How much are we paying to be served?

1. How much are we payingto be served? Components of Civil Service Pay Below the Surface of the Civil Service Wage Bill

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 Below the Surface of the Civil Service Wage Bill

3. Central government wage bill as percentage of GDP Below the Surface of the Civil Service Wage Bill

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/civilservice/subnational.htm Below the Surface of the Civil Service Wage Bill

5. Wages and Salaries Expenditure of different levels of government Below the Surface of the Civil Service Wage Bill

6. Who are we talking about?

7. General government employment as % of population Below the Surface of the Civil Service Wage Bill

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 Below the Surface of the Civil Service Wage Bill

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 Below the Surface of the Civil Service Wage Bill

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 Below the Surface of the Civil Service Wage Bill

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/civilservice/pension.htm Below the Surface of the Civil Service Wage Bill

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 Below the Surface of the Civil Service 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. total compensation personal emoluments How are they rewarded?