Civil servants and austerity
The times they aren't a-changin
Civil-service payrolls have held up surprisingly well
AFTER the party, the hangover.
When debt-fuelled economic growth came to a crashing halt in the financial crisis of 2008, governments across much of the rich world sought to cut spending.
One obvious target was the state's payroll.
Leviathan's minions are certainly costly.
In the European Union public-sector wages and salaries take up about 10% of GDP.
The Initiative for Policy Dialogue, based at Columbia University, reckons that since 2010 almost 100 governments have set out plans to cut their payrolls.
Some cuts may be savage.
The headcount in many British government departments may fall by as much as 40% by 2019 from current levels, says a recent report from the Institute for Fiscal Studies, a think-tank.
Relative to its 2012 level Italy plans to jettison 20% of public-administration managers by 2016.
However, aggregated data on public-sector headcounts offer some surprises.
Whereas Britain's public-sector workforce has already contracted by 8% since 2007, in Germany and France the number has increased.
More intriguing still is what has happened to compensation costs—the amount governments pay bureaucrats in wages and salaries, but not pensions.
Of the 30 countries in a Eurostat database, half are spending more after inflation on public employees than they were in 2007, even in cases where headcount has fallen.
The euro zone as a whole spends only 1.7% less on government wages than it did six years ago.
Belgium spends 10% more, Luxembourg 24%.
And since 2007, 21 countries, including Cyprus, Italy and France, have not cut the proportion of GDP that they devote to public servants' wages.
Finding explanations for dearer public payslips is tricky.
One reason might be wage drift—the automatic increases in salaries that can occur as civil servants are granted annual promotions in seniority, simply for having been in their jobs for another year.
In 2012, for example, more than 600,000 staff from Britain's National Health Service received rises averaging 3.5%, despite a pay freeze.
In 2010 Barack Obama also decided to freeze government pay, yet the median salary for federal employees climbed by over $3,000 during the following two years.
Wage drift could outweigh the effect of reduced headcount, which is likely to be concentrated in the lower echelons of the civil service.
Another possibility, suggests Alberto Alesina of Harvard University, is that governments simply failed to implement planned spending cuts.
At the end of January Greece's highest administrative court ruled that pay reductions for the armed forces and emergency services were unconstitutional: the government now faces a heavy bill in back pay.
Portugal's constitutional court also opposed the scrapping of Christmas bonuses for civil servants on similar grounds.
These data are worrisome.
The implicit trade-off of austerity was pain now, prosperity later.
Yet as growth in advanced economies picks up, many civil services seem no more streamlined than before.