CAN government afford to make staff redundant?
Chief Minister Allan Bell confirmed that ‘substantial’ settlements have already been made where posts have been made redundant.
A planned shake-up of ‘complex’ and ‘out-dated’ compensation payments for government staff who are made redundant was announced last month.
iomtoday understands that a civil servant made redundant could be eligible for a lump sum severance payment of up to three years’ pay - and the bill to government could prove very costly.
A joint working group including employee representatives has been set up to look at how the system can be modernised. It will be chaired by Alfred Cannan MHK, deputy chairman of the Public Sector Pensions Authority (PSPA).
Mr Bell’s predecessor Tony Brown called for government departments to try to cut their salary bill by 10 per cent.
Government salary budgets for the last three years have not been increased and any pay rises that have been awarded during that time have had to come out of existing budgets.
But Mr Bell said: ‘The ability to introduce more efficiencies is going to be more and more challenging and therefore some hard decisions will have to be made about the level of employment and range of services.
‘There is a potentially big issue over the cost of redundancy across government if it is to be carried out on a wider scale.
‘There have already been some substantial settlements where posts have been made redundant. Clearly the costs of redundancy have to be balanced against the savings.’
Mr Bell pointed out that the government has lost a third of its income as a result of the VAT bombshell. ‘We have to make substantial savings,’ he said.
‘Clearly the intention of departments is to make savings which will help them to rebalance their own budgets in the long term. There is a balance to be struck between the short term costs of redundancy and the long-term savings which could be quite substantial.
‘Compulsory redundances always have a short term cost. It has to be proportionate to the savings likely to be made.’
But the Chief Minister warned against ‘too savage’ a reduction in the government workforce.
He said: ‘Wholesale redundancies not only involve financial settlements but there is the potential simply to transfer the costs from the departments to the Department of Social Care and the benefits system.
‘Equally, too savage a reduction in employment will lead to the destabilisation of the local economy.’
Mr Bell said the government had been ‘somewhat generous’ in the past with staff terms and conditions.
He said: ‘We are looking at terms and conditions of employees to see whether sufficient savings and flexibility could be created by changes in that area.’
Alf Cannan declined to comment about levels of redundancy settlements but said: ‘Negotiations are ongoing with the employees’ side and senior officers are keen to seek a resolution.’