Job cuts are looming at Glasgow City Council as it looks to reduce the workforce to cope with the bill for the equal pay settlement.
The council is to open a voluntary redundancy scheme to reduce the total wage bill. It said it is necessary to cope with ever-tightening budgets and also ongoing costs following the equal pay deal agreed last year.
The council has to finance loan deals, which total hundreds of millions, from selling off key assets to City Property and then financing the deal through annual budgets to pay the settlements.
A £195 million loan was agreed between city Property and Canada Life last October to buy the Riverside Museum, Tollcross International Swimming Centre, Glasgow Royal Concert Hall, Gorbals Leisure Centre and Toryglen Football Centre and lease back to the council.
Another loan for £285m was struck with Legal and General earlier last year and a £166m, 30-year loan was then agreed with Canada Life Investments in September 2019.
There is also a new pay and grading structure to be implemented which will see average salary costs rise. The council admits a new pay and grading structure cannot be put in place “without significant costs”.
In a report to councillors, Carole Forrest, director of governance, said: “That average earnings will increase appears unavoidable and this, it is suggested, is an inevitable consequence of the decision to settle equal pay.
“The total number of employees and hence the total pay bill is, however, subject to a degree of control. It is proposed that it would be prudent to seek to reduce the overall size of the workforce. That requires service reform and these reforms will require access to voluntary redundancy to be successfully delivered.”
The report adds the council’s current policy provides a redundancy payment of up to 66 weeks’ pay for those with no access to immediate payment of pension and up to 30 weeks’ pay for those who have.
Ms Forrest states: “The purpose of a redundancy scheme is to provide the council with a means to manage its workforce. To be effective, therefore, redundancy terms need to be attractive to employees.
“This attractiveness, however, needs to be of set against a requirement that the exercise is also cost-effective.”
The scheme, which will run for three years, will launch with a “trawl for registrations of interest” by June 30. Last month, local authority watchdog the Accounts Commission praised the council for its handling of the dispute, which will cost £505m to settle. In a report it said by the end of August last year the council had settled the vast majority of claims.
But in November there remained about 150 settlements outstanding, as well as 480 other claims. Some of these are “instances where the case has been difficult to finalise”, including where the women involved had not returned signed agreement forms, or the claimant had died.
The 450 other claimants are not being acted for by the main representatives, and the agreed settlement does not include them. The report said the council had “successfully delivered a challenging and complicated project within a relatively short period of time”.
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