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April of last year marked a new era for public sector services in the UK as the government seeks to address the deficit and reduce the cost of its public sector workforce. Traditional entitlements for public servants have been heavily scrutinised in a way not seen in the last decade with the announcements of job losses, pay freezes and reduced pension provision.

The traditional lure of job and financial security within the civil service is a focal point of public sector worker discontent and is at the heart of what is known as the psychological contract. This is best explained as a series of unwritten and unconscious reciprocal expectations that the employee and employer have of each other.

For example, an implied (though unofficial) agreement may exist whereby in exchange for diligence and loyalty, an employee may feel assured in his or her job and financial security. It has been suggested that public sector workers often have stronger psychological contracts, placing greater emphasis on long-term involvement and fair treatment, than their private sector counterparts.

But what happens when the employer does not fulfil its end of the bargain? If an employee recognises that the employer’s actions are inconsistent with its obligations, then this breach of the psychological contract has a severely detrimental effect on the employee’s attitudes and behaviour. Research has shown that violating the psychological contract can lead to a lack of trust in the employer, lower performance levels, reduced desire to remain in the organisation and decreased employee satisfaction.

These types of reactions, however, can be moderated by how much procedural justice employees perceive there to be in the organisational restructuring. That is to say, they will be less likely to react negatively to changes in psychological contracts if they are able to attribute the breach to a legitimate need and that the process of implementing the changes was fair. So, the extent to which employers consult with their staff and not simply communicate the changes in employment arrangements will, in large part, influence their employees’ morale and behaviour following any restructuring process.

Unfortunately, of the 330,000 jobs expected to be cut in the public sector, one key area of staff reductions is likely to be managerial posts and in particular senior managers. Potentially it could be an over-stretched and under-qualified pool of public service managers, with little experience dealing with the costs of cuts and redundancies that will be left with the task of delivering to a high standard, whist morale is low.

It will be vital for public service employers to effectively manage change within their organisations. In the long term, reduced commitment to the employer, resulting from a breach of the psychological contract, could lead to difficulty in retaining skilled employees internally. Further difficulties will lie in recruiting talented individuals externally. Bear in mind, these changes are occurring within a wider series of austerity measures such as the substantial increases in university tuition fees. I suspect young people’s career intentions to be further shaped unfavourably against opting for work in the civil service as graduates abstain from low paying public service jobs for higher paying positions in the private sector.

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