© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. Julio Nabais OECD, Sigma Programme Vilnius, 14 December 2006 Civil Service Salary Reform Process in Portugal during the 1990s: The Creation of a New System

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. Presentation Plan 1.Why a new system of remunerations (NSR)? 2.The creation and implementation of the NSR  the objectives  strategy  methodology 3.The NSR – main characteristics 4.The NSR – its development 5.The (N)SR – Current challenges 6.Lessons to be learned

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. The old system (30’s) was: l rigid and unable to cover new needs and diversity l too complex l inconsistent l lacking coherence l an obstacle in HRM development – retaining staff problems 1. Why a new system of remunerations (NSR)?

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 2. The creation and implementation of the NSR – (i) the objectives lTo create a newly remuneration system internal fairness external competitiveness lTo modernise the public employment system lTo develop the public management system lTo include all the civil servants in the new remuneration system

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. l Political support at higher level (PM) l Solid policy analysis l Strong leadership l Small & motivated team + teamwork l Creating allies – the negotiation process – step by step l Communication (internal & external) l Evaluation 2. The creation and implementation of the NSR – (ii) the strategy No discussion about the career's system

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. lWhite Paper Evaluation of the existing system Proposals Adoption by the Government –General guidelines –Time-limit –Budget ceiling lTeam set up 2. The creation and implementation of the NSR – (iii) the methodology (1)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. lAction plan to define the general principles (qualitative) on salaries, management and public employment to adopt new salary scales for general careers to adopt new salary scales for the main special corps (teachers, doctors, …) to adopt new salary scales for the remaining civil servants 2. The creation and implementation of the NSR – (iii) the methodology (2)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. lNegotiation discussion about the White Paper negotiation of the qualitative principles negotiation of the quantitative development –internally MoF / Budget ministries –externally – the trade unions 2. The creation and implementation of the NSR – (iii) the methodology (3)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. Professional Groups & Relative Salary Positioning TEACHERS DIPLOMATS DOCTORS NURSES SPECIALISTS ADM ASSIST SENIOR OFFICER MAN WORK AUXIL MANAG

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 3. The NSR – main characteristics lUnitary system - same main principles, rules and components for the whole CS in central, regional and local Public Administration (PA) lComponents: basic salary, working conditions supplements, social allowances. No Performance Related Pay (PRP) … → lA general scale (Ind 100 → Ind 900 ) with some special scales (for special groups defined by law) – scales are autonomous but with some common parameter lInd 100 value updated yearly by negotiation [ in 2006: € 321,92 ] lBasic rule: some function=some salary (for the whole PA)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. The monthly net remuneration… The amount of the index ( depends on the career, the level and the rank ) (e.g. adviser 1 st rank= I 610 = 1 963,71€) + Supplements (if…) (risk, shift work, night work, extra work, …) + Social allowances (family allowances, …)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. The career dynamics and salaries e.g.: administrator Senior adviser Adviser Principal st class nd class Trainee 310 Index 100 = € 321,92 Progression by seniority (3 years) Promotion by seniority and merit

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. l Central management of the NSR (MoPA and MoF) but… l Problems with some transitory rules l Pressure from some powerful groups in CS l Political inconsistency / lack of continuity l Supplements: the weakest part of the system l Some experiences of PRP l Spiral of salaries 4. The NSR – its development

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 5. The NSR – Current challenges l Introducing some PRP mechanisms l Reinforcing internal fairness (reviewing unfair developments) and external competitiveness (more flexibility in adjusting to the economy and to the employment market conditions) l Increasing the compression rate l Better linkage between supplements and real working conditions

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU.  Need of political support  Clarity of the objectives  Accurate strategy  Go step by step  Flexibility and patience to negotiate but firmness on the objectives – however some diversion regarding the initial forecast is highly probable  Permanent cost/budget check and control 6. Lessons to be learned (1)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU.  Firmness in implementation, consistency in development and capacity in management  Assessment of the results and permanent monitoring of the system  Sustainability: estimate costs at short, medium and long term  Be careful with the transitory rules  Communicate (internally and externally) 6. Lessons to be learned (2)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. SOME FINAL REMARKS …  Each PA system results from a complex environment: System background Historical evolution Political, economical and social context Negotiation process  Information about other PA’s systems is a source to help inovation and to improve own solutions (not copy/paste)  Some common principles exists and should be followed in order to prevent same errors

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. Thank You! AČIŪ !