Civil Service Salary System in Ireland and Recent Reform Trends. by David Hurley. Pay and Remuneration Division, Dept of Finance Dublin, Ireland

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1 Civil Service Salary System in Ireland and Recent Reform Trends by David Hurley Pay and Remuneration Division, Dept of Finance Dublin, Ireland Conference on Civil Service Salary Systems in Europe Bucharest, 25 April 2007 This document has been produced with the financial assistance of the European Union. The views expressed herein are those of the author, and can in no way be taken to reflect the official opinion of the European Union, and do not necessarily reflect the views of the OECD and its member countries or of the beneficiary countries participating in the Sigma Programme.

2 Good afternoon, ladies and gentlemen. My name is David Hurley and I work in the Pay and Remuneration Division of the Department of Finance. I have responsibility for Civil Service pay and industrial relations. I propose to structure my presentation as follows: background information on the general Civil Service grades; the structure of the salary scales; the pay determination process; both the general wage rounds which are now part of the National Partnership arrangements; and benchmarking, which is a relatively new process of ensuring equity between the public and the private sectors in relation to pay; the salary review process for the very highest grades, which includes a system of performance awards. General Service Structure The next chart shows the hierarchy and the relative size of what we term the General Civil Service. These are the administrative grades that are common across the Central Government Departments. I have simplified matters a bit by omitting the professional and technical grades, which are about 20% of the total Civil Service and a small number of posts at Deputy Secretary General and other exalted levels. Recruitment I particularly want to point out the recruitment grades which are: Clerical Officer; Executive Officer traditionally the school leavers entry point, but now very many are university graduates; 50% of posts are filled through open competition; Administrative Officers; this is the entry grade for Honours level university graduates. To date almost all officers are recruited at these relatively junior levels and most remain in the organisation for all of their careers. The terms and conditions of employment from recruitment to retirement are designed to accommodate the development of a career either within one Department or a number of Departments. The primary Government policy on public service pay, therefore, is that the public service should be able to attract its fair share of good quality staff at the entry levels and thereafter to have sufficient incentives to retain, and develop that staff. Greater use of open recruitment in the higher grades was part of the reforms negotiated in the recent social partnership agreement Towards The Civil Service may, from next year, recruit by open competition to fill: 2 in 9 of all vacancies at Principal Officer grade; 1 in 5 of all vacancies at Assistant Principal Officer; 1 in 6 of all vacancies at Higher Executive Officer. Pay Scales We operate a system of incremental pay-scales, with annual additions to salary which are dependent on an assessment of basic competence. In practice, most officers progress steadily up through the points on the scale. The number of points on the scale reduces progressively as one looks up the hierarchy, from 12 points for Clerical Officers to, for instance, 5 for Principal Officers. There are also additional long-service increments for officers that have served 3 years and 6 years at the maximum point of the scale. Promotion The main regard for good performance is promotion to the next grade. There was a time when promotion was mainly based on seniority and suitability but that has progressively changed so that 2

3 a minimum of 75% of internal promotion posts in each grade are filled by merit-based competition. Between one third and a half of promotions are offered on the basis of interdepartmental competitions. Performance Appraisals and Rewards In recent years we have put in place a Performance Management and Development System which applies to all grades. The system is competency based. The main elements include an initial planning phase, a mid-term review and an annual assessment of performance. There are direct links with the award of increments and an indirect link to promotion through the requirement to reach a minimum rating in the assessment. The focus of the performance appraisal is on training and career development rather than on monetary awards. Performance-related pay is not a significant feature in our system, other than at Assistant Secretary level. Some limited monetary awards are available. Departments allocate a budget of 0.2% of pay to staff as merit awards. An amount equivalent to about 1% of payroll is available to be allocated among certain grades as a special service award. There are also marginally higher scales that apply to 25% to 30% of staff at executive level and 15% at clerical level. Given the inherent difficulties in applying performance-related pay in the public service and the preservation of a career-based, the main focus in ensuring the on-going motivation of staff is on non-financial aspects of reward. A range of measures are used in this regard. High levels of mobility with and between Departments; Increases in the level of interdepartmental promotions; Increases in the level of competitive merit based promotions; Training and development; Family friendly measures. Pay Determination Since the l970s, public service pay agreements have been reached within the framework of national agreements between the social partners. These agreements had two elements relating to pay, - general around or cost of living increases and special increases or local bargaining provisions. Since l987, public service pay negotiations have been conducted within the framework of social partnership programmes negotiated by the Government, trade unions, employers, farming organisations and the community and voluntary sector. These social partnership programmes link agreement on pay to frameworks for the evolution of taxation, social security, social equity, public expenditure and other issues. Towards 2016, a Ten-Year Framework Social Partnership , is the current partnership programme, negotiated last summer. It incorporates a pay agreement giving a 10% increase in phases over a period of 27 months. This covers both private and public sectors. In the case of the public service it commenced on 1 December This Agreement: Provides that no cost-increasing claims for improvements in pay or conditions will be made during the Agreement other than those provided for in the Agreement; Commits employers, trade unions and employees to promoting industrial harmony; Precludes industrial action in respect of matters covered by the Agreement. In the case of the public service, provision is included for benchmarking pay and conditions against those in the private sector. I will return to benchmarking later. Modernisation and Flexibility The Agreement commits all parties to co-operate with modernisation and flexibility measures designed to achieve improvements in the efficiency and effectiveness of public service delivery. This continues and expands upon such measures included in previous partnership agreements. It sets out principles in relation to organisational changes, adoption of new technology etc. It contains 3

4 an outline of the modernisation programme for each of four sectors, Civil Service, Health, Education and Local Government. These will be further developed into Action Plans specific to each organisation, for example, to each Department in the Civil Service. The payment of the wage increases under the Agreement will be dependent on formal verification of satisfactory progress with these Action Plans. Performance Verification Groups representative of both sides and with independent members oversee that process. Benchmarking The principles underlying public service pay determination provided that pay for jobs in the Public Service should be determined with reference to pay rates for similar types of employment in the private sector. Put at its simplest Government policy on public service pay is that the public service should be in a position to attract and retain its fair share of good quality staff at all levels. It should neither lead the market nor lag it. This policy has been in place for many years. For instance, the various National Agreements of the l970s allowed for claims, in addition to the standard round increases where rates of pay have fallen seriously out of line with the general level of rates for the same or similar work, performed under the same or similar conditions and circumstances (1972 and 1974 Agreements) or an equivalent formula. The first Public Service Benchmarking Body was established in 2000 and issued its report on 30 June In outlining its procedures and outcome, I can t improve on the Executive Summary that the Body published with its Report. 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 information in respect of 138 public service grades; Examined individual jobs and interviewed 347 public servants; Collected private sector data in respect of jobs covering 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 need for modernisation and change in the public service; The value of public service pensions relative to those in the private sector; Other material sectoral differences in conditions and benefits such as security of tenure and benefit in kind. The Body recommended A number of changes in public service 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%. 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. The Government accepted the recommendations of the Benchmarking Body and the recommended awards were paid in three phases as part of the Programme for Prosperity and Fairness and the subsequent partnership agreement Sustaining Progress. A second Benchmarking Body is currently conducting another exercise, under similar terms of reference and using similar procedures. It is due to report next September. Further details about the benchmarking exercises can be obtained on the Body s website 4

5 Review Body on Higher Remuneration Special increases for higher public servants are determined by the Independent Review Body on Higher Remuneration in the Public Sector. Established in 1969, the Body advises the Government on the levels of remuneration appropriate to the higher ranking public servants, members of the Judiciary or of the Government. In relation to the Civil Service, this process covers all posts at the level of Assistant Secretary and higher. In its latest general review, published in September 2000, the Review Body carried out a pioneering benchmarking exercise with the assistance of Hay Management Consultants. It focussed on the comparison of job sizes in the public service with those in the private sector. The Review Body recommended: A relationship between basic pay for top public service posts and lower quartile of private sector salaries; Pay increases ranging form zero to 33.3% for key senior posts; A new approach to performance-related awards. The government implemented the recommended increases on a phased basis from September 2000 to April The Body recommended an increase of 7.5% in an interim review in June 2005, which has since been implemented in two phases. The Review Body s website is Committee on Performance Awards Following the recommendation made by the Review Body on Higher Remuneration in 2000, a scheme of performance-related awards was introduced for the levels of Deputy Secretary and Assistant Secretary in the civil service. The scheme of awards is based on performance by reference to demanding targets. The pool for performance awards is 10% of the pay bill for the group concerned. Within that overall limit individuals can receive payments of up to 20% of pay. Decisions on awards are made by the Committee for Performance Awards (CPA), which includes a majority of private sector members. The main roles of the Committee are to monitor the application of the scheme of performance-related awards and to bring independent judgement to bear in approving objectives for the persons covered by the scheme and in approving recommendations for awards. Details of the procedures, the numbers covered by the schemes, the range of awards and the total amounts paid in Departments are outlined in the annual reports of the Committee (available on the website Summary To sum up: We use a common structure of incremental scales across all Departments and Offices; We have recruited at lower grades only, but from now on will be opening up to some extent at higher levels; General wage rounds are negotiated within the National Partnership process; Benchmarking is used to match pay with that for jobs of similar size in the private sector; Pay increases are dependent on satisfactory progress with modernisation at the level of the organisation; Performance-related pay for individuals is used only at the very highest levels. 5