A Public Salary Raise Based on Priorities

At the presidential opening statement of the joint session of the House of People’s representatives (HPR) and the House of Federation (HoF), covered and long list of social, political and economic ills, flickering light on the priorities of the state.

One big agenda he raised concerning the living standards of civil servants and the salary scale revisions made for teachers at an average of 40pc raise earlier this year. He also made clear that the year will see a new scale intended to link the public sector and the development of the country, taking into account the inflation rate in recent years. The year is also said to see a pilot study of reform and career grades to be completed by the middle of the year.

With the first quarter gone now, the executive has not pushed its tabled agenda to the public. The issue addressed weakly on the Parliamentary session two weeks after the President’s speech, is now facing the danger of being underplayed by the executive. It is highly important that conversation among experts and the public servants be made at different levels to do away with the potential dissatisfaction which will leave all sides at a loss, a zero sum game.

It is also critically important that the salary raise or revision alone would not bring about substantial change to the quality of civil service. As it unfolds now inefficient and corrupt administrative wing and incapable bureaucratic capacity that has led to anger and frustration and public protests for almost a year.

The government, still the biggest employer with 1.4 million people makes 3pc of the work force and stands timid in the face of the growing private sector which absorbs 1.6pc. Despite the significant numbers of workforce the public sector provides, the remuneration and career ladder is much more promising in the private sector. A case in point, the banking sector, a relatively infant industry that absorbs a workforce of 60,000 employees pays an average of over eight thousand as an average salary , a fivefold higher than the public sector’s average pay of a little over 1500.

While every Ethiopian has a role in the evolution of the country, there has been no bigger actor than our public servants. The Public service is vital to the progress and it should continue to be a sacred profession. It should ideally be able to attract the best and motivated ones to it. The state should put the issue not out of pity of their compromised situation, or charitable gesture but as a nation that invests in its best. No public servants should be in a position of despair while serving his or her country.

In such a setting where the skilled labour force migration is a natural phenomenon, hitting the capability of the public domain. Retaining the skilled ones and hiring the competent new ones demands a salary and benefit package revision, while making the working environment more permissible and bureaucrats friendly.

Civil service reforms projects with millions of budget from the Business Process Reengineering (BPRs), Balanced Score Cards (BSC) of capacity building, and the Japan inspired streamlining services Keizen by Ministry of Public Services and Human Resource Development have all failed short of the desired revamp in the public service.

Primary focus has to be given to the public servant is ensuring that it can afford its livelihood, and decent standard of living to the minimum of indicators set by the United Nations.

Increasing or revising salary scheme and competition with the private sector or the sour outcomes of inflation comes as a challenges that demands a critical balancing act with the trauma of budget deficit, and a worst case scenario. The country’s experience from the past is a typical cases in point where a 30pc raise led to a sweeping effect of uncontrolled inflation.

Despite the sour price paid to raise salary scales, the increment was eaten by inflation.

Again the case of the 2014 revision, the latest one also repeated the same rates – a 39.5 pc raise, which followed by 7.7 pc inflation and added a two percent budget deficit to GDP.

Scattered efforts to raises public service salaries distort economic platform. This year only saw average raises of 40 to 50 pc for teachers and judges of the federal government. Such large sudden raises are can have negative effects.

Such boost of cash in the economy is a one sure way to a national budget deficit which can can damage an economy.

The revision proposed by the President for the year is also expected to affect the coffers of the government, yet there is no critical time to decide on the rate to get to the best win-win result.

The state employs over a million plus people, tying up 8.1pc of the budget for salaries, 2.6pc of the GDP.

Given the numbers, and from the angle of keeping the budget deficit share to GDP in the bounds of 3. While attending to the issue of underpayment, the government at this point can make an increase of 30pc which as things stand, can widen the budget deficit percentage share of the country’s GDP to 2.8pc.

In order to avoid the inflationary pressure, the government should raise its tax revenue by at least 2.7pc, which helps the economy to attain a trade deficit, below 3pc. The country has revised its tax schedule last year in such a way that it benefits the wider public servants, easing up the percentage of tax burdens.

But raising salary without introducing a mechanism that boosts tax revenue has to be done in a creative manner than a simple revision of schedules, which is introduced just a year ago. Rather the focus has to be on widening bases which has not been the best pick of the EPRDFites for long. Now is the critical time to sit back and vigorously work on widening the base.

Making saving attractive by raising interest rates, which imply borrowing less attractive too will put a break on the spending capacity of the raised income on the public side.

Published on Nov 22,2016 [ Vol 17 ,No 864]



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