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Washington, D.C.—In both the public and private sectors, pay-for-performance systems, such as the type the administration is pushing to cover federal employees, have generated a wide range of problems virtually everywhere they have been tried, the leader of the nation’s largest independent union of federal workers said today.

These systems have given rise to a sense of unfairness among employees, to the view that managers have too much discretion over pay and to a fear of management favoritism in pay decisions, said President Colleen M. Kelley of the National Treasury Employees Union (NTEU).

“The serious concerns raised by pay-for-performance systems have yet to resolved,” President Kelley said in testimony before the House Civil Service and Agency Organization Subcommittee. As an example, she cited a General Accounting Office (GAO) study of the shift by the Federal Aviation Authority (FAA) of its pay system to one that is market-based pay-for-performance.

According to GAO, nearly two-thirds of FAA employees interviewed “disagreed or strongly disagreed” that the new pay system is fair to employees, generating a fear among employees that they will not be treated equitably by their managers. “This is the kind of critical issue that must be addressed in any discussion about changing the federal pay system,” the NTEU leader said.

President Kelley set out key threshold requirements for any substantive changes in the way federal employees are paid. Among them:

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Employees and their unions must be full partners in the design and implementation of any such system;

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A pay for performance plan for federal workers must apply only to within-grade pay increases. Annual pay raises and locality increases must continue to prevent federal salaries from slipping further behind private sector wages;

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Congress must provide agencies with adequate resources to implement a pay for performance system. Anything less will doom the system to failure;

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Development and implementation of a performance appraisal system must be subject to bargaining with employees and their unions; and

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Managers must be appropriately trained on how to evaluate employee performance in a fair and unbiased manner—a key step not now being undertaken.

President Kelley added that the federal government is today seeing “the effect of its failure over many years to invest in its most important resource—its employees.” Unfortunately, she said, this administration is continuing that approach in its fiscal 2004 budget by proposing only a two percent pay raise for federal civilian workers.

That proposal “sends the unmistakable message—even to those employees on the front lines of helping secure the nation’s borders—that their work is not as important, not as valued, and not as vital as that of their military counterparts,” President Kelley said. NTEU supports higher military pay, she said, but believes federal civilian employees should receive the same increase as members of the military.

As the largest independent federal union, NTEU represents some 150,000 employees in 29 agencies and departments.