The coming enterprise agreement negotiations for the APS will test the Coalition's reform appetite. Photo: Erin Jonasson
Australian Public Service enterprise agreements are due to expire on June 30, 2014, and the prospect of another round of contested negotiations looms. The Coalition's handling of those negotiations will be a key test of its resolve to reform public service working conditions.
It remains to be seen how the government will deal with the negotiations; particularly whether the policy of centralised bargaining proposed by the former government will be implemented and whether the APS bargaining framework will be retained.
Either way, there are two key themes that are likely to feature throughout the negotiations: wage disparity across the APS, and redundancy provisions.
Artificially capping the wages of higher-paid public servants will be counterproductive. Photo: Jessica Shapiro
The wage disparity across the bureaucracy garnered attention recently from the media and public sector unions, with calls for the government to address the issue during the upcoming negotiations. One solution that has been mooted is to facilitate larger increases in the wages of those earning less while keeping a lid on increases for those at the top.
There are a number of problems with this idea; not least that the government is unlikely to have the appetite to significantly increase APS wages at all, especially given its election commitments to cut spending.
Australia's enterprise bargaining system is built around increasing productivity. Any increases in wages should be offset by corresponding gains in productivity. Given that the APS has already been through several efficiency dividend increases in recent years, agencies will need to engage in some serious reflection and analysis to identify productivity gains or efficiencies that could be achieved to justify wage increases.
Artificially capping the wages of those at the top will also be counterproductive. After all, what incentive is there for those public servants who would be affected to increase their productivity if the reward is a wage increase less than that offered to their colleagues?
A simplistic focus on raw wage disparity also ignores the variety of work performed across the APS. No two jobs are the same: different work is performed and different skills are needed, even though the positions may be at the same level.
The system isn't perfect, but it allows agencies to offer wages that are attractive to skilled workers and which, arguably, reflect the market value of their labour. Artificially capping the wages paid to workers at the top will only harm mobility in the long term by making it harder for agencies to differentiate themselves as attractive employers.
Redundancy and redeployment
Another issue that is likely to dominate the minds of the APS is redundancies.
With the Coalition's proposed 0.25-percentage-point increase in the efficiency dividend from next year (on top of Labor's 2.25 per cent dividend), agencies will likely need to look at redundancy measures to meet budget requirements.
In this context, the cost of potential redundancies will not be far from the minds of the government. The current APS standard provides for up to 48 weeks' pay, depending on age and length of service. This is significantly more than the maximum entitlement of 12 weeks in the Fair Work Act, making redundancies in the APS a costly exercise.
The government is also likely to seek revised flexibility terms in the new APS enterprise agreements as a means for managing the workforce. Options include:
- formalising ''spill and fill'' procedures where redundancies are being considered. The advantage of this is it allows an employer to use a merit-based process for filling a reduced number of positions, and can avoid allegations of discrimination or inequality associated with the ''last on, first off'' procedure;
- the ability to redeploy positions to regional areas, where it would be more efficient for those roles to be performed than in metropolitan areas; and
- the flexibility for agencies and APS staff to enter into part-time arrangements as a way to reduce salary costs. This mechanism worked well in the private sector during the global financial crisis, allowing many people to retain their jobs when they would otherwise have been retrenched.
The government will soon need to turn its mind to how it wants to deal with the upcoming round of APS bargaining. It can expect pressure to deal with wage disparity across the APS, but an economically responsible government should resist populist calls to artificially inflate wages. Any increases should be linked to productivity gains and reflect the value of the work performed. The government should also be prepared to critically examine redundancy and flexibility provisions.
Jennifer Wyborn is a partner and Nathan Moy is a lawyer at Meyer Vandenberg Lawyers.