Presented to: Presented by: World Bank Staff Ranjana Mukherjee PREM Knowledge & Learning Week Senior Public Sector Specialist Washington, DC PREM South Asia Region April 19-20, 2007 The World Bank The World Bank
On the one hand … … On the one hand � Governments take on new functions as they modernize � New ministries, departments and agencies are created � Wage expenditure crowds out � public investment programs � O&M of existing resources, affecting service delivery � Unsustainable wage bills come in the way of meeting HIPC conditions Ranjana Mukherjee Page2 Civil Service Reform Course The World Bank
… on the other hand on the other hand … … … � Civil service pay is generally considered lower than that in private sector , see http://www1.worldbank.org/publicsector/civilservice/development.htm � Low pay � discourages talented persons from joining the civil service � Said to encourage corruption � Disincentive for high quality service delivery � If the government can’t hire and pay teachers and health staff, how will human capacity be built? Ranjana Mukherjee Page3 Civil Service Reform Course The World Bank
A ‘ ‘model model’ ’ sustainable wage bill? sustainable wage bill? A Cross- -national comparisons are very national comparisons are very Cross difficult to make … … difficult to make Employees’ compensation as % SAR country Fiscal year of central Gov. expenditure Afghanistan 2005-06 27% Bangladesh 2005-06 17% India 2006-07 4% Pakistan 2005-06 7% Sri Lanka 2005-06 17% Ranjana Mukherjee Page4 Civil Service Reform Course The World Bank
Government employment (1990s) Government employment (1990s) 9 8 7 Percentage of population 3.4 6 5 5.1 4 1.6 2.5 3 1.1 1 2 0.9 0.8 0.7 0.8 0.7 0.3 1 1.8 1.4 1.2 1 0.9 0.9 0 Africa Asia ECA LAC MENA OECD Central Government Local Government Teaching and Health Ranjana Mukherjee From Working Paper Series 1771. Government Employment and Pay in Global Perspective Page5 Civil Service Reform Course The World Bank
What is counted in the wage bill? What is counted in the wage bill? 100.0% Percent of Recurrent Expenditure 90.0% 80.0% Manpow 70.0% er 60.0% Services 50.0% Transfers 40.0% 30.0% Total 20.0% 10.0% 0.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 (budget) Ranjana Mukherjee Page6 Civil Service Reform Course The World Bank
Central Govt.’ ’s wage bill s wage bill Central Govt. as proportion of GDP (1990s) as proportion of GDP (1990s) 12 10 8 % of GDP 6 4 2 0 Africa Asia ECA LAC MENA OECD Regions From Working Paper Series 1771. Government Employment and Pay in Global Perspective Ranjana Mukherjee Page7 Civil Service Reform Course The World Bank
Tracking upward pressures on the wage bill Tracking upward pressures on the wage bill Wage bill = Σ (number of employees) X (each employee’s compensation) Ranjana Mukherjee Page8 Civil Service Reform Course The World Bank
Number of employees: Number of employees: Civil Service size as % of population (1990s) Civil Service size as % of population (1990s) 9 8 7 % of population 6 5 4 3 2 1 0 Africa Asia ECA LAC MENA OECD regions Ranjana Mukherjee From Working Paper Series 1771. Government Employment and Pay in Global Perspective Page9 Civil Service Reform Course The World Bank
Number of employees is affected by Number of employees is affected by � Number of ministries, departments & agencies � Establishment control � Transfer from projects / capital budget � Cross-checking between HRMIS and FMIS � Civil service census � Shape of the civil service pyramid Wage bill = Σ (number of employees) X (each employee’s compensation) Ranjana Mukherjee Page10 Civil Service Reform Course The World Bank
Retrenchment – – one one- -time reduction time reduction Retrenchment rarely successful in core civil service rarely successful in core civil service � Involuntary – soft and hard options � Voluntary – Golden hand shake, expensive � Even when well-funded retrenchment is hard to administer � No recent Bank support for retrenchment and severance in core civil service – only in SoEs � Earlier big-bang retrenchments have resulted in rehiring and avoidable expense Wage bill = Σ (number of employees) X (each employee’s compensation) Ranjana Mukherjee Page11 Civil Service Reform Course The World Bank
Upward pressures on compensation Upward pressures on compensation � Compression ratios & allowances � Inflation indexation � Unions’ negotiation powers � Institutional mechanism for regular review � Defense Ministry Wage bill (outside Bank scrutiny) Wage bill = Σ (number of employees) X (each employee’s compensation) Ranjana Mukherjee Page12 Civil Service Reform Course The World Bank
Compression ratios affect wage bill rise Compression ratios affect wage bill rise from allowances from allowances Assumed distribution of civil servants: 85% in unskilled / low skilled jobs, 10% in technical / middle; 5% in managerial Wage Bill after Compression Wage Bill $20 wage Wage Bill increase Ratio increase to all 1: 3: 5 140 160 14% 1: 5: 10 185 205 9% 1: 7: 15 230 250 8% Starting compensation: $100 for un / semi –skilled, $300 for middle level; $500 for top level managers Ranjana Mukherjee Page13 Civil Service Reform Course The World Bank
Civil Service distribution among levels Civil Service distribution among levels affects wage bill rise from allowances affects wage bill rise from allowances Wage Bill increase Compression Allowance / Distribution Distribution Ratio raise to all 85 - 15 - 5 70 - 20 - 10 1: 3: 5 14% 11% 1: 5: 10 $20 to everyone 9% 7% 1: 7: 15 8% 5% Ranjana Mukherjee Page14 Civil Service Reform Course The World Bank
Civil Service Pension – – Civil Service Pension closely related to the wage bill closely related to the wage bill � Attractive incentive for civil servants – alongside job security � Pay as You Go from current revenues � Trends in Pension Reform � Reduce pension liability � Advance funding or cost sharing with employees � Pension portability � http://www1.worldbank.org/publicsector/civi lservice/pension.htm Ranjana Mukherjee Page15 Civil Service Reform Course The World Bank
Q&A Q&A Ranjana Mukherjee Page16 Civil Service Reform Course The World Bank
Recommend
More recommend
