Fairly paying public sector racehorses

Country will not progress until KPIs are given to policymakers with handsome reward

KARACHI:

We’re beginning to see some silver linings. Initially, quick deals for port operations were signed with UAE companies. Lately, efforts for curbing speculation and illegal activities have brought USD Rs50 down to Rs280 in the open market.

Under SIFC, accelerated approach is observed where clear targets are given to portfolio holders with expected timelines for delivery and performance. The “whole of government” experiment is working.

Amid all that, one must recall and appreciate the basic human instincts of any professional individual; what exactly am I working for and what do I get out of it (financially)?

Employees in large multinational companies – or sales-driven jobs – are paid performance bonuses, given employee stock option and fast-tracked into higher growth ladder depending on how much money they are bringing on table for sponsors (read: stakeholders/ taxpayers).

There should be no qualms when people around us get bonuses worth millions or tens of millions of rupees. It’s fair play. The more you perform, the quicker and better you are rewarded. Consequently, the motivation, energy levels, determination, team work and leadership skills are far beyond the threshold seen in “sarkari idaras”. What can we do to change it?

One: Let’s start with SOEs, the companies bleeding billions of dollars of already distressed taxpayers’ “halal” money, which would have been in far better shape had there been incentive for the top and middle clan to revitalise the operations and cut fat similar to what notoriously infamous capitalists global private equity groups do. They first strengthen the cow and then milk it more; win-win-win for owner, managers and society at large.

The idea is to bring efficiencies and add value to shareholders (taxpayers like you and me). Unfortunately, most of the heads are rolled without completing tenure, due to political influence and inability to bring change.

Two: Blanket increment policy needs to change: It is vital for people doing their job by putting 10-12 hours a day to be rewarded with twice or thrice the amount of increment people get by showing up 4-6 hours to chitchat, move files and sip cups of tea. Let alone the ghost employees sitting at home.

The dismay in the competent mindset would eventually push them out of the system if they are not financially rewarded with variable incomes.

Three: Reward those at key positions: There should be lesser (cannot be zero) incentive for people to cheat the system.

Imagine a DISCO officer going to collect unpaid dues from people and ending up taking a fraction in his pocket and letting it be. If he were to be rewarded with X percentage of recovery, he would work towards plugging the holes.

Similarly, if a tax collector is rewarded with Rs3-10 million for widening the tax base by Rs500-1,000 million, he will still feel awarded and disincentivise under-the-table transactions.

Four: Incentivise FDI and exports. Policymakers should be given clear monetary incentives for attracting foreign investment, domestic investment and enhancing exports. This is Pakistan’s make or break.

There should be more financial incentive for particular set of high-value industries, if any foreigner sets up plant for export-based or import-substituting industry.

A taxpayer would not mind rewarding an individual with $100K bonuses for bringing 1,000 jobs and growing exports annually by $50-100 million. Just imagine paying $4-8 million in interest only to borrow those dollars from global lenders. Think smarter.

Five: Compensate risk taking: Many senior competent public office holders are content, dismissive and reluctant to search out-of-the-box ideas for lack of personal financial reward and fear of undue accountability as well.

People already secured with extremely generous pension systems only worry about their post-retirement stress for not having to go to courts to defend themselves with their own “halal ki kamai”.

If projects conceived years ago were launched on time (ML-I?), billions of rupees would have been saved every year. We have missed out uplifting tens of millions from poverty already due to the unfair system.

Six: Take good financial care of law enforcement agencies. (LEAs). LEAs play a critical part of controlling the law and order and provide sound footing to plant trees.

Reduction in crime, imposing penalties on violence, curtailing smuggling worth billions, seizing counterfeit, smuggled and illegal products should be financially rewarded with some modest fraction of the quantum of loss averted. If smuggling causes losses worth billions, pay millions to those who can and should stop it.

Conversely, doctors and nurses saving lives of many shouldn’t be given fixed salaries but compensated for the number of patients seen, treated and operated upon. Otherwise, the top talent is recruited by the private sector and fairly compensated, eventually increasing income inequality.

Critics would often revert by saying it is their job to do the job honestly, efficiently and wholeheartedly. Unfortunately, that model has failed for three quarters of the century and something is totally disconnected with the human mindset.

Hire top global management consultants to refine the proposal or do better and most would offer similar solution. Country would not progress until explicit KPIs are given to policymakers with handsome compensation.

Some may also rebut that people who are used to the corrupt system would remain corrupt despite offering higher legitimate incentives. Well in that case, at least the fresh leg of policymakers may remain relevant, productive and choose to be part of the system.

We happily pay lawyers who save Rs100 million of liability with 5-10% of savings. We are also willing to pay our top sales guy bonuses worth 5-10 times in monthly salary if he’s providing benefits worth 50 times his salary. That is the only proven model that would work.

Last month, Pakistani cricketers secured apparently lucrative central contracts with PCB allocating 3% of the revenue. Excuse me? The guys bearing the heat, sweating their bodies, undergoing the stress and winning the glory are being paid peanuts compared to 26% revenue shared by BCCI to Indian cricketers and 27% paid to Australian ones.

Do not be surprised to see these countries winning the race since there is clear alignment of interest.

The writer is an independent economic analyst

 

Published in The Express Tribune, October 23^rd, 2023.

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