Out of hand

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.