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Washington, D.C.— The shrinking long-term budget surplus reported by the administration in its mid-session budget report puts into sharp focus the need to establish priorities, and there should be no more clear national priority than paying federal employees a fair and competitive wage, the leader of the nation’s largest independent union of federal workers said.

Otherwise, said President Colleen M. Kelley of the National Treasury Employees Union (NTEU), “there is no way, over the long term, that the legitimate needs of the American people can be met by federal agencies that are having an increasingly difficult time in recruiting and retaining the skilled employees they need.”

Kelley was sharply critical of comments by Office of Management and Budget (OMB) Director Mitchell Daniels, at a press conference accompanying release of the budget report, that the administration is standing by its proposal for a 3.6 percent pay raise for federal civilian employees in 2002.

A 3.6 percent raise “is inadequate, inappropriate and unwise,” Kelley said. NTEU has been the leader in pressing for higher pay for federal workers as the key to recruiting and maintaining an effective work force. The union also has been leading the fight for continued military-civilian pay parity; the administration has proposed a military pay increase next year of at least 4.6 percent, a full percentage point higher than its proposal for the civilian work force.

“The administration can maneuver and interpret the numbers in any number of ways,” Kelley said, “but the fundamental truth remains the same. The public is going to be deprived of the quality services it wants, needs and deserves because we are paying far too little attention to recruitment and retention issues in federal service. This is the wrong path.”

Kelley emphasized that “all signs point to a human capital crisis” in federal service, including the fact that as many as 53 percent of federal workers will be eligible for regular or early retirement over the next few

years, and the increasing turnover in a variety of agencies caused by employees lured to the private sector by sharply higher pay levels.

As further evidence of the impending problems, she pointed to the General Accounting Office (GAO) report placing the entire federal government as an employer on its “high-risk” list, a step usually reserved for government agencies and departments with the most serious problems.

NTEU represents some 150,000 employees in 25 agencies and departments.