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Senior pay

The State Services Commissioner employs and sets the remuneration of chief executives of Public Service departments (except for the Crown Law Office, Government Communication Security Bureau, and the State Services Commission whose chief executive remuneration is set by the Remuneration Authority). Chief executives, set the remuneration for their staff.

In the Public Service staff are on a mixture of permanent and fixed-term contracts and their remuneration packages are more commonly structured around a base salary component, which is adjusted through annual performance review process or collective bargaining.

In contrast, Public Service chief executives are on fixed- term contracts of between three and five years, which may be extended for a further term. Their remuneration consists of a total remuneration package, parts of which are at-risk and must be earned through individual performance and contribution to broader sector outcomes.

Public Service chief executive remuneration was redesigned in 2014 to create a stronger and clearer link between chief executives' performance expectations and remuneration. Chief executives' total potential remuneration is typically comprised of:

  • Target remuneration which is made up of 90% base salary and a 10% earn-back component which is linked to very good performance over the year against achievement of the expectations for chief executives. Payment of the earn-back component is withheld until after performance has been assessed at the end of the year.
  • Exceptional performance payment of up to 15% of target remuneration, specifically linked to chief executives demonstrating exceptional performance against the system-wide stewardship expectations, paid at the State Services Commissioner's discretion.
  • Employer contribution to superannuation arrangements, typically 10% of salary.

For further information on Public Service chief executive remuneration refer to SSC webpage: http://www.ssc.govt.nz/ssw-pay.

As at 30 June 2015, the Public Service workforce was made up of 11% managers and 89% in other occupational groups. There were 28 chief executives (one vacancy), 940 tier 2 and 3 managers and 4,375 other managers employed on 30 June 2015 as shown in Table 3.3.

Table 3.3 Public Service staff by seniority, 30 June 2015

Seniority

Headcount

% share

Chief executive

28

0.1%

Tier-2 manager

170

0.4%

Tier-3 manager

770

1.6%

Other manager

4,375

9.3%

Rest of staff

41,816

88.7%

Total

47,159

100.00%

The average base salary of staff increases along with seniority as shown in Figure 3.3, reflecting the increasing job size and responsibilities of their roles. Base salary is used for general comparison because data for individual employee's superannuation and performance pay are not collected in the HRC survey. It is also less relevant to compare total remuneration of chief executives with other employees because their remuneration structures are different.

Figure 3.3 Average base salary of Public Service staff by seniority, June year 2012-2015

Figure 3.3 Average base salary of Public Service staff by seniority, June year 2012-2015

The average annual base salary of Public Service chief executives in 2015 ranged from $215,000 to $630,000, with the average being $410,000.

Figure 3.4 shows the ratios of average salary for the four management levels over the rest of non-management staff.

Figure 3.4 Average salary ratio by seniority, June year 2015

Figure 3.4 Average salary ratio by seniority, June year 2015

These ratios were quite stable over the last three years. In 2015, the average base salary of chief executives in the Public Service is on average 6.3 times that of the rest of non-management staff. The ratios for other management levels are: tier-2 manager at 3.9, tier-3 manager at 2.7 and other manager at 1.7 times. At a broader level the average salary ratio for chief executives to all other staff (including managers) was lower at 5.7 times.

While salary ratios generally remain stable from year to year, annual salary movements can be volatile at management levels owing to their relatively smaller cohorts, which are more susceptible to influence by staff movement and organisational changes. Table 3.4 shows the annual rates of salary movement for the last three years. The average movement for Public Service chief executives was 2.1%, lower than other management and non-management groups.

Table 3.4 Annual salary increase by seniority 2013 - 2015

Year

Chief executive

Tier-2 manager

Tier-3 manager

Other manager

Rest of staff

Total

2013

2.8%

4.3%

3.6%

3.2%

2.4%

2.1%

2014

2.1%

1.0%

4.4%

1.2%

2.4%

2.5%

2015

1.5%

3.2%

1.7%

4.0%

2.9%

2.7%

Average 2013-15

2.1%

2.8%

3.2%

2.8%

2.6%

2.5%

Note: These annual increases in base salary reflect the impact of changes in the Public Service workforce structure, occupational mix, movement in staff pay through performance review process or collective bargaining, and the salaries of new and departing staff. It measures the salary change of the Public Service as a whole, as opposed to measuring salary movements for individuals.

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