Reform civil service instead of raising pay

Reform civil service instead of raising pay

Nuraida Mokhsen, Jakarta

The government will raise the take-home pay of civil servants
by an average of 20 percent next year. This pay increase,
according to the Vice President, is expected to boost the
performance of civil servants.

Considering civil servants' real income will only increase
slightly, it is very unlikely that this policy will promote work
motivation. Besides, the salary structure is still based on rank.
Such a structure provides no incentive to improve productivity,
as civil servants' ranks have nothing to do with performance.

Currently, monthly basic salaries of civil servants range from
Rp 575,000 (US$ 57) for the lowest rank to Rp 1.8 million for the
highest rank. Those who are appointed to structural and
functional positions also receive position allowances ranging
from Rp 20,000 to Rp 4.5 million. In addition, civil servants
also receive honoraria from many different projects.
Nevertheless, take-home pay of high-ranking officials is still
much lower than those of their counterparts in the private
sector.

With the 30 percent increase, the take-home pay of government
employees with an elementary school background will be Rp
747,500. This is fair enough since it is very close to the
minimum wage for Jakarta. But for most senior civil servants,
with a 7 percent increase their take-home pay will only be Rp
6,741,000, an amount considered still below their real market
value. The rise, therefore, will not have an impact on
performance nor on corruption.

It is a dilemma whether or not to raise the salary of civil
servants. In the fiscal year of 2005, approximately Rp 35
trillion has been allocated from the state budget for salaries
and allowances of central civil servants, police officers,
military personnel and pensioners. In addition, approximately Rp
40 trillion has been set aside by regional governments for
regional civil servants. This means that Rp 75 trillion is needed
annually to pay salaries and allowances of civil servants.

If civil servants' salaries are made comparative to the
private sector, as proposed by Erry Riyana Hardjapamekas, deputy
chairman of the Corruption Eradication Commission (KPK), the
government would need to set aside at least Rp 200 trillion a
year from the state budget. In addition, the government should
also allocate more funds for pensioners, as their pension will
automatically increase. Considering the current state of the
economy, it is highly unlikely that the government can provide
such a large amount of money from the state budget, unless the
number of civil servants is drastically reduced.

Suppose that the government could afford to pay the salaries
of civil servants based on market value, there would be no
guarantee that this would promote civil servants' performance,
for low pay is not the only reason for low work motivation.
Ineffective design of the salary structure and scale has also
significantly contributed to low performance.

Under the current system, monthly salaries are calculated
based on a civil servant's rank and years of service. Rank is
defined based on education and years of service. This means that
the salary level is very much affected by years of service
(seniority). Surprisingly, performance does not have a direct
impact on rank and salary. Every four years one's rank will
automatically move up one step, regardless his or her
performance. Such a practice has discouraged work motivation. Why
should civil servants work hard if colleagues who do not perform
also get the same salaries?

To promote civil servants' performance, the government should
introduce a more systemic and comprehensive civil service reform.
Government functions should be redefined and its structure should
be made more rational and mission-driven. Unnecessary positions
should be cut. Recruitment of new civil servants should be based
on real needs.

All civil servants should be appointed to positions rather
than to ranks. They should have clear job descriptions so that
their performance can be measured objectively and they can be
held accountable for their actions. Recruitment and promotion
should be based on merit and the process should be made
transparent.

Salary structure and scale should be redesigned. It should be
based on job value. Incentives should also be provided for those
who perform well. For this purpose, the government should
reintroduce professional job classifications to the civil service
and perform job evaluations.

Attempts to implement civil service reform have been made by
many agencies at the central as well as regional level. Those
initiatives, however, tend to be partial and sometimes conflict
with each other. This is due to the fact that regulatory
responsibilities for the civil service are fragmented among
various agencies, like the Ministry of Administrative Reform, the
Civil Service Agency (BKN), the National Institute of
Administration (LAN) and the home ministry. Coordination among
central agencies and between the central and regional governments
is poor. As a result, the quality of public services remains
poor.

Without comprehensive civil service reform, the bureaucracy
will remain the same and civil servants will remain self-oriented
rather than public service-oriented. To ensure that the reform is
effective, the President should form a special task force for
civil service reform. This tasks force could be given a mandate
to prepare a grand strategy for civil service reform and
coordinate the implementation of the reform program. This
strategy could be expected to improve coordination, speed up the
process and ensure the effectiveness of reform.

This task force should report directly to the President. Its
members should be selected from those who have genuine knowledge
and experience in this area. In addition, they should also be
strongly committed to reform. They could be recruited from inside
as well as outside the bureaucracy.

The process of preparing and delivering the reform agenda
should be participated in by all relevant parties, including
civil society. By doing so, it could be expected that the
reform's objective, to create an efficient, effective and
accountable civil service, could be effectively achieved.

The writer is adviser for Civil Service, Partnership for
Governance Reform in Indonesia and can be reached at
nuraida.mokhsen@undp.org