Attraction, recruitment and retention

Remuneration

Remuneration has been identified in the literature as a key attraction issue; however, it does not appear to be of first order importance to most APS employees as an attraction issue, although it was ranked by almost half of employees as one of their top five job satisfaction attributes. The literature also suggests that remuneration is not as important an issue in retention as it is in attraction. This did not hold true in the APS where there was little difference in its relative importance for current employees when comparing issues affecting retention and attraction.

APS agencies use two types of instruments to set their employees’ remuneration—collective agreements and AWAs. The trend in recent years has been for increasing numbers of employees to be employed using AWAs. This trend continued in 2006–07, with the number of operative AWAs in the APS increasing to 20,195 from 14,800 last year.

The majority of APS employees (around 87%), however, continue to be employed under collective agreements. The remaining 13% are covered by AWAs. This comprises around 8% of APS 1–6 employees, around 26% of ELs, and essentially all SES employees. Of the 101 collective agreements that were operating in the APS at 30 June 2007, two-thirds have been made with one or more trade unions, while around 30% have been made directly with employees—a proportion that has been stable over the past five years.

To the extent that remuneration impacts both on retention and attraction, two aspects are of interest. How does the APS compare to other sectors in relation to the movement in, and level of, remuneration?

Movements in APS remuneration

The most comprehensive source of data on movements in APS remuneration is available in a survey commissioned by DEWR and conducted by Mercer Human Resources Consulting (the APS remuneration survey) each December.²² The survey reports on APS remuneration, and provides broader market comparisons with the private sector and with State and Territory public services. It also provides information on the spread of remuneration at each classification. This data is particularly useful because, as remuneration has been devolved to the agency level, the spread of remuneration at any given classification level across agencies has become more dispersed.

The data from the APS remuneration survey on remuneration growth, which is based on calendar years, is presented in Table 4.6. Remuneration in the APS generally increased more in 2006 compared to 2005. This was also the case for equivalent jobs in the private sector, whereas the rate of growth remained the same in the combined State and Territory public services between the two years.

In 2006, non-SES base salaries and total remuneration package (base salary plus benefits such as superannuation and motor vehicles but excluding bonuses), at the median level, increased at much the same rate as equivalent jobs in the private sector but faster than equivalent jobs in the State and Territory public sectors. Base salaries increased faster for SES employees compared to non-SES employees in both 2005 and 2006. The SES total remuneration package increased slightly faster than equivalent jobs in the private sector and significantly faster than in the State and Territory public sectors. However, for SES, this pattern was a reversal of the one in the previous year when their total remuneration package increased significantly less than the State and Territory public sectors and somewhat less than the private sector.

Overall, across the two-year period, the relative position of SES remuneration compared to the private sector and the State and Territory public sectors remained essentially stable. For non-SES, there has been some improvement relative to the State and Territory public sectors but relative stability against the private sector.

Including bonuses in the analysis of total remuneration makes little difference to the picture at the aggregate level for non-SES employees, due to the low incidence of bonuses for most APS employees at these classifications. For SES employees, it marginally improves their relative position against the private sector but does not change the position against the State and Territory public sectors.

Table 4.6: Comparison of remuneration growth, 2005 and 2006
		Median base salary % change			Total remuneration package^(a) % change
		APS	State public services	Private sector	APS	State public services	Private sector
2005	Non-SES	3.7	3.5	3.7	3.7	3.4	3.6
2005	SES^(c)	4.3	N/A	N/A	3.7	5.6	4.4^(b)
2006	Non-SES	4.0	3.5	4.0	4.4	3.5	4.1
2006	SES^(c)	5.6	N/A	N/A	5.0	3.0	4.3^(b)
(a) Total Remuneration Package includes base salary plus benefits such as superannuation and motor vehicles but excludes bonuses. (b) Movements at the 25th percentile and the median for equivalent positions. (c) Movements for base salary for SES are not available as at these classifications remuneration is managed on a total remuneration package basis. Source: Mercer Human Resource Consulting, 2006 Broader Market Comparison—APS SES and Non-SES Remuneration survey conducted for DEWR.

The data in Table 4.6 does not show some of the variability in remuneration growth among classifications. Growth in 2006 in median total remuneration package, for example, was 5.9% for SES Band 3 employees, 5.7% for graduates, 4.4% for APS 6 employees and 3.5% for EL 2s.

Comparative levels of APS remuneration

Although the APS has generally kept pace with movements in remuneration in other sectors, there are continuing disparities in the level of remuneration. Table 4.7 presents the median level of total remuneration package for APS employees for each classification level in 2006 (column 3). It uses the median level as a benchmark for comparing APS remuneration levels with the equivalent jobs in the State and Territory public services and in the private sector. At the APS 6 classification, for example, the combined State public services remunerate jobs at only 87% of the APS median (column 5) while the private sector remunerates significantly above the APS level. At the 25th percentile point in the private sector market, jobs that are equivalent to the APS 6 classification are remunerated at 112% of the APS median (column 6), increasing to 127% at the median point (column 7) in the private sector market.

Table 4.7 also gives some idea of the spread of remuneration across APS agencies. At the APS 6 classification, for example, at the 25th percentile point within the distribution of APS remuneration, employees are being remunerated at 93% of the median level (column 2). At the 75th percentile, employees are being remunerated at 104% of the median level (column 4). The classifications with the largest spread of remuneration between the 25th and 75th percentile are APS 1, EL 2 and SES 1. Classifications with the narrowest spread are graduates and APS 5.

Table 4.7: Comparative levels of total remuneration package,^(a) 2006
	APS			State public services(b)	Private sector
	25th percentile %(d)	median $	75th percentile %(d)	median %(d)	25th percentile %(d)	median %(d)
Graduate(c)	97	43 412	104	N/A	98	105
APS 1	94	40 570	108	86	67	72
APS 2	96	46 141	105	93	86	95
APS 3	95	52 356	104	92	95	105
APS 4	96	58 395	104	91	102	113
APS 5	96	64 717	103	91	108	121
APS 6	93	75 536	104	87	112	127
EL 1	97	93 784	107	77	108	124
EL 2	95	117 832	108	69	105	121
SES 1	94	177 857	107	88	91	108
SES 2	95	220 691	106	89	104	127
SES 3	94	276 446	105	93	126	156
Dept. Secretaries(e)	100	353 310	100	N/A	154	191
(a) Total Remuneration Package includes base salary plus benefits such as superannuation and motor vehicles but excludes bonuses. (b) Mid-point of equivalent positions in the combined State and Territory public services (excluding Tasmania). (c) Base salary rather than total remuneration package is used for graduates as the later data was unavailable. (d) Percentage of the APS median total remuneration package. (e) 2005 data is the latest comparable data available. All 18 Departmental Secretaries are remunerated at the same rate ($353,310) except for three higher-level Secretaries who receive 6.9% more. Source: Mercer Human Resource Consulting, 2006 Broader Market Comparison—APS SES and Non-SES Remuneration survey conducted for DEWR. Report on Work Value and Comparative Remuneration for Departmental Secretaries to the Australian Public Service Commission, Mercer Consulting Group, March 2006.

The relative position of APS remuneration levels compared to the combined State and Territory public sectors is clear—at every classification for which data is available APS employees are more highly remunerated. This is the case even at the 25th percentile point in the APS remuneration distribution. Thus, to the extent that the APS competes with State and Territory public sectors for potential employees, it is in a strong overall competitive position in relation to total remuneration, although this picture may vary somewhat in each State and Territory.

The relative position of the APS compared to equivalent jobs in the private sector is more mixed. Comparing median APS remuneration levels with median private sector levels, nearly all classifications except APS 1 and 2 are remunerated at a rate lower than in the private sector. The inclusion of bonuses in comparative total remuneration levels results in SES employee remuneration being even less competitive compared to that in the private sector. SES median bonus payments are reported to be around one-quarter to one-third of those paid at the median level in the private sector to equivalent positions. No comparative data on bonuses was available for non-SES classifications.

If the point of comparison is the 25th percentile point (or the bottom quarter of the private sector market), and the median level in the APS, five classifications in the APS are remunerated more highly—graduates, APS 1, 2 and 3 and SES 1. Thus, for these five classifications the APS offers a reasonably competitive remuneration package compared to the private sector, particularly if the relatively generous leave conditions in the APS are taken into account. For other classifications, the APS remunerates at a relatively low level. If the point of comparison shifts to the 75th percentile in the APS, that is, the top quarter of the APS salary range and the 25th percentile or bottom quarter of the private sector, eight APS classifications are remunerated at a higher level but APS 5 and 6, EL 1, SES 3 classifications and Departmental Secretaries still remain lower than those in the private sector.

The gap between the private sector and the APS is clearly the widest for Departmental Secretaries and the SES 3 classification level, and it is also relatively wide at the APS 6 classification level. This gap, however, does not seem to be strongly affecting agencies’ ability to recruit from outside the APS at the SES 3 and APS 6 classification levels. In 2006–07, the proportion of engagements from outside the APS as a total of promotions and engagements to the SES 3 and APS 6 classifications was 50% and 38% respectively, compared to 13% and 39% in the previous year.

Employees’ views on remuneration

Employees were asked if they agreed that they were fairly remunerated for the work that they do. The majority agreed (61%), with higher classifications having higher levels of agreement. Views on whether remuneration was fair for the work done varied by type of work, with those in policy roles having the highest agreement rates and those in research and those exercising regulatory authority having relatively low levels of agreement.

The rate of agreement of employees that they were fairly remunerated varied considerably between agencies with individual agency-specific results, from 47% to 82%. Some of this variation may well reflect the spread of remuneration outcomes among agencies evident in Table 4.7. It is noteworthy that some agencies are able to achieve such high levels of agreement when the APS’s level of remuneration competitiveness compared to the private sector is relatively low, even for agencies paying at the higher levels of the APS distribution. This may reflect several issues, including that remuneration is not necessarily of first order importance as an attraction or retention attribute for most APS employees who, the evidence suggests, put more weight on issues such as work-life balance, satisfaction with current job, working relationships, and career and development opportunities. Employees may also compare their remuneration more with that of other APS agencies, and State and Territory agencies, than the private sector.

22 Mercer Human Resource Consulting, APS Remuneration survey, commissioned by DEWR, in each year from 2001 to 2006. Since 2002, the Mercer surveys present a snapshot of data at 31 December each year. In previous reports this survey was referred to as the APS Remuneration survey. For additional information see: <http://www.workplace.gov.au/workplace/Organisation/ Government/Federal/Reports/2006APSRemunerationSurvey.htm>. As participation in the APS Remuneration survey is voluntary, there are some limitations concerning the generalisability of the data collected from the 56 participating agencies (in 2006) to the whole APS. Self-selection into the survey, for example, has resulted in a higher proportion of larger APS agencies, than medium and small agencies, participating in the survey.