Explained: how hundreds of civil servants get pay hikes

The recently announced promotion of a Civil Servant in the Department of Planning reminded me of a little secret, rather like a family’s ‘funny uncle’.

It’s absolutely true that the men and women who are employed by Government have not had an across-the-board pay raise since October 2010 when they received an average 1.55% across-the-board pay increase. Knowing that, the private sector workers who pay the taxes that pay the wages and salaries of Government employees would conclude that no Civil Servant has had a pay raise since October 2010.

The thought is reasonable. The conclusion is incorrect. The truth is obscured, as it often is, by broad public ignorance of how things really work.

In the Civil Service pay system, each job is graded. Normally, each job has three pay grades. 

This means that a person who starts out at job grade PS 26, will have three pay grades assigned. These will be pay grades PS 26 ($79,728 per year and start), PS 27 ($82,581 and middle), and PS 28 ($85,640 per year and top). The pay difference between PS 26 and PS 28 is 7.4%.

Movement through grades is determined by job performance assessments. Rarely do negative performance assessments prevent pay grade increases. For virtually all Civil Servants, these pay steps turn out to be automatic pay raises.

Since the March 2010 pay raise, hundreds of Civil Servants have been transferred into different posts within the Civil Service, promoted, or even re-graded.

If transferred or promoted, and simultaneously moved to a new pay grade, the Civil Servant automatically starts on the bottom of a three-step pay process.

For example, Civil Servant Alpha, currently works at PS 28 in the Department of This. He or she is moved to a different appointment in the Department of That. On appointment, he or she is re-graded to the new pay level of PS 30 ($92,096).

So a first pay increase from PS 28 to PS 30 ($85,640 to $92,096 for an overall 7.5% pay increase.)

Then, because of the three step pay grade process, Civil Servant Alpha can now look forward to two more pay raises. To PS 31 ($95,504), then to PS 32 ($99,049).

While the taxpaying private sector may be told that Civil Servants haven’t had a real pay raise in the past three recession years; the truth is that in the past three recession years, hundreds of individual Civil Servants may have had pay raises of as much as 15% or even higher.

In the example, by 2013, Civil Servant Alpha could have gone from PS 28 in the Department of This in 2009 to PS 32 in the Department of That. He or she would have gone from $85,640 in 2009 to $99,049 by 2013. That’s an overall pay increase of 15.7%. And that 15.7% pay increase would have happened during the publicly announced Civil Service ‘pay freeze’ during this recession period of 2009 to 2013.  

All of this is tucked away in the details of the BPSU pay agreements and Civil Service General Orders. This information is not broadly promulgated to taxpayers.

Hidden benefits

That recent promotion within the Department of Planning is an example and reminder of the kind of hidden Civil Service pay raises and benefits that have continued throughout the four, now into five, years of Bermuda’s economic recession. The general Civil Service assertion that ‘we have not had a pay raise in three years’ is partly untrue.

The biggest part of Bermuda’s recession of 2009 - 2013 is the consequence of the mushrooming of Government’s personnel costs between 2006 and 2008; when Government added around 1,200 people to its payroll. These continuing concealed pay raises are now partly paid for with borrowed funds.

In 2013/14, Personnel Costs and expenses (final tally for 2013/14 will be around $580 million) eat up about 66% of Government’s anticipated revenue of $871 million. Debt Service Costs (in 2013/14 projected to be $134 million) will gobble up another 15% of that $871 million revenue. In combination, the two will consume 81% of that $871 million of revenue.

But Government plans to spend $1,202 million. So Government will borrow hundreds of millions ($331 million) to ‘make ends meet.’ In 2013, about forty percent of Government’s need to borrow is driven by these very high Personnel Costs.

That’s the reality. You now understand more of what is happening behind the scene. You ought to know. After all, it is your money. It is your Debt. n