How much are we paying to be served

1
How much are we payingto be served?

• Components of Civil Service Pay

2
Why worry about this ?

• During 1970s and 80s, wage bills ballooned as
  governments took on new functions, and new
  ministries, departments and enterprises were
  created
• Now, governments need to downsize. At the same
  time they need to hire more teachers, doctors,
  and nurses
• Civil servants are paid from public funds. So,
  their wages need to be
• Transparently set
• Fair within the civil service

3
Central government wage bill as percentage of GDP
4
Wages Salaries for Sub-national governments

• Sub-national  employment is often over 50 percent
  of the total in federal counties
• Services key for poverty alleviation are
  delivered and managed by sub-national
  administrations
• Worldwide trend of greater administrative
  decentralization
• See http//www1.worldbank.org/publicsector/civilse
  rvice/subnational.htm

5
Wages and Salaries Expenditure of different
levels of government
6
Who are we talking about?
7
General government employment as of population
8
Base pay

• Step-like structure
• Usually uniform across government for a
  particular level
• Raises/ increments in pre-determined amounts
  depending upon seniority / merit
• Subject of bargaining between employees unions
  and government
• Cited to compare wages in public and private
  sectors

9
Allowances

• Purpose is to encourage employees to accept
  positions in remote / hardship areas, or accept
  additional /difficult / risky tasks
• Taxed when paid in cash, not when paid in kind
• Proportion in total compensation

10
Keep in mind

• in OECD base pay is rarely below 90 of personal
  emoluments
• allowances in developing countries can be very
  high
• allowances not always easily traceable in the
  budget
• intangible benefits can be significant

11
Allowances can lead to significant wage
distortions
12
Pension

• Attractive incentive for civil servants
  alongside job security
• pre-dates the establishment of national social
  security schemes for private sector workers
• Benefits are usually paid from general revenues,
  raising government consumption
• Rising, in our client countries-
• ratio of pensioners to covered employees
• liberal early retirement programs to reduce wage
  bill expenditures
• Trends in civil service pension reform
• Reduce liability
• Cost sharing with employees
• Pension portability
• See http//www1.worldbank.org/publicsector/civilse
  rvice/pension.htm

13
PAKISTAN Contribution of allowances to the total
wage bill

• Aggregate wage bill highly sensitive to changes
  in allowances
• 10 increase in the 3 major allowances amounts to
  2.5 increase in the aggregate wage bill

14
The advantages and risks of modeling pay options

• Advantages
• Bring rigor
• Allow government to "answer back
• Risks
• Can imply a spurious precision
• Can make it look too easy
• Do not take into account future pension costs.

15
How are they rewarded?