SUMMARY ANALYSIS OF THE PRESIDENT'S PROPOSAL FOR REFORM OF FEDERAL STATUTORY SALARY SYSTEMS (Prepared by the U.S. Civil Service Commission) INTRODUCTION One and a half million career employees are paid under Federal statutory pay systems at an annual payroll cost of about $10 billion. This outline presents the President's proposal for reform of these systems. It presents The requisites of a sound Federal salary system and the shortcomings of present statutory systems. Basic principles, standards, and methods for setting and controlling Federal salaries. The major features of a proposed bill incorporating a threephase program for placing reforms in effect. The functions of a public salary system are to facilitate hiring and retention of a high quality level of Government personnel and to control payroll expenditures, with equity to the employee and the taxpayer. The standard proposed for judging Federal salaries is the "national average" private enterprise level, a conservative quality standard compared to a quality standard common among leading private firms of "better than our competitors." SCOPE OF PROPOSAL This proposal would reform civilian pay systems where pay is fixed by Federal statute: The proposal is based on principles in accord with those which now govern the wage-board system which covers about 660,000 Federal trades and crafts workers. 1 I. APPROACH TO PAY REFORM REQUISITES OF A FEDERAL PAY SYSTEM Responsibility to the public To pay enough to permit competent staffing, so as not to endanger the national security and the needed public service. To pay no more than is needed for these objectives. Equity for the Federal employee With other Federal employees. With his equals throughout the national economy. To adapt pay to the individual and to special needs. To initiate general adjustments as required. PRESENT DEFECTS OF STATUTORY PAY SYSTEMS Fulfillment of the responsibility for competent staffing is increasingly difficult. Low Federal rates place the Government at a serious disadvantage in recruitment, especially with respect to professional and managerial talent. Many inequities exist Among Federal pay systems, where some supervisors under one system are paid less than their subordinates who are under another system. Within systems, where pay structures have decayed, leaving inadequate pay distinctions and pay incentives and developing forms of inequity. Between the Federal employee and his equals throughout the national economy. Only in a few of the lower grades has Federal pay kept pace with average private enterprise pay rates. Little executive discretion is permitted in pay administration under the Classification Act and postal pay statute. The executive branch has heretofore not fully exercised either its natural managerial or its statutory responsibility for leadership on pay. BASIS FOR REFORM Federal pay reform should be based upon two principles and upon establishment of executive branch machinery for maintaining the principles in effect. Principles The comparability principle.-Federal salary rates shall be comparable with private enterprise rates for the same levels of work. Adoption of this principle assures equity for the Federal employee with his equals throughout the national economy, provides more nearly competitive rates for recruitment, and supplies an objective yardstick for immediate reform and for subsequent adjustments of the level of Federal salaries. The internal alinement principles There shall be equal pay for equal work, and pay distinctions in keeping with work and performance distinctions. |