Oecd Organisation for Economic Co-operation and Development

Public Sector Compensation in Times of Austerity Oecd Organisation for Economic Co-operation and Development

Austerity drives are leading governments to reduce operational cuts through the wage bill and staffing levels. A big lesson from past experience suggests that when pay cuts and freezes are necessary, it is essential to assess the savings relative to the costs the loss of institutional knowledge if key contributors retire or resign, the time lost by managers and employees who have to deal with the issues related to vacancies and reorganizations, the lost productivity while people acquire new skills and learn new jobs, and the falloff in performance among employees who become discouraged or unsatisfied. This assessment does not appear to have taken place in the current crisis.

This report argues that any new approaches to public sector pay must help to: enhance external competitiveness of salaries; promote internal equity throughout the public sector; reflect the values of public organisations; and align compensation with governments core strategic objectives. It calls for a recognition of the supply and demand for specific expertise. 

Table of Content :

Preface
Executive summary
Chapter 1. Current trends in the compensation of public employees in OECD countries
-Introduction
-The fiscal consolidation imperative
-Plans to reduce payroll and labour costs
-Comparing compensation in selected public sector occupations
-Compensation cuts may produce workforce management challenges
-Conclusions
-References
Chapter 2. Public sector compensation management in a changing world 
-Introduction 
-Government compensation programmes are at a crossroads
-The purpose of compensation
-Controlling payroll costs is key to managing the total compensation package
-Developing accurate job descriptions to establish appropriate salary levels
-Balancing internal and market considerations
-The growth of knowledge jobs has led to greater individualised pay
-Downsizing, restructuring and salary management
-Best practices in compensation management
-Conclusions
-References
Chapter 3. Managing Compensation in a post New Public Management era
-Introduction
The need for change in compensation management
-The use of pay bands to manage salaries
-The highest hurdle transitioning successfully to performance-related pay
-The new importance of the market factor in retaining talent
-Compensating public managers effectively
-Pay and gender equity
-Conclusions
-References
Chapter 4. Policies and practices governing public sector compensation planning
-Introduction
-The compensation data available
-Collective bargaining and salary planning
-Considerations in using labour market surveys to inform salary planning
-Concerns in using inflation data to adjust salaries
-How to allocate amounts for salary adjustments
-Planning and managing additional payments: allowances and bonuses
-Setting the stage for total rewards management
-Conclusions
-References
Chapter 5. Key considerations in reforming the government compensation system
-References
Annex A. Extent of union involvement in HRM issues and sources of financial support, 2010
Annex B.Salary negotiations and determination of pay, 2010