New agreement links pay to performance for government ministry staff

On 30 August 2007, the Italian Council of Ministers approved a draft agreement, signed by the three main trade union confederations and the agency representing public sector employers, for renewal of the national agreement for ministry workers. The agreement is partly a response to recent media debate on the inefficiency of the public sector. Productivity increments and a citizen evaluation of public sector workers will now measure the efficiency of public employees.

Agreement reached

The renewal of the agreement for workers at the Italian ministries comes after 18 months of difficult negotiations between the trade unions and the government. The latter was represented by the Public Sector Bargaining Relations Agency (Agenzia per la Rappresentanza Negoziale delle Pubbliche Amministrazioni, Aran) (IT9709311F, IT9711217F), while the trade unions included: the Public Service Union (Funzione Pubblica, FP-Cgil), affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil); the Federation of Public and Service Workers (Federazione dei Lavoratori Pubblici e dei Servizi, FPS-Cisl), affiliated to the Italian Confederation of Workers’ Trade Unions (Confederazione Italiana Sindacati Lavoratori, Cisl); and the Public Administration Workers’ Union (Pubblica Amministrazione, Uil-PA), affiliated to the Union of Italian Workers (Unione Italiana del Lavoro, Uil).

The draft agreement reached with Aran on 14 July 2007 concerns about 200,000 employees, excluding senior managers, who are eligible for the wage increases envisaged during the two-year pay period of 2006–2007. The pay part of the new agreement will also be valid for two years. This is despite the fact that a longer duration of three years seems to have been envisaged in the political memorandum on the reorganisation of public administration (Memorandum d’intesa su lavoro pubblico e riorganizzazione delle amministrazioni pubbliche (in Italian, 82Kb PDF)), which was signed at the beginning of the year with the government (IT0702039I).

In any case, the innovative feature of the new agreement is that the two parts of the contract – covering pay and other aspects – will be closely connected: the introduction of mechanisms for productivity assessment and certification by managers and the public will affect the calculation of wages. The draft agreement follows the latest public administration framework agreement, which was signed in May 2007 (IT0706029I).

Content of agreement

Pay aspects

The wage increase is around €93 for 13 monthly instalments, and the government has undertaken to raise it to a standard €101. The agreement has also harmonised administration allowances among the various ministries and has standardised salaries among departments. The linking of pay to performance takes place through two levels of productivity assessment: a collective evaluation where citizens can appraise the work of public officials, and an individual review by management with respect to pre-established targets. Productivity will be remunerated in percentages of the targets achieved: if any employees are dissatisfied with their appraisal, they are entitled to a hearing with the manager, attended by the relevant trade union.

Career profiles

Innovations with regard to the variable part of pay will also be reflected in the new system of personnel classification. This is divided into three areas with different pay scales. The purpose of this new system is to link career opportunities with the results achieved, taking account of quality, experience and performance. Moreover, the agreement devotes an entire section to defining the rules on employee mobility within the public administration, encouraging voluntary mobility to functions and offices with the greatest staff shortages.

Outsourcing

The trade unions have succeeded in establishing that, if in the future an administration intends to outsource a function, it can only do so after prior discussion with the trade unions; during such negotiations, the management must provide justification for the decision on cost and efficiency grounds. Furthermore, if standard functions within the administration have been outsourced in the past, they should be re-internalised. This condition also aims to eliminate the forms of precarious employment that often characterise outsourced functions.

Reaction of social partners

As emphasised by the General Secretary of FP-Cgil, Carlo Podda, the sectoral trade unions have sought to counter widespread public discontent with the public administration through the introduction of two levels of employee performance assessment; in recent months, national newspapers had criticised the public sector for being inefficient.

The Minister for Reform and Innovation in the Public Administration (Ministro per le riforme e le innovazioni nella pubblica amministrazione), Luigi Nicolais, is equally satisfied with the new provisions introduced by the agreement. In fact, the draft agreement received approval from the Council of Ministers on 30 August 2007.

Commentary

The innovative aspect of the agreement is its introduction of mechanisms to assess the efficiency of the public administration. The extent to which these mechanisms are practicable and suitable will have to be evaluated in the future. However, it has already been pointed out that linking part of the salary to management appraisal could either encourage collusion between employees and managers or lead to arbitrary decisions. Meanwhile, the external controls – to be exerted by citizens through their appraisal of services – set in the agreement indicate a willingness to bring citizens closer to the public administration. However, this strategy will primarily affect those front-office functions most directly in contact with the public, whereas a large part of the work of public offices is often unobserved by the public.

Cristina Tajani, Ires Lombardia

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