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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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two dominant approaches to civil service pay and employment reform
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
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
micro reviews functional analysis to determine staffing and incentive levels
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
both approaches left big problems un addressed
Both approaches left big problems un-addressed
  • 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)
what is the cs p e model
What is the CS-P&E Model?

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
What is the CS-P&E Model?

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)
the joys of the model
The Joys of the Model
  • 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
the woes of the model
The Woes of the Model
  • 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)
east asia experience pilots in 6 countries capacity building grant from asem
East Asia ExperiencePilots in 6 Countries: Capacity Building Grant from ASEM

Cambodia

Timor Leste

Philippines

Mongolia

Indonesia

Thailand

cambodia the situation
Cambodia: The situation
  • 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)
cambodia the problem
Cambodia: The problem
  • 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
cambodia reform options
Cambodia: Reform options
  • 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
east timor the situation
East Timor: The Situation
  • 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
east timor the problem
East Timor: The Problem
  • 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
east timor reform options
East Timor: Reform options
  • 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
east timor short to middle range approach
East Timor: Short to middle-range approach
  • 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
Results

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