Pay should be set on the basis of a relativity with the few pivotal grades which have direct comparators No basis for any follow-on claims from private sector employees arising out of the Body's recommendations
The following executive summary was included in the report of the Public Service Benchmarking Body, published yesterday:
The Public Service Benchmarking Body carried out a detailed examination into the jobs, pay and conditions of public servants and compared these with jobs of equal size in the private sector using representative comparative data on pay and conditions.
In this regard the Body:
•Collected evidence and information in respect of 138 public service grades.
•Examined a total of 3,994 individual jobs and interviewed 347 public servants.
•Collected private sector data in respect of 3,563 jobs covering 46,351 employees.
The Body considered:
•Personnel issues in the public service such as recruitment and retention.
•Equity between public service and private sector employees.
•The impact of pay on national competitiveness.
•The overriding need for modernisation and change in the public service consistent with the commitments in the PPF.
•The value of public service pensions relative to those in the private sector; and
•Other material sectoral differences in conditions and benefits such as security of tenure and benefit in kind.
The Body recommends:
•A number of changes in personnel management practices.
•A range of pay increases, linked to agreement on relevant modernisation and change, giving rise to an overall increase in public service pay costs of 8.9 per cent.
The awards sever all previous pay links and establish new absolute levels of pay. The awards may not under any circumstances provide a basis for any follow-on claims from employees within either the public service or the private sector.
1. Introduction
The Public Service Benchmarking Body (the "Body") was established under the terms of the Programme for Prosperity and Fairness on 19th July 2000. The Body was mandated to report by 30th June 2002 and in the course of its deliberations met on 103 occasions. This is the full and final Report of the Body.
The members of the Public Service Benchmarking Body were the Hon Mr Justice John Quirke (chairman), Billy Attley, John Dunne, Phil Flynn, Maureen Lynott, Paddy Mullarkey and Jim O'Leary.
2. Pay Determination
The underlying principles of Irish public service pay determination have their origins in the mid-1950s. These principles are based on the premise that the pay of public servants should, where possible, be set by reference to direct comparators in the private sector; and that where these do not exist, pay should be set on the basis of a relativity with the few pivotal grades which have direct comparators.
In fact, the pay of only a small number of grades in the public service has been determined on the basis of direct comparators. The pay of the majority of grades has been set ultimately by means of a relativity with these few pivotal grades.
This approach has stretched the underlying principles of pay determination well beyond what was envisaged and created ongoing problems in the determination of public service pay. It is in this context that the public service employers and trade unions recognised in the PPF that "the traditional approach to pay reviews in the public service, based on analogues and relativities, has given rise to serious difficulties in the past" and committed themselves "to an alternative approach which will be grounded in a coherent and broadly-based comparison with jobs and pay rates across the economy".
3. Benchmarking
In undertaking the "coherent and broadly-based comparison", which was required by its terms of reference, the Body engaged in a systematic, multi-sectoral and broad-based benchmarking of public service pay. This process tested the links and relationships between public service grades to ensure that the manner in which these grades relate to each other and the private sector is more cohesive, equitable and sustainable than what has gone before.
Benchmarking is an integrated approach for the purposes of comparing work and reward. Under its terms of reference, the Body was required to have regard to a wide range of considerations, including: (i) the quantitative and qualitative measurement of jobs; (ii) comparison with the private sector; (iii) public service and private sector reward structures; (iv) the incompatibility of cross-sectoral relativities with benchmarking; (v) the need for internal consistency and coherence; (vi) recruitment, retention and motivation; (vii) equity between the public service and private sector; (viii) public service modernisation, efficiency and effectiveness; and (ix) national competitiveness.
Central to the success of this benchmarking exercise is the capacity to understand and measure the range of work across the entire public service and to compare this in a consistent and rational manner with work and reward in the private sector. Well-established job evaluation methodologies exist; however, the scale and the complexity of the benchmarking task required the Body to develop its own job evaluation scheme.
In doing so, it drew on contributions from nine leading human resource consultancies. Using this method, the Body examined the work of a total of 3,994 individual jobs in the public service. Publicly available and privately held information on salaries in the private sector did not meet the requirements of the Body as set out in the terms of reference.
The Body, therefore, undertook its own confidential salary survey as part of its corresponding research into pay and jobs in the private sector in respect of 3,563 jobs covering 46,351 employees.
4. Characteristics of the Public Service
There are significant differences between the culture and employment characteristics of the public service and private sector. These include pay determination systems, non-pay benefits, career structures and pay progression. In comparing the public service and private sector, a number of other differences are apparent, e.g.
•Public Service as Employer: The public service is the largest employer in the country, employing around 235,000 people, approximately 20 per cent of the working population.
•Levels of Educational Attainment: A substantially higher proportion of public service employees hold a third-level qualification as compared with private sector employees.
•Occupational Profile: A higher proportion of public servants are employed in professional, associated professional or technical occupations than is the case in the private sector.
•Age Structure: Two-thirds of public servants are aged over 35 compared with less than half of those employed in the private sector.
5. Personnel Issues in the Public Service
The Body has concluded that better overall planning is required in some sectors of the public service to deal with recruitment and retention, supply, training and development, motivation and performance management.
It was evident to the Body that a number of the recruitment and retention problems point to deficiencies in personnel analysis and planning, rather than simply issues of pay.
Excessive reliance on overtime and "on-call" working raise issues of concern in a number of services. Such practices are not in the best interests of staff, employers or consumers and the Body recommends that steps be taken to eliminate them.
6. Considerations Underpinning Pay Recommendations
6.1 Comparative Analysis of Public Service with Private Sector
In reaching its recommendations on pay, the Body, in addition to the considerations set out in Paragraph 3, Points (i) to (ix), also considered a number of other issues in respect of the public service. These included security of tenure, pension arrangements, allowances, annual leave and working hours. In the private sector, the Body similarly considered aspects such as bonus payments and non-pay benefits examples of which are: company cars, medical insurance, profit-sharing arrangements and share option schemes.
6.2 Performance-Related Pay
Performance-related pay exists to a variable degree in the private sector, linking certain elements of reward to the performance of the individual, group or enterprise. A general pattern which emerged from the Body's research is that such payments tend to represent a more significant element at higher levels of remuneration. The information available to the Body indicates that, in practice, such payments are more dependent on actual performance at these levels.
The Body notes the commitment of the parties in the PPF to the introduction and subsequent review of systems of performance management in the public service. The Body has taken the view that consideration of the introduction of performance-related pay in the public service is premature pending the outcome of that process of review. Accordingly, it makes no recommendation in this regard.
6.3 National Competitiveness
Under its terms of reference, the Body is required to have regard to "the need to underpin Ireland's competitiveness and develop our economic prosperity on a sustainable basis". It has been an overall concern of the Body that the public service should not lead the private sector in matters of reward. At the same time, however, a central objective of the benchmarking process, as required by the Body's terms of reference, is the "need to ensure equity between employees in the public service and those in the private sector". These principles have been a major element in the formulation, within the overall context of the PPF, of a cohesive overall set of recommendations on public service pay which has regard to the full range of considerations referred to in the Body's terms of reference. In light of the foregoing, there is no basis for any follow-on claims from private sector employees arising out of the Body's recommendations. Any such claims would have no justification and would have a wide impact across the economy with significant implications for competitiveness, employment, and economic and social development.
6.4 Modernisation and Change
The challenges facing the social and economic development of Ireland in the medium to long term underpin the need for continually progressing the modernisation of the public service. The Body notes the reference in the PPF to the link between public service pay awards and the delivery of the modernisation programme in the public service. The Body strongly recommends that implementation of the pay awards should be made conditional (apart from the one-quarter of any award to be implemented with effect from 1 December of 2001 as agreed between the parties) upon agreement on relevant modernisation and change issues at the appropriate local bargaining levels. It will be a matter, in each case, for managements and unions/associations to determine the agenda for this local bargaining, but it is the firm expectation of the Body that real outputs will be delivered. The establishment of an appropriate validation process is recommended to ensure that agreements on issues such as adaptability, change, flexibility and modernisation are implemented.
6.5 Severing of existing pay links
The Body's recommendations on the remuneration of the benchmarked grades have the effect of severing all previous pay links and establishing new absolute levels of pay for each of those grades. No benchmarked grade may receive a further pay increase as a consequence of the Body's recommendations as they affect any other grade, benchmarked or not.
6.6 Pay Recommendations
The overall increase in public service pay costs arising from the Body's recommendations is 8.9 per cent. The awards recommended are set out in Chapters 7 to 11 of the Report.