Civil service law reform comes into force on 1 July 1997

On 1 July 1997, the Act on Civil Service Law Reform came into force in Germany. It seeks to support the competitive principle in the public sector employment relationship, establish more flexible and performance-oriented remuneration systems, and increase the motivation and mobility of public sector employees. The implementation of the civil service law reform and further plans to reform public sector industrial relations have been accompanied by heavy trade union resistance.

Career public servants in Germany

According to constitutional law, the special category of employees known as Beamte, or career public servants, are individuals who are appointed by the state, a municipality or other legal persons under public law to the career public service relationship by sovereign act. They have the benefit of a special, state-administered duty of care on the part of their public sector employer, in respect of which they, in turn, are subject to a special duty of loyalty. In return, career public servants enjoy guaranteed lifetime employment. Although career public servants have the right to form a collective organisation, they do not have the right to strike or the right to refuse to perform their duties. This prohibition of industrial action safeguards the proper functioning of the state and its administrative authorities. On 1 June 1995, 1.9 million of the 5.4 million public sector employees in Germany were career public servants.

The reform of the German civil service law

Since the 1980s, and increasingly in the 1990s, the restructuring and reform of the German public sector has been discussed by the political parties, academics and the public. On 30 January 1997, the Bundestag (Lower House of Parliament) and, on 31 January 1997, the Bundesrat (Upper House of Parliament) passed the Act on Civil Service Law Reform (Gesetz zur Reform des öffentlichen Dienstrechts). It aims to support the competitive principle in the public sector employment relationship, establish more flexible and performance-oriented remuneration systems, and increase the motivation and mobility of career public servants.

The new Act came into force on 1 July 1997. Its basic provisions are set out below.

1. The introduction of"pay-for-performance"elements. These include: the redesign of remuneration systems; the introduction of career paths where promotion is no longer based on seniority but on performance; the introduction of performance bonuses; and the limitation of the number of people receiving performance bonuses to 10% of the workforce. The additional costs caused by these measures are financed by reductions in the workforce associated with natural turnover.

2. The introduction of temporary and probationary career public servants. This includes the introduction of probationary periods in top-level positions and before promotions connected to transfers to other public sector establishments, as well as the possibility for the federal states (Bundesländer) to award top executive positions on a temporary basis.

3. Differentiated methods of performance appraisal. Instead of concentrating on marks, the new performance appraisal system focuses on general guidelines and quotas.

4. Increased mobility between different career paths.

5. Optimisation of staffing arrangements. The extent to which the public employer is able to transfer civil servants without their approval is extended.

6. Measures to support part-time employment. The extent to which federal career public servants can choose to move to part-time work are extended. The rules regarding part-time employment for federal state career public servants are to be established by the federal states.

7. Measures to improve regional and functional flexibility.

8. Measures to avoid early retirement. The general age for applying for early retirement is raised from 62 to 63 years. Furthermore, the public employer will increasingly make use of rehabilitation measures instead of allowing career public servants to retire early. Plans to cut the level of pensions by 3.6% for each year of early retirement from 1 January 2002 are brought forward by four years to 1 January 1998.

9. Measures to restrict entitlements regarding the level of pensions.

10. Measures to improve the situation of families. Changes in pay structures will lead to higher incomes for younger career public servants and those with families. Furthermore, the availability of part-time jobs is extended.

11. Measures to avoid corruption.

The implementation of the reform

The Act on Civil Service Law Reform provides for considerable scope for the employers' side at federal, state and local level regarding the implementation of the measures.

In June 1997, the Federal Government passed two directives on performance-related pay for career public servants and soldiers. The directive on performance-related promotion (Leistungsstufenverordnung) aims at ensuring that promotion within the civil service is linked more closely to performance instead of depending solely on seniority. The directive on performance-related bonuses (Leistungsprämien- und -zulagenverordnung) aims to introduce performance-related elements into remuneration systems.

Furthermore, the Federal Government has agreed on several points regarding the reform of the career public servants' occupational pension schemes. The reform is planned to be implemented at the latest in 1998. Between 2001 and 2016, all career public servants will contribute to the financing of the pension schemes through a fixed 0.2% reduction in annual pay increases. A commission of politicians and trade unionists will control the funds raised by this reduction in pay increases, and ensure that the ministers of finance are not using the capital for other purposes. The basic pay for new career public servants will be reduced by 5%. Furthermore, the system of supplementary benefits (Zulagensystem) will be checked and drastically reduced. The reform will, it is hoped, save DEM 18 billion by 2008. The funds raised by reducing pay increases will, it is calculated, amount to DEM 66 billion by 2015.

At the level of the federal states, state governments have to implement the 1997 reform act by 31 December 1998. Hesse has announced the introduction of obligatory part-time work (Zwangsteilzeit) for new career civil servants, while other states such as Bavaria have introduced top civil service jobs, such as university professorships, on a temporary basis.

There is also a controversial discussion going on regarding measures to cut public sector personnel costs. Proposals include: the reduction of the annual extra month's salary payment for career public servants; the reduction of the annual extra payment for retired career public servants from 94% of a full month's salary (western Germany) and 70.3% (eastern Germany) to 50%; the reduction of continued remuneration in case of sickness (which is currently at 100% of normal pay); the further increase of the retirement age of career public servants; and a general abolition of the career public servant occupational status.

The reactions of the social partners

The German Federal Minister of the Interior, Manfred Kanther, and many of his colleagues at state level welcomed the civil service law reform as the most promising public sector reform of the century.

The career public servants' trade union, Deutscher Beamtenbund (DBB), criticised the reforms as directed more towards saving costs rather than the introduction of streamlined contemporary personnel management methods. In the medium term, the different ways of implementing the reform act at state level would lead to a fragmentation of Germany's civil service law. Furthermore, different rules at federal and state level would converge at the level of the lowest common denominator. Other public sector unions - the teachers' union, Gewerkschaft Erziehung und Wissenschaft (GEW), the public sector employees' union, Gewerkschaft Öffentliche Dienste, Transport und Verkehr (ÖTV) and the police officers' union, Gewerkschaft der Polizei (GdP) - fear the spread of performance pay elements to all public sector employees.

On 10 June 1997, several DBB member unions organised a demonstration of roughly 10,000 police officers, firefighters and court employees against the reforms. On 1 July 1997, GEW and ÖTV demonstrated in Frankfurt against the planned implementation of the public sector reforms for the state of Hesse. More than 10,000 people, many of whom were career public servants, took part. On the same day, GEW called a strike of teachers, of whom a majority are career public servants. Since, in general, career public servants do not have the right to strike and the Hesse Ministry of the Arts explicitly forbade the career civil servants to strike on 1 July, Hesse's Social Democratic Minister of the Arts, Hartmut Holzapfel, announced disciplinary measures against the striking career public servants. Furthermore he intends to fine the GEW DEM 30,000. Later that week, the GEW called for the expulsion of Mr Holzapfel from the GEW. On 3 July 1997, the ÖTV and the GdP organised a demonstration in Bonn. On 15 July, around 10,000 police officers demonstrated against federal and regional savings plans, especially against plans to extend their working life by three to five years, as well as cuts in bonuses.

Commentary

Reforming the German public sector, and especially the outdated structures of the career public service, appears to be a Sisyphean task, given the background of: the fact that 249 of the 672 Members of the Bundestag are career public servants with a further 57 being public sector employees; and the strong resistance of the DBB and other public sector unions, as well as of the career public servants and the public sector employees affected. Indeed, reforms of this encrusted system in order to achieve more flexibility, economic efficiency and service orientation are doomed to proceed at a snail's pace. However, given the current severe constraints on public budgets, the increasing personnel costs of the public sector - especially when taking into account the rising costs of the retired career public servants (projected at DEM 75 billion in 2010 and DEM 161 billion in 2040) - force the German federal and state governments to ponder carefully on public sector reforms. In this respect, the introduction of economically-effective incentive systems in the public sector employment relationship are of outstanding importance. The civil service law reform was just a first step. The next steps will be to reform the career public servants' occupational pension system and then to cut other privileges of the career public servants deriving from the last century. (Stefan Zagelmeyer, IW)