Of all the unholy public service messes inherited by the ALP government last year, the staff remuneration policy and its consequences was probably the unholiest and messiest.
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It had been going on since the Keating government devolved pay negotiations in the early 1990s and then made progressively worse by successive governments ever since.
The policy sidelined the outside labour market for comparable work as a basis for remuneration determination and used the navel gazing stupidity of internal productivity gains in one form or another in which figures were randomly plucked from the ether.
Having competitive remuneration became a matter of chance while the job classification system across the service was shredded.
Different rates of remuneration made a joke of the idea of "One APS" as the staffing playing field was tilted in favour of fortuitously rich agencies.
The government is now trying to clean the ordure from the stables. Its heart is in the right place as pay fixation has been re-centralised and tentative steps are being taken to evening up pay across agencies.
But heart is not enough. Brain is also needed and its working has been addled. Heart and brain are out of sync.
The government has offered an 11.2 per cent pay increase for three years with the first instalment being early next year.
Well, from an impermeable and mutually confusing melange that excludes all matters critically relevant to remuneration fixing in the public service or anywhere else. The offer is imaginative and mindless.
![The government's chief negotiator in APS pay bargaining Peter Riordan. Picture by Elesa Kurtz The government's chief negotiator in APS pay bargaining Peter Riordan. Picture by Elesa Kurtz](/images/transform/v1/crop/frm/pMXRnDj3SUU44AkPpn97sC/d176db58-ae50-4b2f-8377-0add6f3e81df.jpg/r0_11_4223_2378_w1200_h678_fmax.jpg)
Statements by the minister, the Public Service Commission and the government "negotiator" Peter Riordan justify the 11.2 per cent on, among other things "recent wage outcomes" including by state governments, "numerous economic indicators", "the current labour market", "budgetary considerations", "affordability" and "inflation forecasts". It's claimed that the offer exceeds the wage-price index for the July 2023 quarter and that it's the largest pay increase offered for the last 10 years, as if that matters.
None of these considerations is directly relevant to the fixing of pay. They're background noise and they've knocked negotiations off the tracks. Staff and unions are grumbling and industrial action is brewing. That may be resolved but there can be no guarantee the remuneration eventually set will enable the public service to compete effectively in the labour market, make a due contribution to the motivation of staff and give the community confidence it's not under or over paying its public servants.
Let's take a couple of the "justifications".
Inflation forecasts: While staff will be concerned about any inflationary erosion of the real value of their remuneration, inflation is not relevant to fixing their pay. If comparable workers elsewhere in the community were not having their remuneration adjusted for inflation, it would be unfair to do so for public service employers.
Equally, if other employers were paying above that warranted by inflation, it would be unfair for public servants to be kept to increases in line with inflation.
Recent wage outcomes including in state public services: Again, wage outcomes are irrelevant. If remuneration levels in state public services are now 10 per cent in front of the Commonwealth and if the states were to give themselves an 11.2 per cent increase, such a hike for the Commonwealth wouldn't be enough. If the Commonwealth rates were in front of those in the state government, 11.2 per cent would be too much. It's not the size of the increases given by other employers that are relevant, it's the level of the rates being paid.
Budgetary considerations/affordability: Here pay negotiations get lost in a quagmire of fudge. Who is to say 11.2 per cent is more affordable than say 12.2 per cent or 10.2 per cent, or any other figure within cooee of such increases?
This would be beyond even the founder of the Jesuits, Ignatius Loyola. For industrial negotiations to be workably real they must be based as much as possible on solid, verifiable facts. Airy appeals to "affordability" just cruel the turf.
To hammer the point: Remuneration in the public service should be fixed on the basis of a careful assessment of the levels of remuneration paid by other employers for comparable work. That's what model employers do because that's how they get to a reasonably competitive position in the labour market.
To do this the APS should be divided into the largest occupational groups feasible and the remuneration for these groups fixed on the basis levels of remuneration in the labour market for comparable work.
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It is ridiculous to pretend that the vastly different occupations in the public service can be kept in reasonable touch with market rates by paying uniform increases to all at the same time.
Complaints from some departments about recruitment and retention problems with technical and professional staff, project managers, IT personnel and the like is a manifestation of the awkward reality that a uniform increase for all will not do the job.
It is equally ridiculous to try to negotiate a rate of pay now that will come into effect in three years time. Who knows what the relevant markets will be like then.
And the current enlarged apprehensions about inflation will make staff and their unions naturally uneasy about signing up for something three years down the track notwithstanding the forecasts of the Reserve Bank whose recent history of predictions hasn't been flash. That is to say, a shorter period pay increase would now be wiser, or one without a specified end date.
Anyway, as Julius Caesar is alleged to have said a good few years ago, the die is cast. It's a pity it wasn't otherwise. It's not as though those running remuneration policy in the public service weren't told about the right path.
Still, if they want better luck next time, at least they'll have plenty to learn from the errors they've made in 2023.
- Paddy Gourley is a former senior public servant. pdg@home.netspeed.com.au.