Tue, 18 Jan 2000

Out of hand

President Abdurrahman Wahid has effectively presented his critics with new ammunition to attack his administration. He has been accused of lacking a proper sense of crisis resulting from his offhand approach to the sectarian conflict in Maluku. Now his critics can claim that he is simply out of touch with reality, or even oblivious. His proposal to hike the salaries of all top state officials by a staggering amount starting as early as April 1 is so unbelievable that one might think it another one of his jokes.

According to leaked state documents which might be unveiled in the President's budget speech on Thursday, the take-home pay of the President would be raised more than 225 percent from Rp 32.9 million to Rp 107.4 million; that of the vice president from Rp 22 million to Rp 89.5 million; and that of Cabinet members from 5.6 million to Rp 44.75 million. To secure a smooth passage at the House, the plan offers to increase the take-home pay of legislators from Rp 5.5 million to Rp 27.65 million, and that of the House Speaker from Rp 6.38 million to Rp 45.5 million.

Even Nurcholish Madjid, a respected Muslim scholar who has previously been supportive of Abdurrahman's often erratic behavior, condemned the President's plan in no uncertain terms. It is not the salary increases, but the degree of these increases that has drawn widespread criticism. Further, this kind of obscene escalation comes at a time when the nation is still reeling from a deep economic recession, and when the government has barely rescued itself from near bankruptcy.

Since the plan was never officially disclosed, but rather leaked by some members of the appalled Cabinet, the government has not fully justified its proposed salary hikes to the public. We expect to hear the details in Thursday's budget speech, but from the limited explanations given so far, including from Minister of Finance Bambang Sudibyo, the reasoning is feeble, if not contentious. Bambang has asserted that the chairman of the Indonesian Bank Restructuring Agency (IBRA), earns much more than himself, although he oversees the chairman's activities. One could deduce then that the IBRA chairman is grossly overpaid, and not that Bambang is entitled to a raise. Another comparison with the earnings of Singapore officials, including Prime Minister Goh Chok Tong, reflects the callowness of those who presented this argument.

The strongest justification for a sizable increase in the salary of state officials and civil servants is to stem rampant corruption in bureaucracy. Few people doubt that corruption is partly, though not entirely, prompted by the extremely low salaries of public sector employees. Civil servants rank among the lowest paid professionals in this country. They deserve an increase, not only to stem corruption, but also to afford them a decent living and to give them fair rewards for their services and dedication. No one would argue against this, but the government's proposal is for increases in structural allowances and not for basic salaries. All signs point to a maximum increase of 20 percent in basic salary. This is a gross insult compared to the 300 to 500 percent increases their bosses are serving themselves.

Low salaries are only one factor contributing to corruption, therefore it is debatable that embezzlement will neatly disappear as a result of public sector pay hikes, even if it is by a hefty amount.

The salary hike proposal has left many unanswered questions, such as how the government intends to pay for the massive increase in spending. The government's budget policy is always a trade-off, and never a win-win solution. To spend more on salaries, the government must simply cut other spending, for example, by reducing subsidies on fuel or food. It might simply borrow the funds, probably from the International Monetary Fund. But finally, such massive increases in public sector salaries and spending will surely have a profound effect on the economy, such as another round of runaway inflation or high interest rates.

As we wait until Thursday to learn the answers to some of these questions when the President unveils the 2000 budget plan, the leaked proposal has caused irreparable damage to the reputation of the President, who has already faced mounting criticism for his failure to stop the violence in Maluku.