CBO
TESTIMONY
Statement of
James L. Blum
Deputy Director
Congressional Budget Office
on
Reducing The Size of the Federal
Civilian Work Force
before the
Subcommittee on Civil Service and the
Subcommittee on Compensation and Employee Benefits
Committee on Post Office and Civil Service
U.S. House of Representatives
February 1, 1994
NOTICE
This statement is not available for public release
until it is delivered at 10:00 a.m. (EST), Tuesday, February 1, 1994.
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Madam Chair, Mr. Chair, and Members of the Subcommittees, I appreciate
this opportunity to discuss voluntary separation incentives and the restructuring
of the federal work force. Last week, the Congressional Budget Office (CBO)
released a study, Reducing the Size of the Federal Civilian Work Force, that examines three standard approaches to reducing employment--hiring
freezes, layoffs, and early retirements. My testimony today will review
the highlights of this study. Our major findings were:
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Permanent cuts in staff will always save money by reducing the continuing
costs of government. The relative cost advantages of different approaches
to cutting staff, however, depend on the period of time considered. Also,
arbitrary or across-the-board cuts may cause backlogs and delays in providing
needed services and could leave the government with little in the way of
savings.
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The costs of various approaches to cutting staff may not be a paramount
concern. In addition to costs, agencies engaged in cutting employment must
be concerned with ensuring fairness to employees, preserving needed skills,
and preventing increases in average salary.
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With careful management, agencies can accommodate personnel reductions
of several percent a year by relying on a partial hiring freeze with only
a modest level of layoffs. If reductions are large or highly concentrated
in time or by occupation or region--as could be the case under current
budgetary constraints and the reductions proposed by the National Performance
Review (NPR)--agencies would probably find it harder to reduce employment
without laying off more workers. In these cases, separation incentives
could help to avoid layoffs.
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