Benchmarking body recommends pay freeze in public sector

The Public Service Benchmarking Body (PSBB), which compares pay and conditions between the public and private sectors, has decided that the vast majority of the state’s 300,000 public servants should not receive any pay increase other than the rises agreed on as part of normal national pay negotiations. It concludes that ‘this reflects pay practices in the private sector’. The decision is based on the findings of a report issued by the PSBB in January 2008.

Background

The Public Service Benchmarking Body (PSBB), in the second exercise it has undertaken since it was established five years ago, was asked to examine the pay and jobs of specified grades during the second half of 2007; it was also asked to produce a report containing recommendations on the pay rates for these grades. As in the previous benchmarking exercise, which took place between 2000 and 2002, it was proposed that ‘the exercise should be a coherent and broadly based comparison with jobs and pay rates across the economy’.

According to its terms of reference, the PSBB had ‘to examine the roles, duties and responsibilities of jobs in the public service and in the rest of the economy and not just the pay rates applicable to jobs with similar titles, and superficially similar roles, in the private sector’.

PSBB report

The PSBB examined overall pay levels in the public and private sectors, as well as pay rates for particular groups, while taking into account the need to recruit, retain and motivate staff with the qualifications, skills and flexibility required to exercise their different responsibilities. Crucially, the body also took into consideration the differences between the private sector and public service, such as in relation to security of tenure and superannuation (pension) benefits.

In its report, issued on 11 January 2008, the PSBB concluded that major changes have occurred in the pay relationship between the public and private sectors since it issued its first report in 2002; in that year, public servants were awarded average pay increases of 8.9% at a cost of €1.2 billion to the state. Conversely, on this occasion, apart from 15 mainly senior grades, the vast majority of public servants – including staff nurses and other healthcare workers, teachers, civil servants and prison officers – have not been awarded anything. The report’s recommendations in relation to the 15 grades specified will cost the state €50 million – an overall increase of just 0.3% in pay costs.

Public servants will, however, receive the 5% pay rise due to them in 2008 under the Towards 2016 (2.86Mb PDF) national partnership agreement.

Main conclusions

Based on its findings, the PSBB made the following main conclusions:

  • the pensions of public service groups covered by the benchmarking exercise are significantly more valuable than those of private sector groups;
  • the superior value of public service pensions should be quantified as amounting to 12% of salaries. This amount should be deducted when comparing remuneration levels in the public service and private sectors;
  • in general, public service salaries compare well with the private sector.

Trade union reaction

The public sector trade union leaders were disappointed with the results of the report. The Irish Nurses Organisation (INO) demanded that the report be reconsidered. Moreover, it has referred a long-disputed pay claim to the Labour Court; however, the Court is highly unlikely to alter the findings of an independent body agreed by the social partners.

Meanwhile, the influential General Secretary of the Irish Municipal and Civil Trade Union (IMPACT), Peter McLoone, argued that the report had concluded that most public servants should receive no pay rises for two reasons: ‘First, the benchmarking body changed its methodology from that used in the first exercise. Second, it imposed a much higher premium on pensions this time.’

It is expected that the public service trade unions will seek to reform the benchmarking process in forthcoming talks on the next module of the Towards 2016 agreement.

Employers’ response

In contrast to the trade union response, the Irish Business and Employers’ Confederation (IBEC) commented that the report ‘brings reality into pay settlement in the public service at a time when the economy is facing more uncertainty and employment growth is slowing’.

Brian Sheehan, IRN Publishing

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