Modeling Civil Service Pay & Employment Strategy in East Asia

1. Modeling Civil Service Pay & Employment Strategy in East Asia Using the Civil Service Financial Model: A Rapid but Comprehensive Approach to Civil Service Reform

2. Why does East Asia need civil service pay and employment reform?

3. Most East Asian governments have managed their wage bills well over the last three decades

4. Public sector employment levels have also been relatively well-managed in the region

5. Need to professionalize bureaucracy Need for performance orientation Remedy politicization and clientelism Promote civil service accountability Merit-based recruitment and promotion The crisis highlighted the need for better civil services

6. Tight budgets place greater emphasis on ensuring pay and employment practices result in efficient service delivery Increased political voice, demands for accountability, and emphasis on reducing corruption The crisis has prompted a new look at improved civil service management

7. How do we assess East Asian civil service management?The pace of modernization varies – most countries could do better

9. Given the tight, post-crisis fiscal constraints, progress on civil service management may require pay and employment fundamentals to be adjusted.How can governments navigate a sensible but timely course of reform?

10. The Civil Service Financial Model can provide an essential policy tool for governments wishing to plot a realistic civil service reform strategy Micro functional review to determine staffing and incentive levels in the civil service Macro-analysis to determine appropriate size and costs of the civil service

11. 1 2 3 The Civil Service Financial Model Plugs in desired attributes of future civil service Reconciles with current empirical reality and sets targets Models reform program of costs and timing for reaching goals

12. Anyland: Reform Scenario A Employment – no change Personnel spending as a proportion of GDP increased from 2.25% to 2.75% Salaries – increase to 90% of private sector levels over 10 years

13. Anyland: Reform Scenario B Employment – hiring freeze3% attrition over 10 years Personnel spending as a proportion of GDP decreased from 2.25% to 1.5% Salaries – increase to 90% of private sector levels over 10 years

14. Cambodia Situation Problem Reform options • Low wage bill (1.7% GDP) • Very low average wages (2.5 time less than national minimum wage) • No accurate information on remuneration, placement, skills of employees • Pressure from a certain IFI to contain wage bill • Higher salaries necessary to attract more skilled civil servants • This IFI’s solution: cut employment immediately • World Bank solution: provide targets for salary adjustment, decompression, wage bill envelope and rightsizing options through modeling exercise offering options for different salary increase / rightsizing options

15. East Timor Situation Problem Reform options • New country with no parameters • UN organization acting as interim government • Setting civil service pay and employment rules is an arbitrary exercise • Budget planning and pay and employment assumptions must be made • Determine wage bill envelope • Determine salary scale • Determine staffing numbers • Simulate pay and employment scenarios

16. Government ends up with: • A tool to facilitate policy formulation • A vehicle for dialogue among key stakeholders • Ongoing capacity for pay and employment monitoring