Italy: State Fat Cats’ Bonus Bonanza

Published on Corriere della sera english, by Enrico Marro, Marzo 25, 2014 (English translation by Giles Watson).

Impeccably efficient and well worth a full bonus. Despite the best efforts of the then civil service minister Renato Brunetta, almost all public-sector managers in the top two pay bands managed to obtain assessments of more than 90% and pocket a full bonus. The Renzi government will now have to find a way to link earnings to results in its reform of public administration. But it will have to do more than that.  

The new rules will also have to trim the number of managerial posts through job mergers, job rotation and the review of some open-ended contracts, such as those for professors in advanced management training schools where high-flying mandarins can rake in before-tax salaries of more than €300,000. The €500 million saving on 2014 public-sector managers’ pay is one item of Carlo Cottarelli’s spending review that the government has refrained from questioning.

But the commissioner’s report goes beyond targeting salaries that it claims are much higher than the equivalents in the UK, Germany or France (an average of 12.7% higher for the second pay band and 105% higher for the first compared to per capita income in the countries considered). The reform of public administration that the government is scheduled to present in April should make possible cuts in the number of public-sector managers, promote job rotation and lead to reviews of open-ended contracts like the ones enjoyed by professors at advanced management schools where annual before-tax pay can exceed €300,000.

There are about 280,000 public-sector managers in Italy. That means one manager for every 11.5 workers – the figure was 12.3 in 2003 – whereas France has one for every 33 public-sector employees. And Italy’s managers are lavishly paid. Those in the first pay band at tax agencies can earn up to €259,000, or nine times the salary of an average employee. But above all, the reform will have to find a way at last to link pay to results. In 2009 the minister of the day, Renato Brunetta, made an attempt but the mandarins evidently won the day if “almost all [the managers in the first and second pay band - Ed.] obtained an assessment of at least 90% of the maximum level expected (with the exception of social security institutions)” and with it the full bonus comprising the variable part of salary, about 30%. All outstanding managers and all worth a full bonus, whatever the meritocrats might say … //

… (full text).

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