Benchmarking FAQ

3 Oct 2003

Benchmarking & Better Services
What taxpayers and service users get for their money

How did we get here?

The late 1990's saw a series of highly disruptive industrial disputes in the public services. These were mostly related to pay claims for particular grades and occupations, claims that were permitted under the prevailing national agreement, the Programme for Competitiveness and Work (PCW). The disputes, which continued into the period of the next national agreement, Partnership 2000, included a national nurses' strike, the so-called blue flu, and a ten-day strike by ten health professions. A large number of less prominent industrial disputes also took place in various parts of the civil and public service.
Many of these disputes were fuelled by the prevailing system of public service pay determination, which consisted of a complex pattern of pay links. For example, pay increases for nurses led to increases for prison officers, gardai, soldiers and others.

There was growing dissatisfaction with the system, which was increasingly seen by Government, economists and commentators as the main obstacle to public service reform. Three problems stood out:

Firstly, grade pay increases were tied to public service modernisation, but the pay links system struggled to accommodate this. There was little incentive for grade "B" to accept change when its pay rise was automatically linked to that of grade "A". All the focus was on internal pay relationships, rather than the needs of specific public services or the wider economy.
Secondly, it was impossible to implement effective modernisation and change against the background of industrial action that increasingly arose from grade claims.
Thirdly, public servants whose jobs, responsibilities and qualification requirements had grown substantially, could not be rewarded for their increased effort and productivity because of the constraints of the pay link system. This exacerbated recruitment and retention bottlenecks, which were fuelled by substantial pay rises in the private sector during the economic boom. Public service quality improvements were stifled as a result.

Benchmarking is a direct product of this debate. Reform of the public service pay determination system was among the Government's top priorities when the Programme for Prosperity and Fairness (PPF) was negotiated in 2000. It argued that modernisation and change was needed in all parts of the public service and that stability in industrial relations was a prerequisite of effective modernisation and service delivery.

The benchmarking solution

The Public Service Benchmarking Body (PSBB) was established in July 2000 under the PPF. It was charged with comparing overall public service pay with the private sector and comparing the rates of particular occupational groups in the public and private sectors. It studied job content, including the roles, responsibilities and duties of particular grades. It did not simply compare the pay of public and private sector jobs with the same or similar titles.

The PSBB also took account of pension arrangements, which are often but not always better in the public sector, as well as other factors like job security.Its terms of reference took account of:

The need to ensure equity between public and private sector employees
The need to ensure ongoing modernisation and change in the public services
The need to sustain Ireland's competitiveness and to develop economic prosperity on a sustainable basis and

Recruitment and retention problems in the public services.

The PSBB used tried and tested job evaluation techniques to compare public service jobs with similar work in the private sector. Thousands of public servants filled out detailed questionnaires about their jobs. Their line managers verified the accuracy of their answers. Hundreds were then interviewed in more detail on the basis of their answers. The PSBB then gathered similar data from a representative sample of 202 private companies, on a commercially confidential basis, in order to make comparisons. It was the biggest and most thorough exercise of its kind ever undertaken.

The PSBB's report was published in June 2002, two years after the Body had been established. It recommended a range of increases for specific grades, ranging from zero to 25 per cent. The average award, across the civil and public services, was 8.9 per cent.

Real modernisation and change

The PSBB made its pay awards conditional on two things:

Firstly, it said its recommendations had the effect of "severing all previous pay links."
Secondly, it strongly recommended that the pay rises be made conditional on modernisation and change. Much of this would have to be negotiated at sectoral level. But the PSBB said clearly that: "It is the firm expectation of the Body that real outputs will be delivered."

Sustaining Progress

As agreed in the PPF, the implementation of the benchmarking report was negotiated as part of the talks on Sustaining Progress.

Sustaining Progress includes a detailed outline of the modernisation and change required as a condition of receiving benchmarking pay increases. Most of these apply across the civil and public services, although Sustaining Progress also demands a large number of specific improvements in different parts of the public service. In line with the PSBB's report, some of these involved sectoral negotiations, which are currently underway. All parties to these negotiations are aware of the PSBB's expectation that "real outputs will be delivered."

Sustaining Progress was accepted by a majority of ICTU unions. But members of a number of significant public service unions rejected the deal. Although dissatisfied with their benchmarking outcomes, these unions are currently abiding by the majority ICTU position.

Change first, money later

Both the PSBB and the Sustaining Progress agreement insisted that modernisation and change be independently verified before the bulk of benchmarking payments were made. That process is currently underway.

Separate performance verification groups (PVGs) have been established for health, education, local government and the civil service. Each PVG has two representatives from public service unions and two from management. They also include two experts and an independent chairperson from outside the public service.

The PVGs have approved modernisation action plans, based on the requirements set out in Sustaining Progress. Between now and the end of November 2003 they will be verifying progress on the action plans. This includes site visits to study directly the impact of benchmarking on public service management and service delivery.

Before the end of November 2003, departmental chief executives must tell their PVG whether or not they are satisfied with progress on the modernisation action plans. The PVG will then make its report to Government. The payment of the next instalment of benchmarking awards will only be made if the Government is satisfied with sectoral reforms and that other conditions, including "industrial peace", have been met.

Five years waiting

Sustaining Progress, including its benchmarking elements, was negotiated early in 2003 against a background of a relative economic slowdown and widespread expectation of a continued dip in public finances after the boom of the late 1990's and early 2000's. So much so that the December 2002 budget announced a 5,000 cut in the number of public servants. The economic and fiscal background has not changed significantly since then, although there are now some signs of recovery in Ireland and abroad.

It is now more than three years since the PSBB was established. And almost five years will have elapsed between the establishment of the PSBB in July 2000 and the final benchmarking payment in June 2005. Throughout this period, public servants and their unions have been refused any grade-based
pay increases. While many private sector workers and self-employed people received substantial pay hikes in the boom years of the late 1990's and the early years of this decade, public servants were told to wait for benchmarking, "the only game in town."

In recognition of the current economic and budgetary situation, public servants and their unions agreed to spread the cost of implementing benchmarking over four budgets (2002-2005, inclusive).

Better public services

Benchmarking is effectively an investment in public service modernisation. Public services are labour-intensive by definition. That's why much of public spending goes into the pay packets of essential and dedicated staff. Pay is not an opportunity cost. Without skilled and adequately rewarded staff, there would be no public services. Indeed, the current shortcomings of the system are usually characterised by staff shortages, even where new infrastructure is in place.

Benchmarking has already delivered:

The end of the old links-based pay determination system
Industrial stability
The ongoing modernisation that these facilitate
And specific service improvements and changes.

Benchmarking represents a good deal for the taxpayer and service users.This achievement has taken almost half a decade to develop and implement and it will facilitate modernisation and service quality improvements well into the future. If benchmarking is jettisoned now, public service reform will be set back years.

Payback time for taxpayers

PAY

An end to the pay link spiral
The benchmarking system replaces much-criticised cross-sectoral pay links, which meant pay rises for nurses automatically led to increased pay bills for guards, soldiers, prison officers and others. This was the Government's main objective going into benchmarking - and it's been delivered.
Pay freeze
Unlike private sector workers, public servants have undergone a pay freeze so far under Sustaining Progress. There's been no pay rise since October 2002 and none is due until 2004. Already delivered.
No pay claims
Under the deal, claims for old-style "special" pay rises for particular groups of public servants (eg, nurses or teachers) are a thing of the past. Already delivered.

STRIKES

No strikes
The benchmarking deal means no public sector industrial action over pay or anything else covered by Sustaining Progress. Benchmarking won't be paid if strikes or industrial action happens. Already delivered.
Fewer days lost already
The total number of days lost through strikes fell by over 80 per cent (from 114,613 to 21,257) in 2002 as public servants were told benchmarking was "the only game in town". Already delivered.
Avoiding disruption of health services
Detailed changes to industrial relations procedures are being introduced in the health service, to prevent repeats of past disruption to patients and communities. Already operational.
Better disputes procedures
Unions must agree new codes of practice for the conduct of disputes - especially the provision of emergency and essential services.

IMPROVED SERVICE

Longer opening hours
Opening hours are to be extended beyond 9-5, to 8-8, in the health services. Opening hours will also be extended for local authority services.
Parent-teacher meetings
Half of parent teacher meetings will be held outside school hours from this school year. There will be negotiations on extending this further.
Standardised school year
Under benchmarking, the school year and school holidays have already been standardised to the benefit of parents.
Teachers' training
There will be negotiations on improved arrangements for teachers' in-service training to reduce disruption to students and parents.
Lunchtime opening
Lunchtime opening is to be extended to areas where it does not already exist (it is already common across much of the public service).
Streamlined planning
The local authority planning service will be improved with the implementation of a new IT system.
Service standards
Under benchmarking, every department must publish a charter of service standards, against which performance will be evaluated.
E-government
E-Government is to be developed across the public service with more services and information available to the public on-line eg, on-line motor tax renewals and tax clearance certificates.

MORE PRODUCTIVITY

Staff flexibility and change
Public servants are to give full co-operation with ongoing flexibility and change. Previously, this would have given rise to pay claims. Already delivered.
New technology
Public servants are to give full co-operation with the introduction of new technology. Previously, this would have given rise to pay claims. Already delivered.
Cross-functional working
Under benchmarking, staff must co-operate with team-working and cross-functional working. This will supersede traditional work demarcation in many areas.
Flexible work patterns
Flexible work patterns are to be adopted in higher education. In Institutes of Technology, this will include variations in class contact time and better cover arrangements for exam appeals.
New local government IT systems
Local authority planning and procurement services will be improved with new IT systems.

IMPROVED STAFF PERFORMANCE

Performance management systems
Formal performance measurement and management systems - already in place in some areas - will be implemented across the public services.
Dealing with under-performance
Under benchmarking, a wider range of sanctions will be introduced to deal with staff under-performance. General disciplinary sanctions are also to be widened, and the legislative provisions are being changed to provide for this.
Discipline and dismissal
Disciplinary and dismissal functions are being devolved in the civil service and local government, with the necessary legislative changes.

RECRUITMENT AND PROMOTION

More open recruitment
Streamlined recruitment practices will see more people recruited from open competitions, rather than from within the public sector. The legislative provisions on recruitment are also being changed to provide greater flexibility.
Merit-based promotion
The number of competitive, merit-based promotions are being increased, replacing existing "seniority" promotions.
One-year contracts
One-year contracts are being introduced for all new civil servants.
People with disabilities
Employment opportunities for people with disabilities are to be promoted throughout the public service.

VALUE FOR MONEY

Financial management systems
All public servants are to co-operate with the introduction of new financial management systems across the public service, leading to better value for money and accountability.
Improved regulation
Regulatory impact analysis is to be carried out on a pilot basis.
Redeployment
Under benchmarking, staff will be re-deployed to match service and work demands.

Timetable


Late 1990's	Services disrupted by disputes
2000	Government targets pay links in PPF
July 2000	Benchmarking body set up
June 2002	Benchmarking body reports
October 2002	Public sector pay freeze starts
Spring 2003	Sustaining Progress sets benchmarking implementation and modernisation terms and ends pay links system
Summer 2003	Private sector workers get first Sustaining Progress pay rise
Summer 2003	First benchmarking payments are made (one quarter of awards) - originally due December 2001
November 2003	Performance verification groups to report
January 2004	Public sector pay freeze ends. Second benchmarking payment due if modernisation conditions are met. Public servants to get first Sustaining Progress increase. Private sector workers get second Sustaining Progress rise
December 2004	Sustaining Progress 18-month interim pay deal expires.
June 2005	Final benchmarking payment