Trade unions oppose public administration pay reform

Bulgarian Finance Minister Simeon Diankov presented proposals for public administration reform at the meeting of the National Council for Tripartite Cooperation held in November. The focus is on a new pay system, which replaces the traditional civil service system of automatic salary increases based on length of service with financial rewards for good performance. Employers' associations supported the proposal but trade unions have criticised some reform proposals.

Background

On 15 November 2011 at a meeting of the National Council for Tripartite Cooperation (NCTC), Finance Minister Simeon Djjankov presented a package of proposed reforms relating to the state administration. The reform measures include:

According to the Finance Minister, the new regulations for performance-related pay ‘create clear rules for setting and increasing wages as well as for linking remuneration to results achieved’. This will work as incentive to keep highly qualified employees, he added. Despite the lack of consensus among social partners, the government adopted the new regulations.

Main points of proposed reform

The reforms include the following main points.

  • The pay of public sector employees consists of a fixed basic wage and variable components. The basic wage will make up 70% of the gross salary and the flexible component will be 30%.
  • The basic wage is fixed for levels and grades according how the post is classified, the employee’s professional experience and their individual performance appraisal. Each basic salary level includes six grades, each of which has a minimum and maximum rate, set in Annex 1 to the regulation on salaries in the state administration.
  • The bonus paid for long service is abolished and the personal seniority supplement will be incorporated within the basic monthly salary to preserve current remuneration levels. The aim is to replace the traditional civil service system of automatic salary increases based on length of service with performance-related pay.
  • A special bonus for retaining or appointing key experts is introduced, which can reach 100% of the basic wage.
  • The variable pay component is linked to strict criteria for measuring competences and individual employee performance.
  • Career advancement will now be linked to performance appraisal and not to length of service.

The new payment system will come into effect on 1 January 2012 and will cover employees recruited with a contract under the law for civil servants. It will also include administrations previously working under special laws, for example the National Social Security Institute (NSSI), the National Health Insurance Fund and the Economic and Social Council of Bulgaria (ESC), with the exception of the police and military.

Reactions of social partners

The employers’ views

The government’s reform proposals have received substantial support from all employer organisations, which especially welcomed the abolition of the seniority supplement. According to Bozhidar Danev, Executive Director of the Bulgarian Industrial Association (BIA), this will increase the effectiveness of public spending.

Ivelin Zheliazkov, Parliamentary secretary of the Bulgarian Industrial Capital Association (BICA) said length of service does not equal work of better quality, and the possibility of receiving extra pay will motivate civil servants to work better.

The President of the Bulgarian Chamber of Commerce and Industry (BCCI), Tzvetan Simeonov, said the new approach to wage setting for public employees was right because it took account of achievements and skills, thus offering reward for work actually achieved.

Both BIA and BICA consider that the long service bonus should also be removed in the private sector. However, the employers believe that criteria for appraising employee competences and results must be more comprehensive.

Trade unions’ disagreement

The trade unions, both national and sectoral, have complained about not being involved in negotiations on the new payment system, making it impossible for them to express their views and pursue the interests of their members.

The Confederation of Independent Trade Unions in Unions in Bulgaria (CITUB) and the Confederation of Labour ‘Podkrepa’ (Podkrepa CL) have criticised the proposed reforms as unclear and conflicting. In particular, they argue against the abolition of the seniority supplement and the lack of inclusion of trade unions in the appraisals process.

CITUB President Plamen Dimitrov supported the need for public administration reforms, but expressed his concern at the lack of financing for this in the 2012 State Budget, and possible staff cuts. He also warned against the abolition of the seniority supplement.

Meanwhile Konstantin Trenchev, President of Podkrepa CL, criticised the proposal for not providing a clear safeguard mechanism against arbitrary and subjective appraisals by managers. He says the system should first be introduced as a pilot project in one area of public administration, with a view to widening its application later across the public administration as a whole.

Commentary

The implementation of the reform programme is unlikely to be a straightforward process due to the lack of consensus. As with all of its most recent decisions, the government avoided consulting social partners despite having previously established procedures for consultation and social dialogue. In fact, relations between the government and trade unions have been deteriorating rapidly in the last month due to the government’s unilateral approach and the breach of signed agreements.

Against this background, both trade union confederations walked out of the NCTC meeting and began mobilising for a protest demonstration on 30 November, against the unexpected and unilateral decision of the government to increase the retirement age by a year from 1 January 2012.

Nadezhda Daskalova, ISTUR

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