Benchmarking makes for a sorrowful mystery

OPINION: The talks on a new national agreement have reached the crunch, with private sector employers holding out against trade union demands for a 5 per cent wage rise next year. The employers want a pay pause and appear to have little chance of getting one - after all, why should private sector unions agree on a pay pause when their big cousins in the public sector are beneficiaries of a pay bill set to rise by 10 per cent next year?

Half of this 2003 public pay rise is due to implementation of the first phase of the public pay benchmarking report. They don't seem to be arguing about this report at the pay talks. But they should be.

In summary, it recommends a pay increase for public servants averaging 8.9 per cent, with no evidence put forward to support the case. Not a shred. The introductory chapters say that the body undertook widescale research in the private sector against which public wages were "benchmarked".

None of the detail of how the pay awards were determined were revealed in the report. Nor will they ever be revealed. Eithne Fitzgerald sought details from the Department of Finance under the Freedom of Information Act and was told by a senior official that it was "undesirable in an industrial relations and pay determination context that any party should seek to look behind the published reports, reasonings and findings of the bodies".

So we are asked to accept that the body knows best and that public servants deserve the increases recommended, based on the most detailed research. It's just that we can't see the research, not even a sample of how it all worked.

Nor, apparently, can the Department of Finance see the background research, even if it would cost the Exchequer €1.1 billion if fully implemented.

It seems we are all living in the "Big Benchmarking House" and are expected to do as "Big Benchmarker" says. Perhaps publication of the findings might cause questioning of the conclusions?

The report says its conclusions cannot be used to support such further claims in the public or private sectors. To which the only response is - you must be joking.

Public servants have been involved for years in a pay scheme based largely on relativities between different jobs. Already those who believe they have not done well under benchmarking have not been slow in saying so.

If the increases are granted, rising pay claims in the private sector are also inevitable. First, unless the private sector unions are asleep, they will use the implementation of benchmarking as a reason to seek increases for their members. Second, higher taxes to pay for rising public sector wages will inevitably lead to rising pay claims from the private sector.

Mr John FitzGerald of the ESRI calculates that the tax wedge - the gap between gross and take-home pay - could rise by two to three percentage points if benchmarking is fully implemented. We have already seen the cost implications of the first phase of the report in the recent Budget.

None of this is to say that some areas of the public service do not deserve higher pay levels. However such increases should be contingent on one of two things.

The first would be a clear and unambiguous demonstration of the case that their pay has fallen out of line with private sector counterparts. It appears unlikely that this is the case in general for the public service - there is no evidence that the service has had difficulties recruiting or retaining staff, for example.

The second is that increases in pay above inflation must - as generally in the private sector - be based on increases in productivity. Here the benchmarking report, after a general "motherhood and apple pie" statement about how public service managers must lead and manage change, says it was not practical for it to tie pay increases to specific changes in working practices. It also said that any statement it could make on performance-related pay would be "premature", despite the increasing prevalence of this in the private sector.

It did say that any payments over and above the already-agreed increase provided for on Budget day should be based on agreement "at local level" on modernisation and increased productivity.

However a credible negotiating strategy does not offer the cash amount up front and add that, by the way, we'd like you to work a bit harder to get the amount we are offering.

All this is against a background of serious questions about value for money in the delivery of public services. Spending levels have soared, but service levels have not improved commensurately.

An excellent report published on Friday by the National Economic and Social Council addresses this issue. There is a need for a new focus which emphasises the outcomes from public spending - as opposed to the money inputs - it says and a much better evaluation of how money spent is meeting these goals. Perhaps within such a framework public servants could be given incentives to meet these targets?

Maybe the national talks are really heading for failure - or maybe the stage is being set for Bertie to step in and save the day. (You know the script - a few all night meetings, concessions on all sides in the national interest).

If a deal is done, then it is hard to see how a massive imposition on the Exchequer from benchmarking can be avoided. And we will never know the reasoning behind it. If the talks collapse, then the report should be sent to the shredder.