Civil Service Modeling: Simplifying the Complexities of Civil Service Pay and Employment

1. Civil Service Modeling: Simplifying the Complexities of Civil Service Pay and Employment

2. Why Model?

3. Two Dominant Approaches to Civil Service Pay and Employment Reform • Macro-Analysis: The Meat-Axe Approach? 2. Micro-Review: The Bean-Counting Perspective

4. Macro-Analysis to determine appropriate size and cost of civil service • How it works • Gross criteria to gauge nature and extent of reform needed • (Wage bill/GDP; government employment per capita; salary compression ratios, public-private wage relativities) • Pros and Cons • Broad-brush reform guidance but over-simplified basis for government policy and lending terms and conditions

5. Micro-Reviews (Functional Analysis) to determine staffing and incentive levels • How it works • Bottom-up scrutiny of individual organizational units’ objectives, tasks, and resource requirements • Pros and Cons • Accurate picture of on-the-ground reality • Inconsistent methodology – wide variability in quality • Hard to do – takes forever • Difficult to sum up parts: challenge to build coherent civil service strategy for whole based on micro- unit-based details

6. Both approaches left big problems un-addressed • Low government policymaking capacity for CSR • CSR-P&E reality hopelessly complex • Competing sectoral considerations • New wrinkles: decentralization • Conflicting government objectives (social welfare vs. fiscal prudence) • Flimsy empirical basis to donor-country dialogue (discussion often on different pages)

7. What is the CS-P&E Model? Civil service modeling as middle-range analytic tool to bridge gap in existing approaches • Uses country customized data to render the key attributes of current P&E situation • Pay and grading arrangements • CS employment numbers • Sectoral/ministerial geographical particulars • Establishes reform objectives and parameters –“Five-year CSR vision” • Wage bill envelope • Compression ratio and salary levels • Public-private relativities

8. What is the CS-P&E Model? Civil service modeling as middle-range analytic tool to bridge gap in existing approaches • Simulates reform options – calculating and demonstrating costs of alternative policy measures • Assumptions about timing and extent of retrenchment or retirements • Implications of different levels of pay raises • Altering sectoral employment levels (teachers, health workers)

9. The Joys of the Model • Provides governments with hands-on tool for plotting realistic reform strategy with concrete targets • Sorts out wheat from chaff – focus on big picture • Raises level of dialogue with donors (and donor understanding of issues) • Helps policy makers combat special pleading of sectoral interests

10. The Woes of the Model • Cannot (should not) render all detailed characteristics of individual country CS reality (Trade-off between simplicity/clarity and accuracy) • Garbage in-Garbage Out (Poor data mean targets may be off) • Cannot make hard decisions for policy makers • Haven’t dealt with some critical issues (pensions variables hard to incorporate) • Cannot replace good establishment management systems (HR database, tight payroll controls, etc.) • Cannot provide detailed information for reform implementation (for retrenchment; severance package design, etc. – consultancy needed)

11. East Asia Experience • Pilots in 6 Countries: Cambodia - Timor Leste - Philippines Mongolia - Indonesia - Thailand • Capacity building grant from ASEM to assist countries in using modeling tools to develop civil service pay and employment reform strategies • Development of robust and user friendly modeling tool for region

12. Why Model in East Asia? • Wake of financial crisis in 1990s led to fiscal constraints, raising profile of wage bill • Crisis revealed shortcomings in government effectiveness and efficiency; civil service reform became a priority • Modeling reform options could help countries formulate strategy

13. Different Countries, Different Entry Points • Cambodia • IMF pressure on government to reduce CS wage bill and employment resulted in stalemate • Bank entered with model to provide empirical footing to dialogue • Thailand • Reducing civil service employment part of public sector reform program supported by Bank in aftermath of financial crisis. • Support to Office of the Civil Service Commission included modeling reform options

14. Different Countries, Different Entry Points • Philippines • Bloated wage bill and surplus CS employment aggravated by fiscal strain during crisis • With a history of failed reform efforts, govt. agreed to try modeling to develop strategy • Indonesia • Civil service seen as corrupt, poor performer when growth rates screeched to a halt in crisis and beyond • Decentralization about to transform nature of civil service • Modeling intended to provide a starting point for thinking about modernizing CS, but timing was off, given general state of flux

15. Different Countries, Different Entry Points • Timor-Leste • New state with no parameters for civil service pay and employment • Model intended to work out relativities for new government • Mongolia • Fund pressure to reduce wage bill • Government clueless on where to start – model first step in roadmap to reform

16. Results in EAP • Improved, more focused dialogue with country and other donors on CS pay and employment • Country counterparts at technical level gained modeling capacity • Still limited engagement by higher level decision makers • From spreadsheet to GameBoy • Marked improvement in modeling mechanics through trial and error evolution • User-friendly customized models • Whizzy generic model available on website