Benchmarking poor value for money, says economist

EVERY ounce of reform and modernisation should be squeezed out of the public service in return for the €1.1 billion yearly benchmarking bill, one of the country’s top economists stressed over the weekend.

Jim O’Leary, who resigned from the Public Service Benchmarking Board (PSBB) in April, said paying the massive bill was the “least worst scenario.”

The Government had no option but to pay it, but they should get major changes in work practices and productivity in return.

Addressing the Dublin Economic Workshop in Kenmare, Co Kerry, he said the Government should also minimise the impact of benchmarking by spreading it over time.

Mr O’Leary said the PSBB provided no evidence to suggest the pay increases it recommended were needed to address recruitment and staff retention problems or achieve equity objectives.

“In so far as its recommendations might encourage the acceptance of modernisation and change, they are likely to do no more than increase the pressure on recalcitrant trade unions to deliver on commitments made over two years ago. And as for motivation, the benchmarking body chose to ignore the most potent instrument of all: performance-related pay.

From a taxpayers viewpoint, he said the cost of benchmarking appears to represent poor value for money. The astonishing thing, he added, was that nobody was trying to dispel this view.

“There is nobody willing to assume accountability for the benchmarking exercise, and what negotiations are taking place about implementation are taking place behind closed doors with no assurance that the outcome will be properly communicated to the public or transparently policed.

“In other words, taxpayers are being treated as if public sector pay is none of their business,” he said.

Prof Frances Ruane of Trinity College Dublin agreed that “no further wage increases should be paid to the public sector without prior implementation of much-needed reform”.

She said no one should be allowed back to the negotiation table without a full understanding of the present economic realities.

“The present state of the world economy, the deteriorating state of public finances and the apparent failure of large amounts of public expenditure, both current and capital, to generate real benefits for taxpayers, puts the demands of implementing this report in perspective.”

“Instituting the types of reform that can increase productivity of the public service is a task that will prove all the more difficult in the light of the large expansion of public sector employment,” she said.