1. May 29, 2003Below the Surface of the Civil Service Wage Bill1 How much are we paying to be served? Components of Civil Service Pay

2. May 29, 2003Below the Surface of the Civil Service Wage Bill2 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

3. May 29, 2003Below the Surface of the Civil Service Wage Bill3 Central government wage bill as percentage of GDP

4. May 29, 2003Below the Surface of the Civil Service Wage Bill4 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

5. May 29, 2003Below the Surface of the Civil Service Wage Bill5 Wages and Salaries Expenditure of different levels of government

6. Who are we talking about?

7. May 29, 2003Below the Surface of the Civil Service Wage Bill7 General government employment as % of population

8. May 29, 2003Below the Surface of the Civil Service Wage Bill8 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

9. May 29, 2003Below the Surface of the Civil Service Wage Bill9 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

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. May 29, 2003Below the Surface of the Civil Service Wage Bill11 Allowances can lead to significant wage distortions

12. May 29, 2003Below the Surface of the Civil Service Wage Bill12 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

13. May 29, 2003Below the Surface of the Civil Service Wage Bill13 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

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. How are they rewarded? personal emoluments total compensation