factors. The factors are:

    —  knowledge, skills and experience;

    —  complexity and mental challenge;

    —  judgement and decision making;

    —  use of resources (including personnel, equipment and budgets);

    —  communication; and

    —  working conditions.

  The importance of each factor is assessed and the total score from all the factors gives a measure of the size of the job, its job weight. As both civilian and Service jobs are scored under the same job evaluation scheme, it is possible to make comparisons between the remuneration of Service jobs and civilian jobs of a similar job weight.

  3.  Evidence. Each year MoD provides the results of the job evaluation it has carried out using a proprietary job evaluation system developed by external consultants. The system enables posts from Private to Brigadier to be evaluated using the same system. The results provided by MoD enable us to compare the remuneration of Service personnel with that held on our comprehensive civilian pay database covering over 100,000 individuals. This is the third year we have used this system for our comparability evidence.

  4.  Earlier this year we arranged for consultants to review the methodology and data sources which provide us with pay comparability evidence. The review concentrated on the following factors:

    —  the current process of making pay comparisons between jobs in the Armed Forces and civilian comparators on the basis of job weight;

    —  the coverage and appropriateness of the civilian database which combines data from three different sources;

    —  the techniques used to provide comparability evidence on pay levels and pay movements from the remuneration database;

    —  the extent to which the pay comparability system is fit for providing pay data; and

    —  the identification of any areas that required changes when assessing broad comparability when we are comparing pay of the Armed Forces with that of civilians.

  5.  The consultants confirmed that the civilian database we currently use enables us to make valid comparisons between the pay of the Armed Forces and that of civilians.

  6.  Other Ranks. The pay data cover a much broader range of companies and organisations than our previous database for these ranks and include many thousands of jobs against a few hundred previously. We are also, with the new database, able to use job weight as the basis of our comparability evidence for Privates and Lance Corporals.

  7.  Officers. Collecting pay comparability evidence for Officers is more complex, especially for senior Officers, as there is a wide range of pay for any given job weight at this level in the civilian sector. To maximise the validity of the pay comparisons we have weighted the data to reflect more closely the distribution of jobs in the economy as a whole by location and industrial sector and analysed pay levels by company turnover.

  8.  Basis for comparison. The starting point is a comparison of the levels of Military Salary and civilian earnings in the previous April. Our analysis of civilian earnings covers basic pay plus variable payments, including overtime, bonuses and productivity payments, the relative value of civilian and Service pensions and, where appropriate, the relative value of civilian benefits such as company cars. We also take account of the average Service working week, excluding unsocial and other excess hours accounted for in the X-factor, compared with the average civilian working week, including paid overtime hours. Our recommendations on salary levels are made several months in advance of the effective date, and we take account of forecasts of expected future movements in national statistics of earnings, settlements and inflation to inform our judgement.


 
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