Julio Nabais OECD, Sigma Programme Vilnius, 14 December 2006

1. Civil Service Salary Reform Process in Portugal during the 1990s: The Creation of a New System Julio Nabais OECD, Sigma Programme Vilnius, 14 December 2006

2. Presentation Plan • Why a new system of remunerations (NSR)? • The creation and implementation of the NSR • the objectives • strategy • methodology • The NSR – main characteristics • The NSR – its development • The (N)SR – Current challenges • Lessons to be learned

3. 1. Why a new system of remunerations (NSR)? The old system (30’s) was: • rigid and unable to cover new needs and diversity • too complex • inconsistent • lacking coherence • an obstacle in HRM development – retaining staff problems

4. 2. The creation and implementation of the NSR –(i)the objectives • To create a newly remuneration system • internal fairness • external competitiveness • To modernise the public employment system • To develop the public management system • To include all the civil servants in the new remuneration system

5. 2. The creation and implementation of the NSR – (ii)the strategy • Political support at higher level (PM) • Solid policy analysis • Strong leadership • Small & motivated team + teamwork • Creating allies – the negotiation process – step by step • Communication (internal & external) • Evaluation No discussion about the career's system

6. 2. The creation and implementation of the NSR – (iii)the methodology (1) • White Paper • Evaluation of the existing system • Proposals • Adoption by the Government • General guidelines • Time-limit • Budget ceiling • Team set up

7. 2. The creation and implementation of the NSR – (iii)the methodology (2) • Action 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

8. 2. The creation and implementation of the NSR – (iii)the methodology (3) • Negotiation • discussion about the White Paper • negotiation of the qualitative principles • negotiation of the quantitative development • internally • MoF / Budget • ministries • externally – the trade unions

9. Professional Groups & Relative Salary Positioning MANAG DOCTORS SENIOR OFFICER DIPLOMATS TEACHERS NURSES SPECIALISTS ADM ASSIST MAN WORK AUXIL

10. 3. The NSR – main characteristics • Unitary system - same main principles, rules and components for the whole CS in central, regional and local Public Administration (PA) • Components: basic salary, working conditions supplements, social allowances. No Performance Related Pay (PRP) … • A general scale (Ind100 →Ind900) with some special scales (for special groups defined by law) – scales are autonomous but with some common parameter • Ind100 valueupdated yearly by negotiation [in 2006: € 321,92] • Basic rule: some function=some salary (for the whole PA)

11. The monthly net remuneration… The amount of the index (depends on the career, the level and the rank) (e.g. adviser 1st rank= I610= 1 963,71€) + Supplements (if…) (risk, shift work, night work, extra work, …) + Social allowances (family allowances, …)

12. The career dynamics and salaries e.g.: administrator Promotion by seniority and merit Index 100 = € 321,92 Progression by seniority (3 years)

13. 4. The NSR – itsdevelopment • Central management of the NSR (MoPA and MoF) but… • Problems with some transitory rules • Pressure from some powerful groups in CS • Political inconsistency / lack of continuity • Supplements: the weakest part of the system • Some experiences of PRP • Spiral of salaries

14. 5. The NSR – Current challenges • Introducing some PRP mechanisms • Reinforcing internal fairness (reviewing unfair developments) and external competitiveness (more flexibility in adjusting to the economy and to the employment market conditions) • Increasing the compression rate • Better linkage between supplements and real working conditions

15. 6. Lessons to be learned (1) • 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

16. 6. Lessons to be learned (2) • 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)

17. 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

18. Thank You! AČIŪ !