The council has taken on around 500 extra employees in the space of two years with up to 300 more set to join in the coming year.
Figures show that if all the extra staff are recruited the wage bill would rocket to £106 million – a leap of £23.4 million in just four years, which is also partly due to pay rises resulting from the single status deal.
Councillors at Wednesday’s meeting of the Full Council were shocked to discover the scale of recruitment since they were elected in 2007. Some had been under the mistaken belief that all new posts had to be brought before them first to be sanctioned.
An attempt led by services chairman Gussie Angus to freeze recruitment immediately did not succeed. But it is clear that the era of endless expansion of well-paid council jobs for life has ended. Councillor Allison Duncan publicly repeated his warning that enforced redundancies lie ahead.
According to the figures presented by the council’s head of organisational development John Smith, the workforce increased in size by 12 per cent in two years and that will expand to become a 20 per cent increase in the space of three years if all the posts planned for 2010/11 go ahead and are filled.
Most of the job creation activity relates to the expanding need for community and residential care for Shetland’s growing number of old people, which is costing an extra £2 million each year. Each time the council agrees a new service, such as the Montfield care home, or builds a new centre it brings with it a team of new staff.
As depute chief executive Hazel Sutherland told members, it is new posts to provide the new services that have been agreed by them, although she admitted the number of extra jobs associated with each development was not stated explicitly.
Infrastructure chairwoman Iris Hawkins felt that all the councillors were “a bit stunned” at the number of new jobs created. She said in future reports on new developments should spell out the numbers to be employed.
The 800 extra people (Ms Sutherland favoured the estimate of 700) will have added £12 million to the annual wages bill since 2007. Most of the jobs are part-time but when translated into full-time equivalents the 800 new employees equate to 440 full-time jobs, giving the council a payroll which is the equivalent of having 2,959 full-time workers.
Mr Angus’ attempt to take action failed by 12 votes to seven. His recruitment freeze would have applied unless councillors agreed there was a exceptional need for a vacancy to be filled. He also wanted the manpower needs of all council services to be reviewed.
He said the 440 extra full-time equivalent staff was “clearly unsustainable”, warning that further increases in spending on community care were on the way and there was no money to pay for it.
Councillor Jonathan Wills was one of those who backed a freeze while the workforce was reviewed. However, others, like Caroline Miller and Allan Wishart, were happy with the plans tabled by officials to scrutinise all new and vacant posts. They cautioned against a “knee-jerk” reaction and “slashing” or “stabbing” their workforce without knowing what the wider effects might be, given how crucial the council is to keeping the Shetland economy ticking. Mr Wishart said there was enough negativity relating to cutbacks without councillors in their zeal adding a whole new layer.
Executive director of infrastructure Gordon Greenhill got his fingers fried when he dared venture the opinion that a recruitment freeze would send out the wrong message to staff
that they were to be targeted without their involvement.
Mr Angus reacted angrily, accusing the official of “dabbling in politics”. He protested to convener Sandy Cluness: “Why not just let him make a motion? He’ll maybe get a seconder from one of the other staff!”
One of the reasons behind councillor Angus’s alarm about staff costs is the spectre of extra one-off spending totalling about £20 million which is lying in wait for the local authority in the form of £8.3 million to plug the hole in the Shetland Towage pension fund, up to £6 million to settle the legal action over the dredging row with Lerwick Port Authority and £5.3 million in extra wages this year due to the single status deal.
But he was reassured by head of finance Graham Johnston who said allowances had been made for those costs in the council’s long-term financial planning, although he said the port authority compensation, expected to be several million pounds, has yet to be quantified.
Mr Johnston felt it was premature for councillors to slam the door on council recruitment at this stage or to embark on any other “slash and burn” missions to find savings. The plans being put in place would enable the council to cope, he said, and it was important not to destabilise the Shetland economy during the current economic climate.
This year the council is searching for cuts of £9.9 million, representing a seven per cent cut in its gross annual budget for 2010/11. Part of that figure is the savings of £6.7 million agreed by councillors last month which have still to be worked out in detail.
The council may have to take further action if rumoured government cuts of up to four per cent are imposed for the next three years.
As part of the process of cutting back, councillors agreed on Wednesday to the plans put forward by staff as to how they will find the £9.9 million of savings from capital and revenue spending. A lot of the specific proposals to cut existing services will only come to light in the coming months as individual reports are laid before councillors.
From within the council itself there are proposals to make savings from cheaper procurement of goods and services and general improved efficiency, which includes fewer staff off sick, less bureaucracy, selling off surplus assets and sharing services with other organisations, such as the police and fire brigade. Ironically, extra staff will have to be taken on to cut procurement costs by the target of £1 million, which is what the council calls a “spend to save philosophy”.
Ominously, “redesign” of the schools service as a result of the blueprint for education, and of the ports service at Sella Ness, is expected to yield major savings in 2010/11.
Ms Sutherland warned in her report that it will be necessary for the council to consider reducing the workforce through early retirement, part-time work and voluntary redundancy, although nothing was said about Mr Duncan’s prophecy of compulsory redundancies.
Part of the rising wage bill is due to pay increases given to many staff as a result of the single status review, which has added £5.3 million for this coming financial year. In 2006/07 it was estimated the extra required would be £3.5 million but it has shot up due to more staff moving onto higher grades, the need to do single status deals for all the extra staff taken on since 2007 and because there have been several annual pay rises in the meantime.
Now the council is to begin efforts to make gains from the expensive new pay deal it gave its staff. The cost recovery process will seek to squeeze savings from the new working arrangements with the aim of clawing back £2.75 million in the coming year.
One area up for the squeeze is the £3.3 million annual spend on consultants with the council expecting its own staff on their new enhanced salaries to carry much more of the burden. But councillor Bill Manson advised careful cutting because much of the work classed as consultancy was actually done by contractors, not consultants.
As well as hiking the annual wage bill the single status deal cost the council a one-off payment of around £6 million in back pay this year. Councillor Betty Fullerton said it had been a very expensive exercise and she urged progress with the new cost recovery plans.