Small business group ISME has called for a complete review of the public sector benchmarking process following the publication of a report it commissioned from economist Jim Power.
The report describes the first benchmarking deal as 'seriously flawed' and lacking in transparency. The Friends First economist says benchmarking has made a significant contribution to inflation. He also questions whether the quality and quantity of public services has improved as a result.
The report rejects some of the arguments it says were used to justify benchmarking, such as difficulty in recruiting public sector workers and pay rates which lagged those in the private sector. It says the average wage in the public sector at the end of last year was more than 40% higher than the average industrial wage, while total employment in the public sector rose by 25,600 between March 2001 and the end of 2004.
First payments under the first phase of benchmarking were made in 2003. The report says the process will cost the Exchequer ?1.2 billion next year. A second benchmarking review is due to start in the second half of 2005.
The economist says the second phase must be transparent and must insist on proper performance measurement. He also says the process must take into account the advantages public sector workers have in terms of job security, holidays and pension arrangements.
