Public sector reform: International comparisons August 2011

Public Sector Consolidation: International Comparisons
This table provides an update on public sector reform driven by the constrained fiscal environment in a range of international jurisdictions.
All of the information is drawn from public domain sources.
Situation (2011 estimates)
public debt
(% of GDP)
Response: recent activity
Public wages and staffing
June – Revised 5-year plan cuts €14.32bn of public
spending, while raising €14.09bn in taxes to secure
another payment under the €110bn bail-out from the
EU and the IMF
(% of GDP)
July – Further €109bn bailout with reduced interest
July – Government commitment to no further pay
cuts for public servants conditional on “the ongoing
delivery of flexibilities" including co-operation in
reducing staff numbers, cost-containment and
changes to work practices so that services for the
public would be maintained. Ongoing moratorium on
promotion and recruitment
Public sector wage bill cut by €770m in 2011, €600m in 2012, €448m in 2013, €300m in 2014 and €71m in 2015
Nominal public sector wages cut by 15%
Wages of employees of state-owned enterprises cut by 30% with a cap on wages and bonuses
All temporary contracts for public sector workers will be terminated
Only one in 10 civil servants retiring this year will be replaced and only one in 5 in coming years
Expected reduction of 220,000 civil servants (2010-14) from high of almost 800,000
Increase in weekly working hours for public sector employees from 37.5 to 40 hours, equivalent to a pay cut of 6.25%
Cuts in pension entitlements and rise in retirement age from 55 (to 65 by 2015)
Extend freeze on mandatory public pensions
Introduction of unemployment insurance contributions for public-sector employees
• Reduction of 24,750 public sector jobs by 2014
• €1bn of savings through pay cuts ranging from 5% on those earning €30,000 to 15% on those earning more than
• Salary cap of €200,000 for public servants
• Increase in the retirement age
August – Government planning a pre-Budget
assessment in October to reveal plans to increase
taxes and cut spending. Planning cuts of €3.6bn for
the 2012 year
May – EU and IMF agree €78bn bailout if deficit is cut
to 5.9% of GDP this year
June – Newly elected Government claims it will be
more ambitious in reducing the deficit than the terms
of the bailout
July – 4 year austerity budget designed to eliminate
the budget deficit by 2014. Government plans to
double its original savings target of €40bn to €79bn
Recruitment freeze of civil servants (no replacements)
Freeze on public sector wages
5% cut in public sector wages
Freezing of pensions that are over €1,500 per month
Reduction in employers’ social security contributions
Cuts to redundancy payment entitlements from 30 days to 20 days and a ceiling of 12 years
A one-off tax, taking 50% of workers’ Christmas bonus
Abolished regional governments
• Cuts to state pensions worth €600m in 2012, €1.1bn in 2013 and €1.1bn in 2014
• Cuts to the budgets of central government ministries, worth a total of €1bn in 2012, €2.5bn in 2013 and €1.5bn in
• Elimination of 265,000 public service jobs being considered along with salaries of remaining employees frozen for 4
• Retirement age to be gradually increased to 67 years of age
• Savings of up to €50bn to be made through cuts in state pensions
Sources: IMG 2011 debt and deficit estimates; OECD reports; government websites; news reports – accessed July and August 2011
Situation (2011 estimates)
public debt
(% of GDP)
Response: recent consolidation activity
Public wages and staffing
July – Government announces rise in pension
contributions of up to 2.4% and raising pension ages
in line with planned increases in the state pension
age. Ongoing work on the proposed shift from finalsalary to career-average pensions
Reduction of 490,000 public sector jobs by 2014-15
Two year wage freeze
Average 34% reduction in administrative costs for departments by 2014-15
Increased employee pension contributions to save £2.8bn by 2014-15
August – Government reveals savings of £3.75bn in
the ten months from May 2010 to March 2011
£300m cut in civil service salaries bill through a reduction of staffing equivalent to 17,000 places
£870m saved by cutting departmental spending on consulting
£500m saved by reducing spend on temporary agency staff
£400m cut in government advertising and communication
£800m from renegotiating deals with large government suppliers
£90m through better controls of property lease renewals
April – The Prime Minister ruled out further austerity
5% wage cut in 2010; frozen in 2011
10% replacement of vacant positions 2011-2013
16% cut to departmental budgets
Increases to the retirement age, the number of years of contributions required for a pension and incentives for
workers to remain in the labour force past retirement age
(% of GDP)
August – new social security law enacted
5.7 %
May – Froze public spending between 2011 and 2013
to bring deficit within the 3% required by the EU
• Cut 97,000 public sector jobs by 2013 by only replacing 1 out of 2 retiring state employees
• Public sector wage freeze in 2011
• Departmental budget cuts of 10% over 3 years
June – New majority Government seeks C$4bn annual
savings to return to surplus in 2014-15
• Departments instructed to draw up scenarios for budget cuts of 5 and 10%, with options that could include merging
operations across departments, making programmes more efficient and introducing user fees for some services
• If achieved solely through reduction in public services this would equate to about 40,000 positions from a federal
public service of 285,000
• Block budget 3-5 year caps with budget growth factor of 40% of the smoothed GDP growth rate
• Manpower management framework creates penalties for headcount growth faster than the smoothened resident
labour force growth
Sources: IMG 2011 debt and deficit estimates; OECD reports; government websites; news reports – accessed July and August 2011
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