PSC wants public sector executive pay tied to agency performance

A new directive from the Public Service Commission (PSC) wants remuneration strategies of public sector chief executives to be linked to their agencies' performance.

In the directive, the government said agencies should ensure that employment conditions and remuneration settings support the achievement of the organisation and public sector performance objectives and priorities.

"This includes having remuneration strategies that provide for the pay of public sector chief executives and deputies to be linked to outcomes to encourage high performance and ensure accountability," the PSC's directive read.

The move is listed under the government's second priority area of focus for public sector employment relations, which include:

1. Employment outcomes are fiscally sustainable and respond to the current fiscal context and any current budget advice
2. Employment conditions and remuneration settings support a high-performing public sector and delivery of effective, efficient, and responsive services
3. Have a workforce that is responsive to the needs of all New Zealanders
4. Agencies manage their workforce size and composition, including to reduce expenditure on consultants and contractors

Other associated expectations listed

Other associated expectations under these priority areas include ensuring that all workforce costs are "affordable within an agency's baseline and sustainable in the long term."

"Any increases or changes in terms and conditions should not lead to labour market movements and trends," it read.

The costing of bargaining and remuneration strategies and settlements should also take into account the cost of all adjustments to pay and conditions, according to the directive.

It further recommended avoiding the backdating any components of adjustments to pay and conditions.

"To support this, bargaining teams are expected to plan for bargaining and be prepared to engage well ahead of a collective agreement's expiry. Agencies should undertake and resource activity efficiently to avoid unnecessary delay."

The recent directive from the PSC outlines its expectations for an "effective employment relations environment in the public sector."

"This Statement covers a range of workforce matters including remuneration, negotiation of employment agreements, capacity and composition of the workforce, pay equity, diversity, data and information," the directive read.

"It does not predetermine the outcome of bargaining with unions but should influence employers' bargaining strategies and proposed settlements."