Does small salary affect employees' productivity?

Does small salary affect employees' productivity?

JAKARTA (JP): Many people's view of civil servants is that of someone who chats with colleagues or on the telephone in a crowded room with the radio blaring, while those who need their help patiently queue outside.

They blame their small salaries for their slow and bureaucratic attitude. The secret to getting quick and adequate service is 'uang pelicin' (bribe).

"The quality and productivity of civil servants isn't that bad actually, it's their inadequate salaries that has led them to commercialize their positions by complicating their jobs," said noted economist Kwik Kian Gie. "If we are willing to bribe them, they will provide us with excellent and quick service. Some of them are even willing to break the law as long as we pay them."

For idealists who refuse to pay bribes, everything becomes difficult and inefficient.

"The result is a high cost economy," Kwik noted.

Low salaries are also the reason for the poor quality of human resources in the government's administration.

"The nation's best workers undoubtedly prefer to work in the private sector, where remunerations are higher," said economist Arsjad Anwar.

"From my observations, many highly qualified people opt to work for private companies. The government has problems recruiting the best university graduates because it cannot match the salaries offered by private companies," the economics professor at the University of Indonesia said.

The business sector's rapid growth in the 1980s, robbed civil servants of the prestige they enjoyed in 1960s and 1970s. The only remaining advantages of a government job are guaranteed life time employment and a secure pension plan.

Many cabinet ministers have also complained about the brain drain from the government sector to the private sector in recent years.

Arsjad admitted that he had never researched the issue and could not ascertain the gap in salary levels between the private and public sector. He said, however, that he knows that the gap is disturbingly wide, especially for highly qualified people.

An article on Human resource development and management in Indonesia written by Mari Pangestu and Mayling Oey-Gardiner in The Indonesian Quarterly XXI no.4, 1993, said that in 1989, only 11 percent of Indonesia's civil servants had at least a bachelor's degree.

"As a result, the administrative capacity of the government is seen to be weak and, in fact, has been in the past and continues to be, a major burden on enacting government policy in an efficient and transparent manner that will minimize the cost of doing business," the report stated.

Arsjad also argued that an increase in salaries would eliminate embezzlement, corruption and other forms of malpractice in the administration.

Director General of Budgeting of the Ministry of Finance Darsjah was quoted by the Kompas daily as saying that it is impossible to drastically raise civil servants' salaries because of limited government funds.

The government spends Rp 17 trillion (US$7.72 billion) a year on the salaries of the 4.5 million civil servants and members of the Armed Forces. An extra Rp 800 billion, 7.5 percent, is allocated for various allowances.

With the recent 10 percent raise announced by President Soeharto in the draft budget for the 1995/1996 fiscal year, the government must add at least Rp 1.7 trillion to the sum.

"It is a big amount because besides the salaries, we have to finance development as well," Darsjah said.

Economists agree, however, that salaries aren't the only factors affecting productivity and efficiency.

"I'm afraid the connection between salaries and quality of work is not that straightforward," said Hadi Soesastro of the Center for Strategic and International Studies.

Mari Pangestu, also from thee center, who has said that the recent 10 percent raise was merely an adjustment to last year's inflation of 9.24 percent, said the question of productivity relied more on management.

"If we want to improve productivity, do it according to a management's rule: there should be an incentive. It doesn't have to be money, it can be a promotion or just recognition," she told The Jakarta Post, adding that normally a raise in salary is given only if productivity increases, not the other way round.

Pangestu and Oey-Gardiner say in their article that besides providing adequate compensation, ongoing training to improve human resources is also paramount.

Arsjad suggested the government cut the size of the civil service and draw up exact job descriptions for each employee to promote optimal efficiency and productivity.

"I support the idea. The government should reduce the number to those who are capable and are really needed. Then salaries should be raised," Kwik said.

Cutting the number is not that simple, argued Pangestu.

"We have to simplify all the regulations, computerize and study which fields can be handled by the private sector," she said. (hdj/pwn/als)