Pay of public servants

The following are excerpts from the budget speech of our Minister for Finance, who also happens to be the Minister for Planning: “We need a forward-looking, efficient, honest and modern civil service respectful of the needs of people in general . . . we will promote civil servants on the basis of merit and efficiency.” These indeed sound very comforting to us as the descriptors “efficient,” “honest,” “modern,” “respectful,” and “meritorious” are not lately used as attributes of our bureaucrats. When a Finance Minister also has the Planning portfolio, we can presume that the budget the government presents, is not only a ledger book of earnings and expenses but also an explicit depiction of the government’s plans that will follow through to realize the objectives set in the national budget. Therefore, subsequent scapegoating for a widening fissure between plans and objectives does not remain an option.

Plans for our civil servants in the budget
From the budget, we learn that the government is considering the formation of a pay commission to determine a new pay scale for public servants to be implemented by January 2005. In view of the increased cost of living, the government is trying to refix pay scales of the officers and employees of the government and autonomous bodies. This new pay scale will be implemented after evaluation of the recommendations made by the pay commission, which is going to be formed by July 2004.


Understanding the absurdity of the existing payment status, the current government started taking some meager measures from last year. In his last budget speech in June 2003, the Finance Minister announced a 10 percent dearness allowance for all government employees effective from July 1, 2003, until their salaries are restructured. An amount of Tk 700 crore was allocated in the budget to cover the allowances. As an interim measure this year, the Finance Minister proposed to raise the medical allowance of all government employees from Tk 300 to Tk 400 per month with effect from July 2004. He also proposed to offer one festival allowance equivalent to net monthly pension from the next fiscal year to all retired government servants.


Our oversized bureaucracy
From the UNDP reports, we know that our public employment (in civilian government comprising state-owned enterprises, ministries, departments, directorates, and autonomous bodies) grew at an annual rate of 3.6 percent to almost 1 million in 1992, after which it has remained nearly steady. The nearly 1 million government employees make one-third of all formal sector employments. If we compare the size of our government with some of our neighbors, we find that total government employees as a percentage of the labor force are 6.2 for Bangladesh, whereas for India it is 4.5 percent, and for Pakistan, it is 1.7 percent. We undeniably have an over-sized government. Unless the private sector flourishes, this sector will have to absorb most of our emergent workforce. If the bulk of bureaucracy remains so enormous, the government cannot pay them a generous salary because we simply cannot afford it.

Graft and low wage
The existing poor pay structure has been widely believed to nourish the widespread corruption customary to our bureaucracy. Transparency International reported that the Bangladesh government had to incur a financial loss of around Tk 600 crore because of 216 cases of corruption in the first six months of this year. Among those involved in corruption, 63.3 percents were government officials and staff, and 12.9 percent were elected representatives and political leaders and activists. In 35.9 percent of the cases, misuse of power was the major method of corruption followed by bribery (20.4 percent).


The poorly paid government employees turn to graft as an easy source to “balance” the family budget. Some employees are often tempted to accept favors to the detriment of our natural wealth and national economy.


Is it cheaper for us, in the end, to pay a higher salary to our civil servants than to incur the huge burden of financial corruption? How much should we pay our civil servants that will work as filters and dispirit them from being corrupt? The government is in search of an acceptable compensation schedule, which will nevertheless let our public servants meet their physiological and safety needs in Maslow’s Hierarchy of Needs; let us forget about their upper-level needs of Esteem and Self-Actualisation for now.


Our underpaid policymakers
We all are very familiar with how little our civil servants, ministers, elected representatives, and judges get paid. Some of them whine that the private sector pays way higher than what the government pays. Let’s have a look at the prevailing salary structures in the public and private sectors in the US and Canada.

In the US, the President gets $400,000 a year, the Vice President, House Speaker, and the Chief Justice get $198,600, Justices receive $190,100, Majority/Minority Leaders get $171,900, Circuit Judges get $164,000, Senators and Representatives receive $154,700, and District Judges get $150,700.


Corporate Ameroca pays its CEOs exorbitantly. The median salary for a typical Chief Executive Officer in the US is $541,166. An example of a corporate star would be the CEO of Colgate-Palmolive, who gets a cash compensationÊof $1.7 million per year, with a bonus it becomes $10 million. He also has a stock options plan valued at $156 million.


The Canadian Prime Minister gets an annual salary of $262,988; whereas, in the private sector, the CEO of Air Canada gets $1.66 million, and the CEO of Bank of Nova Scotia gets $1.35 million annually.


The difference in payment between public and private sector employees is ubiquitous everywhere (except the communist states). Bangladesh civil servants have to realize and accept this fact of the market economy. Comparing and contrasting their pay structure with that of the private sector will only aggravate their agony and anguish. But, as we see, the pay structure in North America is such that the public sector officials can live a decent life. Our civil servants rightfully deserve a reputable salary.

A slim but functional bureaucracy
There is a valid cause for envy and demoralization among our civil servants about their current pay structure. This wage, especially for the third and fourth-class employees, is often below the poverty-line requirement. The schoolteachers who educate the masses of our children and the policemen with the risk and hazard attached to their work receive compensation not commensurate at all to their duties and responsibilities. Our civil servants retire only at age 57. Most of them can neither complete raising their kids nor can they save enough for their retired life by then. Therefore, most become job hunters again.

The budget has set aside Taka 200 crore to fill-up most essential vacant posts next year. Rather than enlarging further our jumbo bureaucracy, we should focus more on retaining fewer people but start paying them better. If one of the poorest countries in the world can allocate Taka 4,416 crore for its defense forces, it can certainly pay its civil servants a little more.


The government and the pay commission should adopt an open and transparent policy of compensation for civil servants based on just standards. If raising the pay structure can improve productivity and reduce the extent of corruption to some degree, the financial gains from that will be enough to cover the higher costs incurred by a superior pay scale. The commerce and finance ministry should also ensure that a pay rise in no way spike a price spiral in the market, and eat away the better quality of life, we are to promise our civil servants through this new pay schedule. The real struggle is how not to let the cost of living ascend as a consequence of any elevation in compensation.


Hasanat Alamgir

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