Result-based rewards - leveraging wage increases? the case of danish local government

Abstract

A good seven years ago, as a part of a large-scale pay reform, the Danish public sector introduced results-based rewards (RBR), i.e. a pay component awarded for achieving or exceeding targets set in advance. RBR represent a possibility for combining wage-earners interests in higher wages with a general interest in higher efficiency in the public sector. With RBR, both parties get ?something for something?. Thus it seems as if RBR could be a lever with which to increase wages. However, RBR have not gained ground in the local government. The present paper will discuss several reasons for the very limited use of RBR, illustrated with examples. The Danish experiences should give food for thought, given that pay systems used by the public sector are currently under transformation in practically all OECD countries