Abstract
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
Public Wage Bill Determinants
Although the wage bill is not particularly high, its sectoral composition has changed significantly, and recent hiring is likely to add pressure to public expenditure. The growing size of the civil service could threaten a sustainable wage bill and effective public service delivery.1
A. Introduction
1. The public wage bill and the civil service framework provide valuable insights into the options and constraints to effective public service delivery. The hard-to-reverse nature of decisions related to the civil service, and recent hiring plans have motivated this analysis. Among the developments are the Government’s decision in 2012 to hire 25,000 as part of its job creation plan, and a planned security personnel expansion.
B. Determinants of the Public Wage Bill and Civil Service
Size and Composition of the Public Wage Bill
2. The wage bill grew steadily between 2006 and 2012. It rose from 4.5 percent of GDP in 2006 to 5.2 percent of GDP in 2012. It ranked among the highest for the Central Africa Economic and Monetary Community (CEMAC), but is not particularly high compared to other sub-Saharan African (SSA) peer countries (Figure 1). Moreover, it hovered around 40 percent of current expenditure (Figure 2), comparable to the average weight of the wage bill in peer countries.
Selected SSA Countries: Public Wage Bill, 2006-12
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Country authorities; and IMF staff estimates.Selected SSA Countries: Public Wage Bill, 2006-12
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Country authorities; and IMF staff estimates.Selected SSA Countries: Public Wage Bill, 2006-12
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Country authorities; and IMF staff estimates.
Selected SSA Countries: Public Wage Bill, 2006-12
(Percent of current expenditure)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Country authorities; and IMF staff estimates.Selected SSA Countries: Public Wage Bill, 2006-12
(Percent of current expenditure)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Country authorities; and IMF staff estimates.Selected SSA Countries: Public Wage Bill, 2006-12
(Percent of current expenditure)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Country authorities; and IMF staff estimates.Education had become dominant in the wage bill since 2006.2 Education held the largest share in 2006 with 1.7 percent of GDP, or 40 percent of the wage bill (Figure 3). By 2012, education sector wages accounted for 2.7 percent of GDP, or 50 percent of the wage bill. By comparison, the wage bill for health had remained broadly constant at 0.3 percent of GDP, and about 6 percent of the wage bill. The share of security fell from 1.3 percent of GDP in 2006 to 1.2 percent of GDP in 2012; this represented a decline from 31 percent to 23 percent of the wage bill, which almost offset the increase in education. The wage bill for other sectors taken together showed a small increase of 0.1 percentage point of GDP, but nonetheless shrank as a percentage of the overall wage bill (by more than 3 percentage points). Table 1 confirms the relative importance of the education sector wage bill, and the relatively small size of the health sector wage bill. The structure of the civil service is described in Box 1.
Cameroon: Public Wage Bill by Sector, 2006-12
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimatesCameroon: Public Wage Bill by Sector, 2006-12
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimatesCameroon: Public Wage Bill by Sector, 2006-12
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimatesSelected Countries: Public Wage Indicators,1 2000-08
Central government.
2012.
Selected Countries: Public Wage Indicators,1 2000-08
| Education Wage Bill | Health Wage Bill | Total Wage Bill | |
|---|---|---|---|
| (Percent of total wage bill) | (Percent of GDP) | ||
| Africa | 66.7 | 40.6 | 6.5 |
| Cameroon2 | 83.9 | 28.1 | 5.2 |
| Low income countris | 69.2 | 45.6 | 5.2 |
Central government.
2012.
Selected Countries: Public Wage Indicators,1 2000-08
| Education Wage Bill | Health Wage Bill | Total Wage Bill | |
|---|---|---|---|
| (Percent of total wage bill) | (Percent of GDP) | ||
| Africa | 66.7 | 40.6 | 6.5 |
| Cameroon2 | 83.9 | 28.1 | 5.2 |
| Low income countris | 69.2 | 45.6 | 5.2 |
Central government.
2012.
Cameroon: Structure of the Civil Service
The civil service in Cameroon comprises four categories.
Civil servants are hired through competitive, country-wide examinations (“concours”). They are meant to staff the critical positions in the civil service on a permanent basis, as reflected in their distinct grade and salary scale, and terms of employment, which include an accrued pension. Civil servants are classified under four sub-categories: A for senior staff; B for middle staff; C for executives; and D for subordinates.
Contract employees are hired directly by the ministry in charge of the civil service (except for temporary teachers who were recruited in the mid-2000s by the ministries in charge of primary and secondary education). They are divided into twelve sub-categories: sub-categories 1-6 (“appointees”) with skills corresponding broadly to sub-categories C and D in the permanent civil service; and sub-categories 7-12 (“contractuals”).
Uniformed personnel are hired under distinct, open-ended employment frameworks. They are found mostly in the ministries of defense and national security, but also in other ministries in lesser numbers. Conversely, civil servants are also found in the ministries of defense and national security.
Judges and diplomats make up the fourth category, with distinct salary scales and structures, and with a profile comparable to that of civil servants.
The first category of government employees is regulated by the General Statute of the Civil Service; the second falls under the Labor Code; and the last two are governed by special statutes related to their trades.
Size of the Civil Service
3. The size of the civil service increased at a brisk pace between 2006 and 2012. The number of civil servants grew from 167,000 to 250,000, equivalent to a 6.9 percent yearly increase, while the population is estimated to have grown on average by 2.5 percent (Box 2). This trend accelerated in recent years (Figure 4). The bulk of the civil service increase happened through positions filled by contractual workers (79.5 percent). These contractual workers comprised mostly (i) locally hired teachers who were incorporated into the civil service; and (ii) part of the 25,000 young people recruited between 2011 and 2012 under a program to promote youth employment. By comparison, regular civil servants contributed 8.5 percent of the overall increase, and uniformed personnel, 6.5 percent. Appointees contributed the remaining 5.5 percent. By 2012, regular appointments comprised less than half of all civil servants.
Cameroon: Civil Service by Type of Position, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Civil Service by Type of Position, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Civil Service by Type of Position, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.All sectors contributed to the staffing increase, but education was the most important driver. The number of positions in education rose from 37 percent of all positions to 46 percent (Figure 5). Most new positions in education were for teachers hired as contractuals in primary education.3 In health, the number of positions grew at 6.8 percent a year (close to the civil service average) from an initial low level of 10,363 to 15,399. Staffing in security grew modestly by less than 1 percent a year, albeit from a base of 51,551 positions in 2006. In relative terms, the share of security shrank from 31 percent of the civil service in 2006 to under 22 percent in 2012. There has been a shift toward more uniformed personnel, who now comprise almost three quarters of all security staff.
Cameroon: Civil Service by Sector, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Civil Service by Sector, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Civil Service by Sector, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.4. There was significant grade inflation for regular civil servants. While the ranks of the lowest categories of civil servants (i.e., categories B1, C, and D) shrank significantly, the ranks of higher categories (i.e., categories A2, A1, and B2) swell. The top category (A2) is now the largest, with more than a quarter of all regular civil servants (Figure 6).
Cameroon: Civil Service Regular Positions by Grade, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Civil Service Regular Positions by Grade, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Civil Service Regular Positions by Grade, 2006-12
(Headcount)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Compensation
The average salary grew moderately between 2006 and 2012. The salary scales have been frozen since the late 1990’s. Accordingly, salary progression came only from automatic promotions, based on time in grade (Box 3). For the civil service as a whole, the increase was 2.3 percent a year on average, which is less than the average rate of inflation of 3 percent a year over the same period; the average wage increase was about 3 percent a year in the social and security sectors (Figure 7).
Cameroon: Average Monthly Salary in the Civil Service, 2006-12
(CFAF)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Average Monthly Salary in the Civil Service, 2006-12
(CFAF)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Average Monthly Salary in the Civil Service, 2006-12
(CFAF)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.6. The ratio between highest and lowest4 individual wage is relatively low (around 6), but adequate to establish a meaningful incentive structure. Such a “compression ratio” should typically be higher than 4 to help contain corruption in the civil service, but not higher than 14.5
Cameroon: Civil Service Flows
Competitive examinations (“concours”) are launched almost every year for non-contractual civil servants, based on predefined recruitment plans. Eligible candidates must be between 17 and 35 years of age. Successful candidates undergo one to seven years of training in the government’s specialized higher schools. A newly recruited staff member is subject to a probationary period of one year during which he or she must confirm his or her professional ability to perform the assigned duties. In case of an unsatisfactory internship, the civil servant is dismissed after notice. A civil servant can also be fired by the Disciplinary Board of the Civil Service for insufficient results or a disciplinary offense, although this is rare.
Movements between civil service categories are infrequent by design, as each employee is expected, in principle, to stay in his trade. However, line ministers can decide to transfer employees under their authority in the ministry’s various offices throughout the country. The positions of director general, secretary general of ministries, and equivalent positions are appointed by presidential decree, while the Prime Minister appoints directors and technical advisors to ministers. Ministers appoint heads of services and lower positions. Promotions are based on staff qualifications and results, although there remains scope for patronage.
Exit from the civil service can happen through dismissal, revocation, retirement, death, or resignation. A decree of 1974 set the retirement age in the non-uniformed civil service at 50 years for sub-categories C-D and 1-6; and 55 years for sub-categories A-B and 7-12. Several adjustments have occurred since, setting different thresholds for specific sectors. As a result, retirement age is much higher for judges and academics (60-65 years) and teachers (55-60 years). Since 2012, in the uniformed service, retirement age varies between 48 years (soldier) and 60 years (colonel).
Cameroon: Compensation in the Civil Service
Salaries are based on scales for the different categories of government employees. Base salary increases every two years on a time-in-grade basis, provided performance is satisfactory. A civil servant is also eligible for a step increase, as a result of a specific achievement, as documented by two letters recognizing high performance from the minister.
Salaries for judges and diplomats evolve broadly in line with those of regular civil servants, but are more generous. Salaries for the uniformed civil service are also higher than those of the regular civil service. Base salaries of contractual employees are fixed by presidential decree and are lower.
Four main types of allowances are granted on top of base salary, including (i) a category or trade-based allowance; (ii) those related to administrative function (director, head of department); (iii) housing allowance (except for categories 1-6); and (iv) other various bonuses (technicality, risk, teaching, etc.). Total allowances represent on average 32 percent of the base salary, with differences across trades. Allowances are higher in the uniformed services, magistracy, and higher education (up to 90 percent of base salary in these sectors). In addition, specific allowances apply to selected categories (e.g., allowances for technical ability, water, electricity, and telephone).
C. Wage Bill Projections
7. Two scenarios are presented going forward. The baseline scenario assumes no reform in the public service (Table 2). It further assumes (i) a continued freeze in the wage scales and, accordingly, an average compensation that increases by little more than inflation; (ii) an increase in staffing at about 10 percent a year; (iii) a large increase in the number of regular civil servants and a zero increase in the numbers of contractuals, because as primary schoolchildren graduate, they generate demands on the secondary education system, in which teachers occupy mostly tenured positions, and where the ratio of teachers to students is much lower; (iv) a 50 percent increase in the size of the uniformed personnel rosters by 2019, owing to regional security concerns. Under this baseline scenario, the wage bill rises from over 5.5 percent of GDP in 2013 to 7.2 percent of GDP in 2019—a trend that would put considerable stress on the budget. Under a “reform” scenario, salary increases are somewhat tempered, and significant efforts are undertaken to limit the number of new positions in the regular civil service, while uniformed personnel rosters grow at a slower pace than in the baseline scenario. The reform scenario is consistent with the stable, sustainable wage bill of 5.5 percent of GDP contemplated in the macroeconomic framework of the 2014 consultation.
Cameroon: Determinants of Public Wage Bill Scenarios, 2013-19
(Percent, year/ year increase)
Cameroon: Determinants of Public Wage Bill Scenarios, 2013-19
(Percent, year/ year increase)
| Civil Servants | Appointees | Contractual | Mil. + Police | ||
|---|---|---|---|---|---|
| Scenario 1: no reform | |||||
| Civil service growth rate | 12.0 | 5.0 | 0.0 | 6.0 | |
| Nominal salary growth rate | 3.0 | 3.0 | 3.0 | 3.0 | |
| Scenario 2: reform | |||||
| Civil service growth rate | 6.0 | 3.0 | 0.0 | 5.0 | |
| Nominal salary growth rate | 2.5 | 2.5 | 2.5 | 2.5 | |
Cameroon: Determinants of Public Wage Bill Scenarios, 2013-19
(Percent, year/ year increase)
| Civil Servants | Appointees | Contractual | Mil. + Police | ||
|---|---|---|---|---|---|
| Scenario 1: no reform | |||||
| Civil service growth rate | 12.0 | 5.0 | 0.0 | 6.0 | |
| Nominal salary growth rate | 3.0 | 3.0 | 3.0 | 3.0 | |
| Scenario 2: reform | |||||
| Civil service growth rate | 6.0 | 3.0 | 0.0 | 5.0 | |
| Nominal salary growth rate | 2.5 | 2.5 | 2.5 | 2.5 | |
8. A sensitivity analysis indicates that a one percentage point decrease in the projected economic growth rate has a significant impact on the sustainability of the wage bill. The magnitude of this impact is proportional to the size of the wage bill. Over the medium term, this “shock” increases the share of the wage bill by up to 0.5 percentage point of GDP for the baseline scenario, and by 0.3 percentage point for the reform scenario (Figure 8). This argues for continued vigilance in the management of the civil service and the wage bill.
Cameroon: Wage Bill Scenarios, 2013-19
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Wage Bill Scenarios, 2013-19
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.Cameroon: Wage Bill Scenarios, 2013-19
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 213; 10.5089/9781498396011.002.A004
Sources: Cameroonian authorities; and IMF staff estimates.D. Issues and Options
Fiscal Issues
9. Fiscal sustainability could be jeopardized by a rising wage bill. This is slated to happen if new positions are created at the current pace, and if wages increase faster than inflation, which is more likely after the recent spate of young hires into the civil service.
10. Flexible management of the workforce has been improved by the shift toward hiring more contractuals. However, the size of the contractual contingent has become large and concentrated in one sector (i.e., education), which will require careful management given its importance.
11. The increase in the size of the public service has created new pension claims. While these claims may not result in an immediate expenditure, they are an incurred contingent liability that deserves close monitoring to ensure that the budget steers clear of unprovisioned liabilities in the long term.
Service Delivery Issues
12. In the absence of improved revenue performance, a growing wage bill may crowd out other expenditure, such as goods and services. The resulting imbalances in the expenditure mix could compromise the quality of public service delivery. This will be especially important for education, where a growing enrollment in secondary education will test the ability of the government to provide high-quality facilities and teaching equipment.
13. The quality of public service delivery remains a question open to debate. The rapid increase in the number of civil servants does not guarantee that service delivery will meet the expectations of beneficiaries. Specifically, the vast expansion in primary education teachers must meet clear, measurable, and time-bound objectives; requires training of new teachers to contribute to these objectives; and calls for testing to ensure that outcomes are satisfactory. Higher staffing raises expectations of better service delivery that need to be approached methodically.
14. Management of the expanded civil service, especially in education, poses new managerial challenges to ensure effective service delivery. Civil servants need to report for duty, including in less attractive field assignments; absenteeism needs to be monitored and reined in as needed; and the payroll needs to be updated efficiently and effectively to eliminate ghost workers. The drift toward the higher grades of the civil service limits the scope for career progression and may increase frustration and affect motivation.
Options
15. The recent evolution of the civil service calls for closer monitoring of civil service and wage bill developments. While there are no immediate concerns about the sustainability of the wage bill, high and competing demands on government make it an opportune time to consider how to improve the civil service’s contribution to service delivery. It would be useful to launch a task force to assess civil service issues and consider reforms to the civil service framework for better service delivery under the constraint of fiscal sustainability. Options to consider include the development of a medium-term expenditure framework to model the effects of decisions on wages and staffing on public expenditure; the identification of critical positions in ministries, consistent with the efforts of the government to implement results-based program budgeting; the clear association of specific grade levels with certain types of positions to avoid excessive promotions; a continued emphasis on salary increases through merit rather than seniority; and the possibility of creating new grade levels to alleviate pressure in certain grade levels.
References
IMF, 1991, “Public Expenditure Handbook”, Washington D.C.
IMF, 2010, “Evaluating Government Employment and Compensation”, Washington D.C.
OECD, 2004, “Modernising Government: The Synthesis,” Paris.
OECD, 2008, “The State of the Public Service”, Paris.
World Bank, 1993, “Making Government an Effective Partner: Civil Service Reform in Sub-Saharan Africa,” Washington D.C.
World Bank, 2002, “Civil Service Reform—Strengthening World Bank and IMF Collaboration,” Washington D.C.
World Bank, 2010, “Modernizing Civil Service Policies and Practices in Indonesia,” Washington D.C.
World Bank, 2011, “Kazakhstan–Note on Senior Civil Service Pay,” Washington D.C.
Prepared by Jean van Houtte and Du Prince Tchakoté.
Education covers the Ministries of basic education (MINEDUB), secondary education (MINESEC), tertiary education (MINESUP), and employment and training (MINEFOP). Health covers the Ministry of health (MINSANTE); and security covers the Ministries of Defense (MINDEF) and national security (Délégation générale à la sureté nationale; DGSN).
The ranks of contractuals in education swelled, as teachers previously financed under a specific French debt forgiveness scheme were integrated into the civil service in 2008.
The lowest wage (for Category 1) was not used for this comparison, since it applied only to about 500 civil servants. The next lowest wage, by comparison, applied to about 5,000 civil servants.
