Salary Restraint in a Bureaucratic Hierarchy—The Case of the Australian Public Service Under Wage Indexation

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Abstract
The current Australian Public Service (APS) wage structure is an outcome of Public Service Board (PSB) wage policies developed in the 1960s, and the cumulative wage inflation of the years to 1974. Since 1975 the strict application of the wage indexation guidelines within the APS appears initially to have retarded the rate of growth of average APS salaries compared with those paid elsewhere. However, in a hierarchical salary structure (such as that of the APS) staff turnover and consequent promotions can result in individuals experiencing greater earnings increases than the rate of growth of average salaries. This may temper resentment of wage restraint, at least temporarily. The paper is in four main parts. The first surveys the history of PSB wage fixation policies and the effects on the APS salary structure of the application of the National Wage decisions since 1975. The second part discusses the accompanying tables, which examine the effects of these wage policies on the aggregate wage bill per person employed in the APS, and on a particular but important group within the APS: those in the third division clerical/administrative structure. In the third part, the effect of the hierarchical nature of the APS salary structure is analysed. The final concluding part briefly discusses some issues which seem likely to arise in the near future concerning the relation between public and private sector wage structures.

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