Report on public service pay reform advocates Irish solution

The key to resolving the thorny issue of pay relativities in the Irish public service lies in the discovery of "an Irish solution to an Irish problem", according to a confidential draft report on the reform of public sector pay, made public in September 1999. The report advocates a four-level performance-related pay system

A draft report on reform of the public sector pay determination system - drawn up for the government by the economic consultants Fitzpatrick Associates- suggests a menu of options for pay reform which would form the basis for future centralised pay negotiations. A draft of the report - Review of public service pay determination, report to the Departments of Finance and the Taoiseach, August 1999 - which is due to be formally handed to government in the near future was featured in the 23 September 1999 issue of the Dublin-based Industrial Relations News (IRN).

Any agreement on such a new system could come only after the current impasse over nurses' pay and the issue of so-called "catch-up" claims by a variety of groups within the wider public service have been resolved (IE9909292N). The nursing unions commenced strike action on 19 October 1999 in pursuit of a major pay claim, having already rejected several attempts to settle their long-standing pay dispute.

The authors of the new report opt for a "four-level" approach to the implementation of a new performance-related pay system. They warn, however, that such a system must be introduced in what is a specifically Irish context. A number of key considerations must be taken into account in this regard:

  • a public service where "output" or "performance" culture is traditionally absent, and where its introduction will involve a fundamental change in some mindsets and practices;
  • national-level pay agreements negotiated on a partnership basis; and
  • a "full-blown" system can only be introduced over time, given that many of the preconditions of performance-related systems are only now being introduced and will need some time to "bed down" within the civil service, and exist only in embryonic form outside it.

The report says that the elimination of "automatic" internal and external relativities, which have no relationship with one another, must be a key aspect of any new system. No "off the shelf" model of pay determination or performance exists and there can be no "overnight" solutions to the problem.

Various transitional and hybrid arrangements may also be needed, according to the report. In this regard, three important provisos should be taken into account: first, they should yield some early tangible change and not be used as "postponement devices"; second, they should help, not hinder, the wider reform process and; third, unless the status, role and legitimacy of automatic relativities between unrelated occupations can be eliminated, a new system could leave the situation worse rather than better off.

Against this background, the report proposes a four-level approach to implementation of a new system.

1. National level

Incorporation of a strong "performance dimension" into a successor to the current national agreement, Partnership 2000 (IE9702103F), involving both a statement of the principle that public service pay should be related to performance, but also concrete manifestations of this. This might be achieved by:

  • minimisation of any productivity element of pay increases over and above inflation;
  • establishment of the principles and parameters for levels two, three and four (see below);
  • additional increases at these levels, conditional on real, tangible and verifiable productivity increases within wider sectoral strategies; and
  • possible establishment of a total "pay envelope" or ceiling.

2. Departmental/sectoral level

Following an overall national agreement, arrangements could be made within individual departments or sectors, involving either total current expenditure or public service pay only. The report says that this will involve agreement within individual organisations/sectors over explicit strategic objectives and goals of quantified performance indicators. These could relate to key government and public policy objectives.

Level two arrangements might also include the idea of one-off rewards for certain "major changes in work practice ... such instances should be exceptional ones of a fundamental 'super change' nature." They should not involve ongoing change such as the mere introduction of information technology. However, measured increases in outputs resulting from change of the latter nature "might be the object of instruments such as gain-sharing".

3. Group/team Level

Within departments or sectors, agreements which mirror the overall sectoral objectives could be defined. The organisations involved could include divisions or units in major departments and larger agencies, and some small individual agencies. In some cases, there might be a number of sub-levels within level three. In each instance this level could involve: agreed levels of performance by the group or team; and elements of gain-sharing/other "group rewards" for achieving agreed targets.

4. Individual level

This level would involve the eventual replacement of the existing pay progression system with a more broad-banded, individually-related pay determination system. The elements involved would constitute a "menu" from which an individual's pay growth might be composed, not a package of which all elements would apply to each public servant. Also, all of the elements might not be introduced simultaneously.

Commentary

While some trade unions would view the introduction of performance-related pay with suspicion, there is a general acceptance that its introduction in some form may be inevitable. That said, the scrapping of the current common pay and grading structure and the linkages between them would be strongly resisted. Yet this is precisely what lies at the heart of the Fitzpatrick report.

Relativities and linked pay claims were originally designed to apply some order to public sector pay. Groups such as nurses, teachers, the police, the army and prison officers have jobs which are peculiar to the public service and do not have any ready private sector comparators. Clerical and executive grades, on the other hand, can be compared with private sector jobs. Accordingly, their pay is determined by reference to private sector comparators and, in order to maintain equity and fairness, the pay of nurses, the police and other aforementioned groups are linked internally within the public sector to the key "marker" grades. It is a system which is ingrained, and persuading the unions to adopt even a measure of performance-related alternative will not be easy. (Brian Sheehan, IRN)

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