Moving forward on the ‘compensation’ agenda

Performance-related pay and

collective bargaining

A trade union perspective from EPSU

OECD Public Employment and Management Network

Annual Meeting, Paris, 7 November 2011

EPSU – European Federation of Public Service Unions

• Just under 8 million individual members in over 270 affiliated trade unions in 48 countries

• European region of Public Services International • Organising in four main sectors:

• National and European administration • Local and regional government • Health and social services • Utilities – energy, waste and water

• Involved in five European sectoral social dialogue committees: • Central government administrations • Hospitals • Gas • Local and regional government • Electricity

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Key questions • Based on the current context of reduction of expenditure, what is the

contribution of unions to ensure that the rights of their members are respected while at the same time contributing to balance the public budget?

• What issues (salaries, working conditions, benefits) are generally covered in the discussions with unions and which issues of the compensation package are normally not included in the bargaining?

• What is the unions’ view on performance-related pay and delegation of pay in government?

• What preparations need to be made for decentralised pay setting to contribute to pave the way for implementation?

• How can delegated pay setting be governed in an appropriate manner?

• How could performance be evaluated in the public service and to what extent should performance be an element of remuneration? Is performance-related pay more adequate for only certain groups within the public service?

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Unions, fiscal consolidation and employee rights I

• Need a proper debate about scale and timing of fiscal consolidation and when/if balanced budget is right objective

• Collective bargaining should be (should have been) part of the response to the crisis but has been side-lined in several countries

• Pay freezes and/or pay cuts imposed in at least 14 European countries – EPSU’s Wrong Target report was an attempt to detail the nature and result of the pay cuts: www.epsu.org/a/7109

• Suggests governments lack trust in trade unions to negotiate but clearly has been maintained in other countries where pay increases at or around inflation have been negotiated

• Risk of undermining collective bargaining process and procedures in long term

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Unions, fiscal consolidation and employee rights II

• Acknowledgement that public sector pay arrangements often need modernisation – pressure for reforms in several countries, particularly as part of IMF packages, possible to see advantages of simplified and more transparent pay systems but should be negotiated, particularly any question about the introduction of PRP

• Some governments are taking more general action to change employment legislation and labour codes to create what they claim would be “more flexible” labour markets but are seen by trade unions as undermining employee rights

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Views on PRP and delegation of pay I • EPSU does not have a formal policy on either of these

issues – reflecting the diverse opinion among its affiliates • PRP last discussed in detail at collective bargaining

conference in 2004 with briefing paper which reflected many trade union concerns but also some scepticism in private sector about impact of PRP

• Difficult time to discuss any PRP proposals in view of some governments approaches to collective bargaining

• Starting point for improving performance could be appraisal process that needn’t be tied to pay

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Social dialogue – what’s on the agenda? • Wide variety of content in social dialogue and collective

bargaining in the public sector across Europe • In some cases more or less only pay or pay increases that are

negotiated while in others pay is specifically excluded • Also question as to nature of negotiations and whether it is

really a formal process with clear procedures and deadlines or more a kind of consultative social dialogue

• Extent of delegation and decentralisation will also affect what falls with collective bargaining sphere

• EPSU position would be to encourage broadest range of negotiations on pay and conditions but also other elements that impact on employment and working conditions such as work organisation

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Views on PRP and delegation of pay II • If employers want PRP then should be subject to

negotiation • what is being measured and how? • does this reflect individual or team performance? • what kind of rankings? • are there quotas? • what about monitoring, review and revision?

• Importance of training for line managers on PRP scheme • Need data for monitoring to ensure no discrimination • And what about agreement on the kind of data that shows that

PRP does actually make a difference to performance?

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Views on PRP and delegation of pay III • Delegation of pay – again needs to be subject to

negotiation • what is being delegated – all pay and conditions? • To what level? • Will local managers and trade union reps get appropriate

training? • Will outcomes be monitored?

• Concerns of trade unions where they may be strong at national level or in particular agencies/departments but not in others

• Also concern of pay levels diverging despite similarity of some jobs across agencies and departments

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Preparing for decentralised pay • Negotiate over level and content of bargaining – will it be

national bargaining plus some decentralisation ? So minimum standards set nationally that can be improved on at the appropriate level – workplace? Area? Region? Agency? Department?

• Need for training for managers and trade union representatives at the appropriate level

Governance of delegated pay • Are there collective bargaining structures at the appropriate

level(s)? • Is there still some kind of national framework for bargaining? • Is there any kind of review and assessment to monitor pay

developments?

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Performance evaluation and pay I • Performance evaluation is important, particular in terms

of assessing individuals’ skills and competences for a particular job and how these might be improved

• Challenge is to find an evaluation scheme that is as objective as possible

• If individual “output” is quantifiable then perhaps easier to justify a PRP scheme but nature of government services can be very different – contrast between more “mechanical” administrative tasks and work involving advice and help to the general public

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Performance evaluation and pay II • Any evaluation needs to be open to revision to take

account of changes to services, reorganisations, introduction of new (IT) systems

• Process needs not only to be fair but seen to be fair – particularly if it covers different levels of employees – higher and lower earners

• If it doesn’t work well both in terms of rewards and boosting performance then should be revised, if it doesn’t work after revision then should be an option to terminate

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Priorities • Reaffirm collective bargaining procedures that have been

side-lined during crisis • Strengthen collective bargaining where it is not well established • Negotiate on any planned reform of the pay structure including

any proposals for performance-related pay or decentralisation or delegation

• Provide the resources and time for proper negotiations and the training for both sides to carry out their negotiating role effectively

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