1. Budget Community of Practice Working Group on Public Sector Wage Bill Management Update on Progress Maya Gusarova, Public Sector Specialist and member of BCOP Resource Team, World Bank

2. Background and Objectives  Wage Bill WG operated for three years since the fall of 2013  In FY14 the key objective of the Working Group in FY14 was to review and learn from the findings of the World Bank study on public sector wage bill management.  In FY15-16 activity plan was driven by demand of the Working Group members to learn from international experience on a number of specific critical issues in pay policy and wage bill management.  FY16 – last year of WG operation

3. Membership and Resource Team  Core members - Albania, Armenia, Belarus, Bosnia and Herzegovina, Croatia, the Kyrgyz Republic  Since FY15 – Moldova  Since February 2015 - Uzbekistan, Georgia, Kazakhstan, Serbia and Ukraine joined the WG  Core Resource Team - Maya Gusarova, Public Sector Specialist (mgusarova@worldbank.org) and Zac Mills, Governance Specialist (zmills@worldbank.org)mgusarova@worldbank.orgzmills@worldbank.org

4. Issues and Tendencies in PEMPAL countries Although the countries managed to cope with an expanding wage bill as % of GDP after financial crisis of 2008, the wage bill kept growing as % of expenditures in the majority of countries. Control of the aggregate wage bill is strong due to centralized establishment control (civil service), but control over staffing in public sector organizations outside civil service is more complex and poses challenges for planning wage bill expenditures. Key vulnerabilities are identified in pay structures and pay setting policy. Specifically, the following tendencies were identified: In civil service: high proportion of civil service salary comes from variable part, making salary less transparent and pay policy difficult to set and manage, and in some countries pay is still too compressed. In public sector organizations: reliance on single salary grid in public sector organizations; limited use of performance pay.

5. Learning Activities Delivered 8 learning events organized: Managing the public sector wage bill – Achieving Sustainability, Maintaining Performance, World Bank Workshop: Managing Public Sector Wage Bill Expenditure, May 2014, Moscow Customized Wage Bill Forecasting Models to Manage Policy Options, World Bank Improving Government Performance through Pay Flexibility in the Civil Service: Main Findings from a Multi-Country Study, World Bank Improving HRM efficiency in the public sector in Central America countries, IADB Automated personnel expenditure system in Turkey, Turkish MoF Wage Bill Management in Kyrgyz Republic, World Bank and KR MoF Wage bill management and pay reforms at the sub-national level in Croatia, Croatia MoF

6. Activities Planned Study visit on public sector pay reforms in Slovenia, 13-16 April, 2016  Public pay policy and reforms  Staffing policy and management  Planning wage bill expenditures and payroll management including IT solutions for payroll management  Approaches to retaining highly skilled employees  Performance pay

7. Learning Resources Presentations from events are available at http://www.pempal.org/event/budget/ More information is available at BCOP wiki at Refer your questions to Maya Gusarova at mgusarova@worldbank.orgmgusarova@worldbank.org