The staff of the Office of Personnel Management has sent a report to OPM director Donald Devine saying elimination of 125,000 federal jobs in the fiscal year starting next October would be the only way to effect a desired budget saving if Congress rejects the 5 percent cut in civil service pay sought by the White House.
In a draft of a budget report, which Devine requested but has not yet seen, staffers contend that eliminating the jobs would lead to a savings of more than $3 billion a year, comparable to the savings from the pay cut that President Reagan will propose as part of his federal budget next month. Devine asked the staff to explore options available for making the budget reduction.
Should a job cut of that magnitude go in effect, the Washington area could lose 25,000 of its 347,000 federal jobs. That is eight times as many positions as were eliminated by layoffs during the first 2 1/2 years of the Reagan administration.
The administration says it has trimmed 75,000 nondefense federal jobs since taking office, but that has been offset somewhat by civilian hiring at the Pentagon.
While one OPM spokesman described the proposal as "iffy," federal union leaders reacted angrily, calling it a scare tactic and another in a series of administration attempts to balance the budget on the backs of federal workers.
Government employes are due a 3.5 percent raise starting Jan. 1. Under the president's new budget plan, part of his administration's attempt to reduce the federal deficit, pay would be cut back by 5 percent Oct. 1 and then frozen for three years.
OPM would justify the pay cut proposal by producing new data showing that the job turnover rate in government is much lower than it is in the private sector. The report suggests that the turnover rate, and not pay comparisons, is the real measure of how well federal workers are paid.
A draft report produced by the staff of the personnel agency shows that the "voluntary quit rate" in government -- excluding persons who retire -- is only 3.8 percent. The report says the quit rate is three to four times higher among employes in the private sector.
An OPM official said yesterday that the low federal rate indicates that government pay is equal to or better than pay in the private sector, "and it shows that our people government employes know it and vote to stay in government.
"If your quit rate is high, it means you are paying less than the competition," the official said. "If it is the same as the competition it means your pay is on par. If the quit rate is low -- and ours is very low -- it means you are paying very well."
A 5 percent pay cut followed by three years with no raises would save more than $3 billion each year, according to government budget estimates. The plan is the centerpiece of the administration proposal to slash $13 billion in federal pay and retirment costs over the next three years.
The administration also wants to require government workers, who now contribute 7 percent of their salary toward their pension fund, to pay 9 percent. Both the pay and retirement changes would have to be approved by Congress.
A pay or jobs cut could have serious economic repercussions here, where 14 percent of the federal work force lives and collectively earns about $1 billion a month on a median annual salary of $27,252.
But OPM sources downplayed the proposal yesterday after reports about it were broadcast, and said it hadn't been reviewed by OMP Director Donald Devine.
The proposal was "just one line in a staff report on compensation," deputy director Patrick Korten said. "Don hasn't even seen the report yet, much less signed off on it."
OPM spokesman Mark Tapscott said the jobs cut idea "is not even an option yet. . . . It is a very, very 'iffy' suggestion in a staff report that has not been studied or cleared by anyone in authority here."
Loretta Ucelli of the American Federation of Government Employees, one of the unions representing many of the government's 2.1 million nonpostal workers, charged yesterday that "OPM is saying 'If you don't take the pay cut we will fire 125,000 of you.' " She called the plan "demoralizing" and said it would cripple the government's ability to deliver "quality services to the American people. We the civil servants would look like the bad guys."
Sandra Arnold of the National Federation of Federal Employees said: "This administration long ago abdicated management of the federal work force in favor of a media show," in which it attacks federal employes "to demonstrate a get-tough-with-government image."
If the administration decides to make any job cuts it could do it by ordering agencies to shrink their work forces. But Congress could countermand that by ordering agencies to maintain or even increase the size of their staffs -- as it has done in the past, when the administration tried to cut the Veterans Administration and the Department of Energy.
A spokeman for the Federal Government Service Task Force, the congressional civil service caucus, called the last proposal "really high-stakes poker." He said he assumed that any cuts would be heaviest in nondefense agencies.
"As a practical matter, it doesn't make sense," he said. "They would have to pay severance to employes who are fired, and many would retire, jacking up retirement costs. Those costs would put the plan in the high-rent district."
A federal union official who asked not to be identified said, "This is a pretty strong kind of bluff. In effect, you are telling employes either to take a pay cut or to take a 10 percent hit in some agencies.
"What kind of private-sector enterprise would do that? I think the administration is bluffing. But if they are not, this could produce some very wide, and very serious repercussions -- up to and including illegal wildcat strikes."