Reforming the civil service is not a goal in its own right. Moreover, there is no single best “model” of public administration. Given vested interests that must be confronted, civil service reforms must be justified to policymakers and the public by their impact on poverty and on the effectiveness of government—either directly in terms of service delivery, or indirectly through their impact on macroeconomic stability or improved economic and social policy formulation and implementation.
In many countries oversized public sectors arise from an anachronistic government policy that has yet to address fully the changing orientation of the economy. In countries where public services are produced inefficiently or where the government is excessively large, fiscal pressures may emanate from the wage bill or from inappropriate purchases of goods and services. Meanwhile, structural deficiencies may reduce the quality of public services, create improper incentives in public employment, and limit the government’s ability to pursue equitable public policies.
While the ultimate goals are to reduce poverty and enhance government effectiveness, civil service reforms generally target more specific objectives. These range from objectives that are primarily structural—with an impact on service delivery and government effectiveness—to objectives that have a more direct link to macroeconomic stability. Figure 1 offers a stylized representation of objectives found in civil service reform programs.
Typical Objectives of Civil Service Reform Programs
Source: Bank-Fund staff.Typical Objectives of Civil Service Reform Programs
Source: Bank-Fund staff.Typical Objectives of Civil Service Reform Programs
Source: Bank-Fund staff.In practice, there is no easy divide between structural and macrofiscal concerns in civil service reform, since each directly impacts the other. The structural issues of employment and career path, pay policy, and organizational arrangements are key to improved accountability and service delivery, but can also have a significant fiscal impact. In turn, a relatively high civil service wage bill can threaten macroeconomic stability; but measures to reduce the wage bill can have important structural effects.
Macrofiscal and structural concerns lie behind the involvement of both the Bank and the Fund in all countries. However, the relative importance of these issues varies significantly by country, as the 11 selected country cases demonstrate (see Table 1).
Issues Raised in Bank-Fund Programs
Heavily Indebted Poor Countries.
Comprehensive Development Framework pilot country.
Because of sustainable external debt position, it did not seek debt relief under the HIPC Initiative.
Issues Raised in Bank-Fund Programs
| Correct fiscal imbalances | Improve pay and career structure | Improve accountability and service delivery | |||||
|---|---|---|---|---|---|---|---|
| Wage Bill | Pensions | Wage levels | Career structure | Improve skill levels | Reduce administrative corruption | Improve service delivery | |
| Benin1 | X | X | |||||
| Bolivia1,2 | X | X | X | ||||
| Cambodia | X | X | X | X | |||
| Macedonia, FYR | X | X | X | ||||
| Mali1 | X | X | X | X | |||
| Mongolia | X | X | X | X | |||
| Pakistan | X | X | X | X | X | ||
| Russian Federation | X | X | |||||
| Tanzania1 | X | X | |||||
| Yemen, Rep. of1,3 | X | X | X | X | X | ||
| Zambia1 | X | X | X | ||||
Heavily Indebted Poor Countries.
Comprehensive Development Framework pilot country.
Because of sustainable external debt position, it did not seek debt relief under the HIPC Initiative.
Issues Raised in Bank-Fund Programs
| Correct fiscal imbalances | Improve pay and career structure | Improve accountability and service delivery | |||||
|---|---|---|---|---|---|---|---|
| Wage Bill | Pensions | Wage levels | Career structure | Improve skill levels | Reduce administrative corruption | Improve service delivery | |
| Benin1 | X | X | |||||
| Bolivia1,2 | X | X | X | ||||
| Cambodia | X | X | X | X | |||
| Macedonia, FYR | X | X | X | ||||
| Mali1 | X | X | X | X | |||
| Mongolia | X | X | X | X | |||
| Pakistan | X | X | X | X | X | ||
| Russian Federation | X | X | |||||
| Tanzania1 | X | X | |||||
| Yemen, Rep. of1,3 | X | X | X | X | X | ||
| Zambia1 | X | X | X | ||||
Heavily Indebted Poor Countries.
Comprehensive Development Framework pilot country.
Because of sustainable external debt position, it did not seek debt relief under the HIPC Initiative.
Fiscal Stability and Sustainability
Concerns in the Country Cases
The size of the wage bill can threaten macroeconomic stability, and as such continues to be a key issue in many countries (see Table 2). Of the 11 case studies, Fund and Bank mission teams identified this as a particular concern in five countries (Bolivia, the former Yugoslav Republic of Macedonia, Mongolia, the Republic of Yemen, and Zambia). Although these are among the countries with the largest wage bills as a proportion of GDP or of total government expenditure, the size of the wage bill is not necessarily the only indicator of risk to macrofiscal stability. The level of other public expenditures, as well as the size and sustainability of the overall revenue effort, is equally critical.
Wage Bill in Selected Countries, 1999
IMF staff, 2000.
Includes local governments. This is equivalent to the general government wage bill.
Staff estimates of wage adjustment are included, allocated according to the ratio of defense to nondefense personnel.
Wage Bill in Selected Countries, 1999
| Civilian Central Government | Civilian Central Government and Armed Forces | |||
|---|---|---|---|---|
| Wage bill as a percent of GDP | Wage bill as a percent of expenditures | Wage bill as a percent of GDP | Wage bill as a percent of expenditures | |
| Benin | … | … | 4.5 | 26.9 |
| Bolivia | … | … | 8.9 | 35.4 |
| Cambodia | 1.7 | 10.5 | 4.6 | 28.4 |
| Macedonia, FYR | … | … | 9.1 | 39.0 |
| Mali | … | … | 4.1 | 15.6 |
| Mongolia1 | … | … | 3.3 | 9.3 |
| Pakistan | 0.8 | 3.3 | … | … |
| Russian Federation | 1.5 | 8.6 | 2.6 | 14.5 |
| Tanzania2 | … | … | 3.6 | 24.4 |
| Yemen, Rep. of | 7.6 | 26.1 | 11.5 | 39.3 |
| Zambia3 | 4.1 | 14.2 | 5.4 | 18.3 |
IMF staff, 2000.
Includes local governments. This is equivalent to the general government wage bill.
Staff estimates of wage adjustment are included, allocated according to the ratio of defense to nondefense personnel.
Wage Bill in Selected Countries, 1999
| Civilian Central Government | Civilian Central Government and Armed Forces | |||
|---|---|---|---|---|
| Wage bill as a percent of GDP | Wage bill as a percent of expenditures | Wage bill as a percent of GDP | Wage bill as a percent of expenditures | |
| Benin | … | … | 4.5 | 26.9 |
| Bolivia | … | … | 8.9 | 35.4 |
| Cambodia | 1.7 | 10.5 | 4.6 | 28.4 |
| Macedonia, FYR | … | … | 9.1 | 39.0 |
| Mali | … | … | 4.1 | 15.6 |
| Mongolia1 | … | … | 3.3 | 9.3 |
| Pakistan | 0.8 | 3.3 | … | … |
| Russian Federation | 1.5 | 8.6 | 2.6 | 14.5 |
| Tanzania2 | … | … | 3.6 | 24.4 |
| Yemen, Rep. of | 7.6 | 26.1 | 11.5 | 39.3 |
| Zambia3 | 4.1 | 14.2 | 5.4 | 18.3 |
IMF staff, 2000.
Includes local governments. This is equivalent to the general government wage bill.
Staff estimates of wage adjustment are included, allocated according to the ratio of defense to nondefense personnel.
While the wage bill has contracted in the past in several countries, pressures remain to increase spending, principally because of the low level of wages, political pressures to extend public sector employment, poorly executed decentralization programs, and the need to retain staff in priority areas. Additional pressures on spending have also arisen from growing pension liabilities in some countries (Benin, Mali, Pakistan, Tanzania, the Republic of Yemen, and Zambia). In particular, sustainability of pension systems has been affected by: (a) insufficient contributions; (b) lack of a clear distinction between social insurance and social assistance roles of the schemes; (c) overly generous benefit formulas; and (d) worsening demographics.
Even when the wage bill per se is not a major risk (such as in Cambodia, Mali, Pakistan, and Russia) the use of multiple allowances that are not captured by the wage bill can still add to budget pressures, and the structural questions about the efficiency of government in these countries remain.
The size of government employment has a direct impact on the wage bill and therefore influences the overall fiscal balance. Table 3 shows that civilian central government employment varies across the 11 countries—from 0.2 percent of total population to 1.4 percent of total population. Efforts to downsize the civil service have met with limited success because of: (a) insufficient efforts to redefine the role of government and to better organize the structure of government administration; (b) a growing trend to devolve responsibilities to subnational governments; (c) an inability to resist pressures to provide government employment (the Republic of Yemen); (d) political patronage (Bolivia, Cambodia, and Mongolia); and (e) difficulty in changing wage and employment practices due to the presence of strong labor unions (Benin, Bolivia, and Zambia).
Public Employment in Selected Countries, 1996–99
(percent of total population)
Excludes education, health, and police, if available.
Comprises employees of central and subnational government, where applicable.
Public Employment in Selected Countries, 1996–99
(percent of total population)
| Benin | Bolivia | Cambodia | Macedonia, FYR | Mali | Mongolia | Pakistan | Russia | Tanzania | Yemen, Rep. of | Zambia | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Public Employment | … | 2.8 | … | … | … | … | 2.3 | … | 1.4 | … | … | ||||
| o/w: General Government | … | 2.7 | 3.4 | … | 0.4 | 5.6 | 2.0 | 4.4 | 1.0 | 3.5 | 1.3 | ||||
| o/w: Civilian Central | |||||||||||||||
| Government and | |||||||||||||||
| Armed Forces1 | 0.3 | 0.5 | 1.7 | 1.7 | … | 2.0 | 0.7 | 1.1 | 0.5 | 2.6 | 0.5 | ||||
| o/w: Civilian Central | |||||||||||||||
| Government1 | 0.2 | 0.3 | 0.5 | 1.4 | … | 1.2 | 0.3 | 0.4 | 0.4 | 1.2 | 0.2 | ||||
| o/w: Education2 | 0.3 | 1.3 | 0.7 | 1.6 | … | 1.9 | 0.7 | 1.5 | 0.4 | 0.7 | 0.5 | ||||
| o/w: Health2 | 0.1 | 0.2 | 0.2 | 1.1 | … | 1.1 | 0.2 | 1.3 | 0.1 | 0.1 | 0.2 | ||||
Excludes education, health, and police, if available.
Comprises employees of central and subnational government, where applicable.
Public Employment in Selected Countries, 1996–99
(percent of total population)
| Benin | Bolivia | Cambodia | Macedonia, FYR | Mali | Mongolia | Pakistan | Russia | Tanzania | Yemen, Rep. of | Zambia | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Public Employment | … | 2.8 | … | … | … | … | 2.3 | … | 1.4 | … | … | ||||
| o/w: General Government | … | 2.7 | 3.4 | … | 0.4 | 5.6 | 2.0 | 4.4 | 1.0 | 3.5 | 1.3 | ||||
| o/w: Civilian Central | |||||||||||||||
| Government and | |||||||||||||||
| Armed Forces1 | 0.3 | 0.5 | 1.7 | 1.7 | … | 2.0 | 0.7 | 1.1 | 0.5 | 2.6 | 0.5 | ||||
| o/w: Civilian Central | |||||||||||||||
| Government1 | 0.2 | 0.3 | 0.5 | 1.4 | … | 1.2 | 0.3 | 0.4 | 0.4 | 1.2 | 0.2 | ||||
| o/w: Education2 | 0.3 | 1.3 | 0.7 | 1.6 | … | 1.9 | 0.7 | 1.5 | 0.4 | 0.7 | 0.5 | ||||
| o/w: Health2 | 0.1 | 0.2 | 0.2 | 1.1 | … | 1.1 | 0.2 | 1.3 | 0.1 | 0.1 | 0.2 | ||||
Excludes education, health, and police, if available.
Comprises employees of central and subnational government, where applicable.
Structural Concerns in the Country Cases
With respect to structural concerns, the country cases provided in Annex 2 employ a standard classification to ensure comparability, but the organizational structures and employment categories within government often defy simple typologies and raise particular challenges in determining the aggregate wage bill and employment. Distinguishing between core civil service and social sector employment, and between federal and central government and subnational government, is key. 6
Wage levels continue to pose a difficult problem for many governments, caught between the political pressures to compress pay—offering comparatively generous salaries at lower levels—and the loss of their senior staff to the private sector. Chronic shortages of qualified labor in certain areas present particular challenges. Among the 11 country studies, low and compressed wage levels have led to difficulties in hiring and retaining qualified staff, particularly at the senior level in Bolivia, Cambodia, the FYR of Macedonia, Mali, Russia, the Republic of Yemen, and Zambia. However, the evidence suggests that average government wages are not low relative to per capita GDP, which merely highlights the complexity of the issue. 7 Furthermore, pay policy is frequently obscured by multiple and often opaque allowances (Benin, Mongolia, Zambia, Pakistan, and Russia). Some groups of staff can be overpaid in comparison with the private sector, while others with scarce skills are underpaid. The Macedonian case identifies overstaffing in the health and education sectors, and the Tanzanian case highlights the excess of teachers in urban centers.
Lack of accountability and poor service delivery are noted as major concerns. These lead to a focus on petty corruption, moonlighting, and “daylighting,” although their association with low pay is unclear. The absence of a professional, merit-based civil service, and distorted incentive systems that discourage competent staff from remaining in the civil service were raised more often than any other issue in the country case studies. In particular, the weak link between performance and advancement is identified as an issue in Benin, Pakistan, Russia, and the Republic of Yemen; and the absence of a clear career path is a significant concern in Bolivia and Cambodia. In some countries (Cambodia, Mali, the Republic of Yemen, and Zambia) the need for civil service reform programs to combat administrative corruption and to improve service delivery in key sectors is emphasized. Many of the cases refer to patronage in recruitment and appointments, and to corruption and its impact on service users. The cases note the link between political patronage, high turnover following elections, and a weak public service ethos in Bolivia and Mongolia.
