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Old Tuesday, April 06, 2010
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Post The need for salary reform

The need for salary reform
By Zubair K. Bhatti

THE country’s civil service is in a crisis: the National Commission for Governance Reforms says so, civil servants say so, many informed citizens say so and now the International Crisis group also says so.

Many factors contribute to this debacle, which is arguably the prime cause of failing social and economic services. Amongst them are rigid salary structures, a bloated public sector, poor performance management, cadre politics, political interference, failing social controls and weak training — all the problems are well-known.

The biggest problem, however, is that key decision-makers get poor salaries. There are some two million civil servants. The majority — peons, clerks, primary and secondary school teachers — are overpaid (compared to the market rate). Many in the middle get their due. But the few thousand high-potential middle and senior managers are grossly underpaid.

The government is aware of this; pay and pension reform committees appear to be in perpetual session. Yet the tinkering proposed — monetisation of benefits, some salary raise — fails to talk about the central issue: that the salaries of some 8,000 managers who constitute the spine of government and take almost all the discretionary decisions must be unshackled from the general civil service salary structure.

The logic of focussing on salary reform for the core group of decision-makers rests on a simple argument: the increased salary of a tax collector, or any other key decision-maker, is an investment that will bring returns in terms of better decisions.

The level of investment required is not all that much. Focussing on 8,000 or so decision-makers requires about Rs6bn a year for special pay ranging from Rs30,000 to Rs120,000 a month. Spread over all five governments, this really isn’t that much money. This will allow merit to be rewarded because most of these officers entered government through the most transparent competitive processes available in the country. Recruitment, retention and morale shall also improve. Furthermore, such reforms would reduce the rigidity of existing cadre politics.

However, challenges abound. First, many citizens are simply not aware of the acuteness of the problem. For example a federal government deputy secretary with some 15 years of service receives a cash income — including house rent — of Rs40,000 per month. A district coordination officer, the chief exec utive of a district who controls billions in development budgets, takes home around Rs30,000 after 10 to 15 years of service. Judges’ salaries have been increased recently, particularly in Punjab, but these — about Rs60,000 for a relatively senior judge in Sindh, for example — are inadequate.

The second challenge is the misconception about perks. Surely, many say, a district police officer or a deputy collector of customs has lots of non-cash benefits. Not so, unfortunately. There is almost no medical care. Housing is scarce in the federal and provincial capitals, Lahore’s famous GORs being the exception rather than the rule.

A vehicle and limited petrol may be available but many in the judiciary or tax services or even the federal government don’t get any during their first decade of service. Subsidised plots, the roundabout way in which army officers get compensated, are now virtually nonexistent on the civil side. Finally these (limited) perks — even if available for certain assignments or to senior civil servants — do not pay for groceries, utilities, school fees or medical emergencies.

The third challenge is a technical issue. There is no benefit in increasing salaries without linking them to performance, argue well-paid donors. Unfortunately, since performance metrics are either unavailable or extremely hard to implement even in developed countries, the demand for decent salaries is lost. This technical argument also ignores the simple point that nobody is asking for fantastic bonuses. The basic demand is, well, quite basic — pay top public-sector decision-makers onefourth (or even less) of what middle-ranking private sector managers make. Lee Kuan Yew, the architect of efficient Singapore, raised salaries first and then asked hard questions.
The fourth confusion is the specious saintly argument: “senior public servants shouldn’t ask for better salaries when the common man is barely keeping soul and body together”. Unfortunately professional organisations, public or private, can’t be built on such holy assumptions. Ask Lee Kwan Yew.

The fifth challenge is the absence of organised constituencies for change. Civil servants should be interested and some are but, on balance, they are more interested in the inertia of narrow cadre interests. Substantial numbers also unfortunately prefer the corrupt status quo. Civil society, the media and donors are either unaware of this central problem and its pernicious effects on overall governance, or aren’t interested in mobilising on behalf of the superior civil services. Serious analysis of the issue in public or donor discourse is either lacking or tends to de-emphasise, like the mostly insightful February International Crisis Group report, the immediate plight of the higher civil service.

The biggest challenge is that no government wants to spend time and energy de-linking key civil servants’ salaries from the other two-million-plus mass. It won’t look good trying to increase the salaries of much-vilified bureaucrats while ignoring other officials such as engineers, teachers or clerks — all vocal, well-organised lobbies. The investment of political capital in any such move would be huge and the returns shall not be immediate and visible, so why bother. And, a rapacious politician may actually prefer a corrupt (and pliant) civil service.
These are overwhelming challenges but the need for focussed salary reform is overwhelming too. Doubters need only consider the following facts: the cash salary of a driver in an international NGO matches that of a district police officer; the all-powerful 55-year-old federal secretary takes home less cash than his recent MBA-graduate son selling soap in a multinational. Something is clearly fundamentally wrong.

The harsh fact is that if we pay peanuts, we’ll attract only apes. Worse, we’ll turn many good men into monkeys.
This sorry situation has to be rectified. If it is not, citizens’ expectations have little chance of being realised, notwithstanding massive investments in heath, education, capacity building or any other reorganisation of public-sector architecture.
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