THE PRESS THURSDAY, FEBRUARY 26, 1987. Ceiling on pay increases

Press, 26 February 1987, Page 12

THE PRESS THURSDAY, FEBRUARY 26, 1987. Ceiling on pay increases

The Government has decided to legislate to prevent the Higher Salaries Commission from, as the Government sees it, upsetting another series of pay negotiations. Last time, in September, 1985, the commission announced a pay rise for members of Parliament and senior officers of the State Services and local government on the eve of a-wage round. The increases, up to 50 per cent and more, sounded enormous. In cash terms they were. The trade unions promptly raised their claims in the light of them.

The Government spent a good deal of time deploring the matter, but the commission was an independent body and there was nothing the Government could do about it. Now, it is rumoured, the commission is about to announce that senior State servants are entitled to increases of up to 30 per cent. As this comes at a time when the Government is trying to keep fire-fighters and others to increases of 3 per cent and less, the Prime Minister decided he had to act. Is action necessary and if so has the Government taken the correct step? By introducing legislation to set a ceiling, the Prime Minister has left himself open to accusations that he has adopted one of the less subtle, and now discredited, economic management techniques of his predecessor. In determining salaries, the commission is enjoined by its establishing act to have regard to “the need to achieve and maintain fair relativity with the private sector in the levels of rates of salaries.” To fix comparability, the commission must take into account conditions of service, including tenure and superannuation rights, allowances, benefits and other emoluments, whether money or not. The object is to enable the State sector to recruit and retain top people whose talents are in demand outside. If the very high rate of staff turnover in the upper reaches of the Treasury Department or the Justice

Department is any indication, it seems that, even in attempting to maintain comparable pay levels, the Higher Salaries Commission has not been entirely successful. In all the fuss over the increases that the commission has awarded, some people have questioned its method for arriving at the going rate in the private sector. They have not, however, proved the inaccuracy of the method. Government interference in a system that is seen as fair and objective will do more than give offence; it may leave some departments with a worse recruitment and retention problem than they have at present. Part of the problem with the commission’s pay determinations is in appearances. In 1985, the announcement of pay increases of up to 50 per cent made on the eve of the pay round applied to the previous four years. Although there had been a pay freeze in effect for much of that time, salaries for some executives had in fact risen steeply. This time, the commission’s* determinattion covers two years in which pay rises totalling more than 20 per cent have been commonplace. The determination comes, however, in the midst of the tussle with the fire-fighters and others; hence the deep embarrassment and hasty reaction. Limiting someone else’s pay rise, that of highly paid senior public servants, has considerable populist appeal. This will not do much harm to the Government except when its breach of the non-interference policy is enlarged upon by other employers. The Government’s legislation will take care of the immediate political problem. But it will still be compelled to find a more honest way than setting an arbitrary ceiling on senior State servants’ pay increases. If the commission were to report more frequently — annually, for example — and if the Government were to decide the date of the announcement to avoid unnecessary embarrassment to itself, a good deal of the heat would be taken out of the process.