Public Sector Compensation in T - OECD _ OCDE

148 Pages·2.335 MB·English

Public Sector Compensation in Times
of Austerity
Contents Public Sector
1. Current trends in the compensation of public employees in OECD countries
Compensation in Times
2. Public sector compensation management in a changing world
3. Managing compensation in a post “New Public Management” era
of Austerity
4. Policies and practices governing public sector compensation planning
5. Key considerations in reforming the government compensation system
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iSbn 978-92-64-17773-4 -:HSTCQE=V\\\XY:
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Public Sector
Compensation in Times
of Austerity
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the Organisation or of the governments of its member countries.
This document and any map included herein are without prejudice to the status of
or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2012), Public Sector Compensation in Times of Austerity, OECD Publishing.
http://dx.doi.org/10.1787/9789264177758-en
ISBN 978-92-64-17773-4 (print)
ISBN 978-92-64-17775-8 (PDF)
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3
FOREWORD –
Foreword
As part of the work programme of the Public Employment and
Management Network (PEMN) of the OECD Public Governance
Committee, the OECD Secretariat – through its Public Governance and
Territorial Development Directorate – has initiated an examination of the
strategies adopted since the onset of the economic and financial crises to
manage employee compensation cuts more effectively. Wage and salary
programmes represent one of the largest controllable costs for government
employers. Changes in the structure and administration of pay programmes
are not merely isolated austerity measures but in fact part of broader
initiatives to restructure government so as to reduce costs more generally.
The crises have made rethinking public sector compensation models
imperative, both to meet the immediate need for lower operational costs and
to effectively plan for the long term.
This volume aims to assist member countries with that rethinking,
offering a close-up look at compensation planning and management as a tool
for tackling the budget crisis and achieving the goals of government in a
cost-effective manner. The focus is primarily on wages and salaries, and to a
lesser extent on cash incentives and allowances.
The report is based on information provided by member countries
through the 2010 OECD Survey on Strategic Human Resource Management
in Central/Federal Governments and the 2010 OECD Survey on the
Compensation of Employees in Central/Federal Governments, both
conducted by the OECD Public Governance Directorate. Discussions held
during the experts’ meeting on compensation 9 September 2011 were
invaluable in helping refine arguments and conclusions.
Howard Risher (consultant) wrote Chapters 2 through 5.
Oscar Huerta Melchor (OECD Secretariat) co-ordinated the project and
revised the report. Input that greatly enriched its conclusions came from
members of the Public Employment and Management Network:
Georgia Valatsu (Greece); Bunzo Hirai and Yoko Numata (Japan);
Robert Cloarec and Per Stengard (Sweden); Wojciech Zielinski (Poland);
and David Livingstone (United Kingdom). Useful comments were provided
PUBLIC SECTOR COMPENSATION IN TIMES OF AUSTERTY © OECD 2012
4
– FOREWORD
by Robert Ball, Stéphane Jacobzone, Zsuzsanna Lonti, Varinia Michalun
and Elsa Pilichowski from the OECD Secretariat. Randall Holden edited the
book. Karena Garnier (OECD Secretariat) provided administrative
assistance. Janos Bértok (OECD Secretariat) oversaw the project under the
direction of Rolf Alter (OECD Secretariat).
PUBLIC SECTOR COMPENSATION IN TIMES OF AUSTERTY © OECD 2012
5
TABLE OF CONTENTS –
Table of contents
Preface ......................................................................................................... 9
Executive summary ................................................................................................. 11
Chapter 1: Current trends in the compensation of public employees in OECD
countries ....................................................................................................... 17
Introduction ....................................................................................................... 18
The fiscal consolidation imperative ....................................................................... 18
Plans to reduce payroll and labour costs ................................................................ 22
Comparing compensation in selected public sector occupations ........................... 30
Compensation cuts may produce workforce management challenges ................... 35
Conclusions ....................................................................................................... 38
Notes ....................................................................................................... 39
References ....................................................................................................... 40
Chapter 2: Public sector compensation management in a changing world ........ 41
Introduction ....................................................................................................... 42
Government compensation programmes are at a crossroads ................................. 42
The purpose of compensation ................................................................................ 45
Controlling payroll costs is key to managing the total compensation package ..... 47
Developing accurate job descriptions to establish appropriate salary levels ......... 50
Balancing internal and market considerations ....................................................... 52
The growth of knowledge jobs has led to greater individualised pay .................... 58
Downsizing, restructuring and salary management ............................................... 60
Best practices in compensation management ........................................................ 64
Conclusions ....................................................................................................... 66
Notes ....................................................................................................... 67
References ....................................................................................................... 68
PUBLIC SECTOR COMPENSATION IN TIMES OF AUSTERTY © OECD 2012
6
–TABLE OF CONTENTS
Chapter 3: Managing compensation
in a post “New Public Management” era .............................................................. 69
Introduction ....................................................................................................... 70
The need for change in compensation management .............................................. 71
The use of pay bands to manage salaries ............................................................... 73
The highest hurdle – transitioning successfully to performance-related pay ......... 80
The new importance of the market factor in retaining talent ................................. 96
Compensating public managers effectively ........................................................... 96
Pay and gender equity .......................................................................................... 102
Conclusions ..................................................................................................... 105
Notes ..................................................................................................... 106
References ..................................................................................................... 107
Chapter 4: Policies and practices governing public sector compensation
planning ..................................................................................................... 109
Introduction ..................................................................................................... 110
The compensation data available ......................................................................... 110
Collective bargaining and salary planning ........................................................... 111
Considerations in using labour market surveys to inform salary planning .......... 115
Concerns in using inflation data to adjust salaries ............................................... 118
How to allocate amounts for salary adjustments ................................................. 119
Planning and managing additional payments: allowances and bonuses .............. 123
Setting the stage for total rewards management .................................................. 126
Conclusions ..................................................................................................... 127
References ..................................................................................................... 128
Chapter 5: Key considerations in reforming the government compensation
system ..................................................................................................... 129
References ..................................................................................................... 135
Annex A Extent of union involvement in HRM issues and sources of financial
support, 2010 ..................................................................................................... 137
Annex B Salary negotiations and determination of pay, 2010 .......................... 140
PUBLIC SECTOR COMPENSATION IN TIMES OF AUSTERTY © OECD 2012
7
TABLE OF CONTENTS –
Tables
Table 2.1. Restructuring plans and leaving conditions (2010) ............................. 62
Table 3.1. Factors that determine base salary at different hierarchical levels ...... 82
Table 3.2 Gender pay gap in the New Zealand public service .......................... 104
Figures
Figure 1.1.Announced consolidation plans vary ................................................... 20
Figure 1.2.Expenditure-based versus revenue-based measures ............................ 21
Figure 1.3. Operational expenditure measures – frequency .................................. 22
Figure 1.4.General government compensation of employees as a percentage of
GDP, 2000 and 2009 .............................................................................................. 27
Figure 1.5.Employment in general government as a percentage of the labour
force, 2000 and 2008 ............................................................................................. 28
Figure 1.6.Production costs as a percentage of GDP, 2000 and 2009 .................. 29
Figure 1.7.Average annual compensation of economists and statisticians in central
government (2009) ................................................................................................. 32
Figure 1.8.Average annual compensation of employees in secretarial positions,
2009 ....................................................................................................... 33
Figure 1.9.Teachers’ salaries in lower secondary education in public institutions,
2008 ....................................................................................................... 34
Figure 1.10. Compensation of salaried doctors and nurses, 2008 ...................... 35
Figure 2.1.UK approach to “total reward” ............................................................ 49
Figure 3.1.Extent of delegation of human resource management practices to line
ministries in central government (2010) ................................................................ 79
Figure 3.2.Extent of use of performance-related pay
in central government (2010) ................................................................................. 85
Figure 3.3. Average annual compensation of central government senior managers,
2009 ....................................................................................................... 98
Figure 3.4 Average annual compensation of middle managers in central
government, 2009 ................................................................................................ 101
PUBLIC SECTOR COMPENSATION IN TIMES OF AUSTERTY © OECD 2012