Contrary to claims that bureaucrats are underpaid, a study by the Pakistan Institute of Development Economics (PIDE) has revealed that civil servants are earning 20% more than their counterparts in private sector, as ingresses by the bureaucracy continue with blessings of the federal cabinet.
The “Cash Poor, Perk (Plots, Privileges) Rich” report has found that the bureaucracy was availing huge benefits without properly disclosing their pay slips, which in the case of top grade-22 are 10 times more than the average basic salary of the officer.
The study has quantified the total pay package for each Basic Pay Scale (BPS) grade of the civil servant by consolidating the pay, allowances, non-monetary benefits and rewards. The report has been launched two days after the federal cabinet allowed the bureaucrats to avail the benefits of Management Pay Scale (MP) without resigning from civil service.
Voicing concern over the federal cabinet decision, Pay and Pension Commission Chairperson Nargis Sethi said, “Such decisions should not be made piecemeal and the government should have waited for recommendations of the Pay and Pension Commission.”
The purpose of introduction of MP scales was to bring best talent from the private sector and the federal cabinet’s decision to allow bureaucrats to avail MP scale packages was against these objectives, said former finance secretary Wajid Rana.
However, Sethi, a former District Management Group officer, was critical of the PIDE report, which she said was biased.
“The title of a report, a research paper or a study indicates the author’s intent and direction in which they would like to steer the conclusion, and in doing so objectivity is the common casualty,” she added.
While all past reform efforts have failed to improve performance of the civil service, it has set up a system for “perk maximisation” and political quid pro quo for perks, according to PIDE.
The only thing transparent in the civil servants’ compensation structure is that it is opaque, it added. There are numerous allowances, perks and benefits, many of which are invisible.
The generous handing out of perks has allowed the system to be gamed and maximise compensation.
“Estimates of total compensation of civil servants, including monetary wage plus allowances, and quantified in-kind and intangible rewards, show that civil servants are not underpaid since a large chunk is not declared on the salary slip.”
The report found that public sector employees, on an average, take 19.5% more salary than their counterparts in the private sector.
Civil servants, who have a minimum of bachelor’s degree, have an income (cash) advantage of 9.4% over private sector employees with a similar educational level. It is only after having a degree of MPhil/PhD that private-sector employment becomes more lucrative than public-sector employment, it added.
However, the cabinet’s decision to allow bureaucrats to occupy MP scale positions will also end this difference.
The report says the government housing facility, given as an in-kind benefit, is never accounted for in the total cost of civil servants - something that has a huge opportunity cost to the government.
Perks and different allowances add to the total cost of civil servants substantially and, if monetised, would break the myth of low salaries in the public sector.
A grade-1 employee - the lowest pay scale - gets average salary of Rs13,840 per month but after including allowance and perks, his monthly benefits increase to Rs43,657, which is three times of the basic salary.
A grade-20 employee gets average basic salary of Rs100,660, which jumps to Rs729,511 after including allowances and the cost of a fully maintained car, a house and medical facilities.
For grade-21, the average basic salary is Rs111,720, which shoots up to Rs979,594, almost 11 times of the basic pay. For the highest pay scale of 22, the average basic salary is Rs123,470 and the total cost of having a grade-22 officer jumps 10 times to Rs1.1 million, according to PIDE.
The report says a federal secretary is earning even more than what a UN officer in the comparable grade is getting in compensation, estimated at Rs910,000. The total cost of a grade-21 officer becomes 12% higher than the UN national officer’s cost.
“This comparison refutes the claim that civil servants are underpaid.” They receive highly competitive compensation, which is 10% to 15% higher than a UN national officer’s compensation, it added.
With higher grades, the proportion of cash allowances in pay and quantified perks in the total cost increase. The use of official vehicles for personal use by grade 20-22 officers increases the total cost by more than 1.2 times of the basic pay.
PIDE said that the higher remuneration for upper grades is, thus, camouflaged by the compressed basic pay scales.
The civil servants and their lobbies want an increase in the cash salary keeping the perks intact, possibly even increasing them, it added.
Valuing the in-kind benefits received by the civil servants show that public-owned houses have a minimum market value of Rs1.45 trillion and can generate an annual rental income of Rs10.75 billion.
Job security in civil service has an added value of 0.5% to 17% on the compensation. Apart from the medical allowance, which is part of the salary slip, approximately Rs2.3 billion monthly are incurred on civil servants’ medical bills.
The World Bureaucracy Indicators of the World Bank estimates that public-sector wages in Pakistan are 53% higher when compared to private-sector wages.
The objectives of the private and public sectors are diverse. While the former is concerned with the bottom-line, the public sector is responsible for service delivery and its quality, said Rana.
There is far too much generalisation in the report in drawing conclusions without understanding the pay structure and allowances system and its applicability to various levels, Rana said, adding that the calculation of total pay and perks is not correct and its general applicability is also flawed.
PIDE has recommended that the salaries of civil servants must be on a par with the comparable private-sector salaries. The annual adjustment in the civil servants’ salaries must be based on an annual survey.
The second component of the adjustment must be performance-based, with only those getting a raise that cross a mutually agreed-upon and predetermined efficiency bar.
PIDE has also recommended monetisation of these perks, however, the last experience of monetising cars has badly failed. The bureaucrats are getting cash as well as irregularly having possessions of official cars.
PIDE said that government housing assets have a market value of approximately Rs1.45 trillion and it can receive this value after releasing the government housing assets in Islamabad to the private sector.
The use of official cars by top-tier civil servants must be abolished, and the civil servants should be given cars on lease arrangements involving banks, it added.
Published in The Express Tribune, May 7th, 2021.