Weathering the Storm

Introduction

Public service employment was traditionally perceived as secure and permanent. Tenure was one of three pillars of the traditional career service, alongside merit and a unified service. The career service changed in recent decades as Australia, like many other countries, undertook extensive reform of public management and the institutions and processes that govern public employment (Pollitt & Bouckaert, 2004).

In addition to these decades of reform, most countries have faced further public management challenges due to the economic downturn commonly known as the global financial crisis (GFC). Governments have scrambled not only to respond to contradictory pressures to stimulate their economies but also to reduce government expenditure. For example, the British government is aiming to cut around £8 billion in public spending in the next 4 years, with a loss of more than 300,000 public sector jobs (Watson & Fleming, 2010). Australia is in a better financial position than many of its counterparts, but a large portion of government spending is on public employee salaries and costs, and spending cuts are likely to affect jobs. These pressures bring public sector employment security into the spotlight.

This research considers how the GFC affected the already weakened tradition of employment security, and whether initiatives related to the GFC represented a continuation of previous trends or a new trajectory in personnel policy. It explores this question through an indicative case study of the public service in Queensland, a large and prosperous Australian state with a comparatively strong tradition of employment security. The research not only focuses on changes in the values and intentions of the policies but also provides insights into the institutional constraints of the New Public Management (NPM) environment. The article begins with a brief discussion of traditional approaches to public sector employment security and the effects of NPM reforms. It proceeds with a review of Queensland public service (QPS) developments in 2009, in the context of the GFC and extensive restructuring of government departments. It focuses on permanent employees within the core government departments (as temporary employees do not have the same expectation of employment security). Information is drawn from primary sources including parliamentary records, public employment policies, media releases, newspaper articles and budget speeches, and supplemented by interviews with union, bureaucracy, and political representatives.

The research supports several conclusions about the Queensland case study. First, the tradition of tenure has waxed and waned and was often affected by severe economic downturns in Queensland’s early history. In recent decades, employment security has been affected by NPM reforms that changed government structures and sought more flexibility in employment. Second, even moderate reforms such as a departmental restructure had implications for employment security. The lack of a comprehensive reform agenda meant the reforms appeared somewhat ad hoc and contradictory, with a lack of vertical and horizontal integration across agencies. For example, although the central personnel agency generally developed policies and strategies to preserve employment security, this was sometimes undermined by contradictory policies issued by the central industrial relations agency or by departmental choices in implementation. When given a choice, many departments embraced policies consistent with NPM values (such as flexibility and redundancy) rather than those that favored employment security. The economic context provided a backdrop that allowed some suspension of values and scrutiny even for initiatives not driven by the GFC.

This case study provides lessons for other jurisdictions. It highlights the tensions between merit and tenure during economic downturns or restructuring. Furthermore, it highlights the limitations of institutional arrangements that have segmented human resources (HR) and industrial relations (IR) responsibilities across central agencies and downward to departments. This devolution may provide desirable agency autonomy, but may make it difficult to impose central control in a time of crisis such as the GFC. Weakened central personnel agencies are perhaps less able to direct department actions through policies and workforce planning approaches, and governments may be limited to budgetary control of public services.

Public Employment Traditions and Reforms

The traditional requirement for public service employees to be permanent and independent recognized the political nature of the public service environment and was a major difference from private sector employment relationships. Tenure was not just a good employment practice but also an important element of an integrated career service model. The career service model was introduced in the U.K. civil service in response to problems of fragmentation, inefficiency, and politicization that arose when there was no clear separation between politics and administration (Jackson, 1993; Northcote & Trevelyan, 1854). Permanent employment was intended to provide continuity beyond electoral cycles and enable public servants to provide frank and fearless advice to any government without fear of dismissal (Parker, 1978).

Australian governments adopted this British career service model (Caiden, 1965). Traditional public sector employment relationships were characterized by three pillars: merit-based recruitment and promotion within an internal labor market, tenured employment to support permanence and independence, and a unified service with standardized pay and conditions (Pollitt & Bouckaert, 2004). Most scholars agreed that employment structures had made it difficult to remove public service employees, and permanent officers had a psychological contract where they expected their employment to be secure (Gardner, 1993; McCallum, 1984; McCarry, 1994). A central personnel agency often managed this career model, to keep decisions out of the hands of politicians. Governments resented this lack of control, and a perennial problem for governments was balancing respect for the independent public service with ensuring its responsiveness to government priorities (Davis, 1993).

In recent decades, governments around the world have introduced NPM reforms, partly to bring public employees under control by weakening their hold on positions, knowledge, and power (Rhodes & Weller, 2001; Smith & Corbett, 1999). In Australia, the drivers for reform included economic pressures, new philosophies about the size of government, and unfavorable accounts of public bureaucracy as being wasteful, inefficient and unresponsive (Pollitt, 1990; Weller, 1996). There were two waves of change: managerial reforms to import private sector management techniques (Davis, 1993; Jackson, 1993; Weller, 1996) and contractual reforms to adopt a “steering not rowing” approach where governments set policy direction, and services are delivered by the private sector, with no assumptions of public agencies or permanent public employment (Davis, 1998).

The reforms affected the institutional and procedural framework for public employment relationships. The traditional central personnel institutions that regulated public employment were weakened or dismantled, often with a horizontal split of HR and IR across central agencies, and a vertical split through decentralization of employment responsibilities to departments. The pillars of public employment were also weakened, with a deprivileging of public servants and a reduction in the rules governing jobs (Pollitt & Bouckaert, 2004). Employment security was threatened through an increase in temporary employment (for flexible staffing), contract employment (to increase the responsiveness of public servants to political direction), and redundancy to downsize and reshape agencies. There were similar trends to deemphasize conventional full-time permanent jobs in other sectors (Cappelli, 1999; Gummer, 2000). Cappelli (1999) argues that the 1980s recession changed the broader labor market, with a new focus on shareholder value rather than the previous paternalism toward employees—one casualty was employment security. This new approach arguably changed the nature of redundancy, from its traditional use in response to economic pressures to a new use as a management tool to shape organizations: It also changed the targets of redundancy from blue- to white-collar workers (Colley, 2004; Jacoby, 1999; Littler, Dunford, Bramble, & Hede, 1997). By the mid-1990s, NPM reforms had made the public sector a leader in downsizing, with a new preparedness to abandon earlier assumptions and expectations about employment security (McCarry, 1994).

The following section considers these traditions and reforms in the QPS case study. Within this study, retrenchment is the involuntary termination of an employer, whereas redundancy refers to situations where an employee’s position has been deemed redundant, and the surplus employee may be managed through either alternative job placement and training or offered a voluntary severance package. Although temporary and contract employment can also be barriers to employment security, this research limits its focus to reductions in employment security for permanent and tenured employees.

Queensland Approaches to Employment Security

Early QPS legislation demonstrated a waxing and waning of employment security. Legislation in 1889 confirmed tenure but provided for retrenchment if the government needed to reduce the number of officers in a department (Civil Service Act, 1889, s. 33). Retrenched officers had a prior claim on reappointment as suitable vacancies occurred. Queensland governments retrenched up to 15% of the QPS workforce in each of the recessions in the 1890s, 1900s, and 1920s (CSB, 1895; Queensland Public Service Board, [QPSB], 1905; Scott, Laurie, Stevens, & Weller, 2001). Significant numbers were reengaged as new vacancies arose (CSB, 1895; QPSB, various years). In the great depression of 1929, the conservative government took a different path, deeming extensive pay cuts as preferable to retrenchment and unemployment (Lack, 1961). In the period of economic prosperity from the 1940s, Queensland governments promised no more retrenchments and staff reductions were achieved through natural attrition (Howatson, 1988).

Relatively stable Queensland public administration was disrupted in 1983, when the conservative National Party gained government and embarked on extensive reforms. It provided unfettered autonomy for Ministers and permanent heads and weakened the pillars of public employment (Queensland Parliament, 1987; Savage, 1987). The central personnel institution was dismantled, and personnel management was devolved to departments. The government abandoned the existing retrenchment provisions and reengagement requirements, and implemented a more flexible and accessible redundancy options that significantly changed traditional employment security. As predicted by Littler et al. (1997), redundancy became dissociated from the economic cycle and used as a strategy in restructuring programs. This government fell amid evidence of corruption and politicization (Fitzgerald, 1989).

In 1989, the Goss Labor Government came to power on the promise of political, electoral and administrative reform (Goss, 1989). Notwithstanding national concerns about the size of government, Queensland was in a strong financial position and its reform program did not require the drastic downsizing or privatization pursued elsewhere (Coaldrake, 1991; Davis, 1995). Goss implemented managerial reforms from the moderate end of the NPM spectrum. Goss split the responsibility for HR and IR across two departments, with HR reforms managed by a strong, independent central agency. Goss generally advanced the pillars of public employment, strengthening merit through new recruitment processes and enhancing tenure by removing contracts for everyone below chief executive level (Queensland Parliament, 1991). Employment security was threatened by departmental reviews that consolidated functions (Davis, 1995). The pillars of merit and tenure clashed, as the stringent application of open merit competition led to the “spilling” of many redesigned positions and many staff were declared surplus and had to reapply for their own jobs. New policies ostensibly emphasized the redeployment of surplus staff, but nonetheless gave chief executives greater flexibility to offer early retirement and gave employees more options to sever their career if they chose not to redeploy (Public Sector Management Commission [PSMC], 1991). The considerable staff unrest led the government to try new approaches to managing organizational change (PSMC, 1994), and its narrow win at the 1995 election gave it practical and political motives to promise no further job losses. Employment security remained a political issue from this time (Colley, 2004).

The new Borbidge conservative government, elected in 1996, promised to abandon the Goss reforms (Scott et al., 2001). Borbidge decentralized HR to departments, to be managed by a weaker central personnel institution. He promised stability, no privatization and no downsizing but nonetheless reduced employment security through extensive use of contracts, temporary employment and more accessible redundancy options (Public Service Act, 1996). By December 1996, the public sector again felt under attack from restructures, budget cuts and extensive job losses, and unions lobbied for employment security (State Public Service Federation of Queensland [SPSFQ], 1996, 1997). The government issued two contradictory policies related to employment security that highlighted the conflict between the conservative government Coalition partners over the reform agenda: the central personnel institution issued a policy for employment security, whereas the Treasury issued contradictory guidelines that permitted outsourcing (Queensland Parliament, 1998, 1996). At the June 1998 election, unions continued their campaign for guarantees of employment security (SPSFQ, 1996-1998).

The Beattie Labor Government came to power in 1998 and fulfilled its election promise to stabilize the public service (Queensland Parliament, 1998). Its employment security policy committed to maximizing permanent employment, limiting future organizational restructuring, using the public service as the preferred provider of government services, and promising that nobody would be forced into unemployment as a result of restructuring or downsizing (Office of the Public Service Commissioner, 1999; Queensland Public Service Commission [QPSC], 2000). These principles were enshrined in collective bargaining agreements, in contrast to the reductions in employment security achieved under earlier agreements (Colley, 2004). Government and unions worked together to reduce unnecessary temporary employment, and policies allowed for longer term temporary employees to be converted to permanent status in some circumstances. Nonetheless, the government implemented two voluntary early retirement schemes, to achieve “skills rejuvenation” (Australian Taxation Office [ATO], 2002, 2006).

In summary, employment security waxed and waned. Labor governments held power for most of the period since 1990, and they supported government provision of services and employment security (Colley, 2004, 2005). Conservative governments attempted to implement extreme NPM ideals in the late 1980s and mid-1990s and, arguably, this contributed to their electoral defeat. The nature of redundancy evolved from economic necessity to organizational choice and, unlike earlier provisions, precluded rather than required the reemployment of redundant officers. Employment security had become a significant election issue, albeit for industrial reasons rather than traditional concerns about public service independence. By 2009, public employment matters were divided across many forums: the Queensland Public Service Commission (QPSC) took responsibility for broad government HR policies, a separate central agency was responsibility for wages and conditions policies, and department chief executives were largely responsible for their own staffing decisions below senior levels.

This research now considers developments since 2009, as the Labor Government sought reelection during the GFC.

The 2009 Queensland State Election and Policy Announcement

The Bligh Labor Government called an early state election in March 2009, in the throes of the GFC, as Queensland faced a budget deficit and a downgrading of its credit rating (Hawker, 2009). The election campaign provided a stark choice. The Opposition proposed cuts to public spending, equating to a loss of around 37,000 public service positions (Giles, 2009; Hawker, 2009). Premier Bligh campaigned on job creation, with a AUD $17 billion capital works program to support the economy and create 100,000 jobs (Hawker, 2009), consistent with the direction of this and other Labor governments.

Bligh won the election and 5 days later announced major machinery-of-government changes to streamline the number of departments from 23 down to 13 (Bligh, 2009). The government was heavily criticized—during the election campaign, it had attacked the Opposition plan to cut jobs, but it did not mention its own plans for restructuring and staff displacement (Lion, 2010). The rationale for the restructure is difficult to determine, with no mention during the election (Australian Labor Party, 2010); and no central government reform program outlining its purpose. Many public servants had to glean information from press releases, news stories, and public sector magazines (Bligh, 2009; QPSC, 2010a, 2010c; Sectorwide, 2009; Wilson, 2009). The Premier described it as an efficiency measure for better coordination and gave assurances that it would not lead to job cuts—any savings in nonfrontline staff (such as finance, HR, audit, or other support staff) would be redirected to frontline services (Bligh, 2009; Lion, 2009; Sectorwide, 2009). Nonetheless, the Fraser (2009) projected extensive savings from the restructure and an increased efficiency dividend from agencies.

The restructure was accompanied by new workforce policies to manage surplus staff, with varying effects on employment security, as discussed in the following sections.

Personnel Reforms to Enhance Employment Security

The government introduced several initiatives to manage surplus staff without reducing employment security or the unified service. These initiatives were consistent with existing employment security commitments and not consistent with the NPM ideal of flexibility rather than tenure.

Personnel Reforms That Reduced Employment Security

Several initiatives reduced employment security, favoring flexibility instead.

Analysis and Conclusion

This article canvassed changes to employment security during recent NPM reforms and more recently under the GFC, using a study of the Queensland public service.

The research supports several conclusions about the Queensland case study. It confirms that employment security was a tradition but not a right of public employment. The nature of redundancy has changed, from an economic necessity during economic downturns to a means to implement organizational choices. Under the GFC, the Queensland government maintained its previous path of moderate reform, as it did not have the same financial imperatives as many other jurisdictions. Nonetheless, the Queensland government’s recent department restructure—designed to reduce the size of corporate services and grow frontline service delivery—affected employment security.

The reform direction appeared ad hoc and unplanned. There was no comprehensive reform program to clarify the rationale or integrate the department restructure. There were also mixed and contradictory responsibilities among the central agencies, with the Premier’s department responsible for the restructure, the QPSC responsible for placing surplus staff, and the justice department responsible for redundancy policies. As predicted by Pollitt and Bouckaert, personnel reforms followed other organizational reforms and budget constraints, rather than being a lead reform item integrated into the Premier’s restructure announcement.

The reform direction lacked horizontal and vertical integration between central and line agencies. The QPSC policies (such as priority placement and managing surplus employees) all supported employment security, whereas the central industrial relations unit in Justice issued more accessible redundancy policies that undermined employment security. This no doubt contributed to the unmonitored disconnection between policy intention and implementation. Departments seemed reluctant to adopt the policies and strategies that enhanced employment security (such as priority placement) and more enthusiastically embraced those that reduced employment security (such as individual and group redundancies). Given discretion and choice, departments preferred NPM measures over traditional approaches, even though these are contrary to government policy. This adoption of NPM approaches was perhaps made feasible by the GFC, even though the initiatives were unrelated to the GFC. Agency autonomy allowed them to lessen their focus on employment security.

The research raises questions about the direction of, and responsibility for, public employment policy. The QPSC did not, and perhaps could not, take a strategic leadership role. First, it did not hold primary responsibility for the restructure or sole responsibility for employment security policies. Second, it lacks enforcement powers or authority, and its policy intentions could be undermined in practice by departmental discretion and choices. If the government is serious about employment security, it may need to review the current split responsibilities and decentralized environment and give the QPSC greater powers for enforcement and culture change.

Overall, the restructure and the employment initiatives discussed in this article lead in contradictory directions, sometimes as a result of contradictory policies and sometimes being frustrated through implementation. It is difficult at this stage to forecast the extent to which redundancy, retrenchment, and early retirement measures will be used, and will represent a departure from the previous patterns of employment security. What is clear is the department appetite for the NPM ideals. Overall, it is likely that the traditional philosophies that prevented Queensland from pursuing an extreme neoliberal agenda will endure. It remains to be seen whether the money spent on early retirement packages is simply a loss of the most marketable employees.

The case study provides lessons for other jurisdictions. First, it highlights an interesting inter-play of the pillars of public employment. These pillars, which had usually operated alongside each other in a consistent manner, had a different emphasis under the pressure of the GFC. For example, the priority placement scheme reduced competitive merit processes to allow for streamlined placement of staff across departmental boundaries and to limit opportunities to existing staff. This process deemphasized merit and used the unified service to support employment security.

Second, the findings suggest some limitations to the institutional arrangements, in Queensland and many other jurisdictions, which have split functions horizontally across separate HR and IR agencies, and/or devolved responsibilities to departments. This confusing and sometimes contradictory array of responsibilities was never ideal, but may be particularly inappropriate when governments are seeking to impose strong central policies of restraint. Weakened central personnel agencies may be less able to direct departments to observe central policies or workforce planning initiatives for restraint in the growth of nonfrontline workforces, and governments may be limited to budgetary control of public services. When given choices, departments tended to favor NPM flexibility over traditional values, to the detriment of public sector employment security.

Third, the research demonstrates the political and industrial complexity of this economic context. The GFC became a backdrop for all public employment initiatives and may have provided a window of opportunity for desired initiatives to be implemented with less scrutiny or opposition. The GFC focused the Queensland government on job creation and protection across the board, but arguably less so in its own workforce. However, the government promised unions and its workforce that there would be no job losses and extensive creation of new frontline jobs. At the same time, the government devolved the power for involuntary retrenchment, which would allow departments to undermine government intentions. The continuation of higher level policies and agreement for employment security largely remain in place due to the good will of the current Queensland government.