Civil Service Modeling: Simplifying the Complexities of Civil Service Pay and Employment
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Civil Service Modeling: Simplifying the Complexities of Civil Service Pay and Employment. Why Model?. Two Dominant Approaches to Civil Service Pay and Employment Reform. Macro-Analysis: The Meat-Axe Approach? 2. Micro-Review: The Bean-Counting Perspective .

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Civil Service Modeling: Simplifying the Complexities of Civil Service Pay and Employment

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Why model l.jpg
Why Model? Civil Service Pay and Employment


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Two Dominant Approaches to Civil Service Pay and Employment Reform

  • Macro-Analysis: The Meat-Axe Approach?

    2. Micro-Review: The Bean-Counting Perspective


Macro analysis to determine appropriate size and cost of civil service l.jpg
Macro-Analysis to determine appropriate size and cost of civil service

  • How it works:

    • Gross criteria to gauge nature and extent of reform needed

    • (Wage bill/GDP; government employment per capita; salary compression ratios, public-private wage relativities)

  • Pros and Cons:

    • Broad-brush reform guidance but over-simplified basis for government policy and lending terms and conditions


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Micro-Reviews (Functional Analysis) to determine staffing and incentive levels

  • How it works:

    • Bottom-up scrutiny of individual organizational units’ objectives, tasks, and resource requirements

  • Pros and Cons:

    • Accurate picture of on-the-ground reality

    • Inconsistent methodology – wide variability in quality

    • Hard to do – takes forever

    • Difficult to sum up parts: challenge to build coherent civil service strategy for whole based on micro- unit-based details


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Both approaches left big problems un-addressed and incentive levels

  • Low Government Policymaking Capacity for CSR

  • CSR-P&E Reality Hopelessly Complex

    • Competing Sectoral Considerations

    • New Wrinkles: Decentralization

    • Conflicting Government Objectives (Social Welfare vs. Fiscal Prudence)

  • Flimsy Empirical Basis to Donor-Country Dialogue (Discussion often on different pages)


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What is the CS-P&E Model? and incentive levels

Civil service modeling as middle-range analytic tool to bridge gap in existing approaches

  • Uses country customized data to render the key attributes of current P&E situation

    • Pay and grading arrangements

    • CS employment numbers

    • Sectoral/ministerial geographical particulars

  • Establishes reform objectives and parameters–“Five-year CSR vision”

    • Wage bill envelope

    • Compression ratio and salary levels

    • Public-private relativities


What is the cs p e model8 l.jpg
What is the CS-P&E Model? and incentive levels

Civil service modeling as middle-range analytic tool to bridge gap in existing approaches

  • Simulates reform options – calculating and demonstrating costs of alternative policy measures

    • assumptions about timing and extent of retrenchment or retirements

    • implications of different levels of pay raises

    • altering sectoral employment levels (teachers, health workers)


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The Joys of the Model and incentive levels

  • Provides governments with hands-on tool for plotting realistic reform strategy with concrete targets

  • Sorts out wheat from chaff – focus on big picture

  • Raises level of dialogue with donors (and donor understanding of issues)

  • Helps policy makers combat special pleading of sectoral interests


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The Woes of the Model and incentive levels

  • Cannot (should not) render all detailed characteristics of individual country CS reality (Trade-off between simplicity/clarity and accuracy)

  • Garbage in-Garbage Out (Poor data mean targets may be off)

  • Cannot make hard decisions for policy makers

  • Haven’t dealt with some critical issues (pensions variables hard to incorporate)

  • Cannot replace good establishment management systems (HR database, tight payroll controls, etc.)

  • Cannot provide detailed information for reform implementation (for retrenchment; severance package design, etc. – consultancy needed)


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East Asia Experience and incentive levelsPilots in 6 Countries: Capacity Building Grant from ASEM

Cambodia

Timor Leste

Philippines

Mongolia

Indonesia

Thailand


Cambodia the situation l.jpg
Cambodia: The situation and incentive levels

  • Wage bill low by international comparators (US$ 52.4 million, 1.7% of GDP in 1999), but revenue projections missing targets set by Fund

  • Very low average wages (4 times less than national minimum wage) and very compressed from top to bottom, 2:1

  • Census being carried out, but meanwhile no accurate information on numbers, placement, skills of employees

    • estimated 164,000 civil servants (14 civil servants per 1000 population)


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Cambodia: The problem and incentive levels

  • Pressure from Fund to maintain wage bill

  • Higher salaries necessary to attract more skilled civil servants

  • Fund’s solution: cut employment immediately (yesterday), but clueless about how much

    • arbitrary target of 15%, allowing across the board 10% wage increase

  • Our solution: provide targets for salary adjustment and decompression, wage bill envelope, and rightsizing options through modeling exercise over several months


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Cambodia: Reform options and incentive levels

  • Raise salaries, but keep wage bill constant, by retrenchment (see chart on costs of employment)

  • Different degrees of salary increases will mean different retrenchment imperatives


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East Timor: The Situation and incentive levels

  • New country with no parameters -- wage bill envelope, salary scale, numbers and types of civil servants (and functions and structures) all still to be determined

  • U.N. organization acting an interim government

    • setting wage precedents with its own staff

    • setting up structures, rules and budgets over next few fiscal years, with various binding consequences for East Timorese government when constituted 2002-3.

    • donor group meeting in Lisbon end-June to determine East Timor’s immediate future


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East Timor: The Problem and incentive levels

  • With little private sector activity, fluctuating prices and fluid labor market -- and invasion of expatriate assistance -- setting civil service pay and employment rules is an arbitrary exercise


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East Timor: Reform options and incentive levels

  • Budget planning assumptions

    • GDP conjectured at pre-ballot levels (US$ 300 million)

    • Revenues (donor-funded and later own-sourced) 15% of GDP

    • Expenditures set even with revenues (US$ 45 million)

  • Pay and employment assumptions

    • Employment 15,000 (about half of Indonesian civil service in East Timor province)

    • Wage bill 65% of total expenditure (high by international standards)

    • Salary scale -- only information on basic wage from cost of living study

    • Compression ratio of between 4:1 and 7:1


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East Timor: Short to middle-range approach and incentive levels

  • Determine salary scale

    • using Indonesian comparators

    • find reservation wage for benchmark jobs through quick and dirty comparator pay survey

    • cost of living study for living wage

  • Determine wage bill by affordability and international comparators

  • Try to match up rough functions and structures and staffing

  • Use above and international comparators to determine staffing numbers

  • Simulating future civil service pay and employment scenarios (Australian Dept of Finance providing assistance for modeling exercise)


Results l.jpg
Results and incentive levels

Cambodia

  • Govt. and donors on same page (single sheet)

  • Govt. proposed better – though not satisfactory – P&E strategy

  • Pinpointed analytic work agreed upon

  • Bank placing CSR at center of PRSC


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