Pay, allowances and the BPS

The presentation of the annual budget in parliament could not have come at a better time. As Covid-19 eats away at the respiratory and pulmonary systems of the patients it infects, and the economic impact of Covid-19 eats away at the veneer of normalcy constructed by the Pakistani elite, could the budget exercise be the one, singular moment of truth in a sea of lies?

Taxpayers in Pakistan this year will pay approximately Rs470 billion in civilian and military pensions combined during the upcoming fiscal year. This seems like a lot because it is. With Rs470 billion, the Ehsaas Emergency Cash programme could make a total of 39,166,666 payments of Rs12,000 each. This means that over 3.2 million households could be paid Rs12,000 each, every month, for the entire year. But let’s have a heart. Pensioners served a lifetime in government, most probably sincerely and honestly. Why do this kind of math on pensions? There is at least one good reason to, but let’s park that for now.

Let’s look, instead, not at the cost of those men and women that served a lifetime in government and have retired, but at the men and women currently in government. There are over 660,000 sanctioned government positions in the federal government alone; this is totally separate and independent of the military. Of these, the most recent census of the federal government employees indicates a total of about 580,000 government employees in service today.

Some experts see the budget exercise as a useless exercise meant to excite only the most naive and gullible. But it may not be entirely fruitless. Schedule III of the Annual Budget Statement gives us “object classification wise expenditure”. The “Total Employee Related Expenses” for the federal government are just over Rs789 billion. Of this, Rs475 billion are employee related expenses for the defense services. Let us examine what constitutes the remaining Rs314 billion. (There is a wider debate that many believe this country should have about the nature of the state and the quantum of funds dedicated to national security. That debate is certainly worth having, but is separate and independent from the pay, allowances and pensions lability exclusively in the civilian realm. Given the recent and current experience of civil military relations, no such debate is possible in the absence of civilian competence to engage in the debate).

The total pay of federal government employees in the coming fiscal year will be Rs155 billion. But this isn’t the sum total of what taxpayers are paying. The total for non military federal government employee allowances is Rs158 billion. In short, total ‘pay’ and total ‘allowance’ are virtually dead even.

What are these allowances that constitute fully half of all total employee related expenses for federal government employees and where have they come from? “Allowances” are the magic trick that has enabled the bureaucrat-politician compact in Pakistan to adjust remuneration in accordance with the needs of a given position or set of positions in government.

One easy example that can help illustrate this are government employees working in high stress roles, such as the personal staff officers (PSOs) to senior officials. PSOs regularly work upwards of 14 hours a day, on-call 24 hours a day, and often complete several months, sometimes a full calendar year without any significant breaks. Health conditions like hypertension and circulatory issues are a common appearance among mid-career PSOs. Having seen at least two generations of DMG (now PAS), Secretariat, PSP, FSP, Customs, IRS, Audit and Accounts, as well as PMS officers serve in the PSO role, I can count dozens of such officers. The same goes for officers that have served as district administrators in key districts all around the country.

A more current example is the Covid-19 crisis. Should government employees at high risk (such as doctors, nurses, policemen, administrators and other frontline public sector workers) not be compensated for the higher risk they have to take during this crisis? Of course, they should. Enter allowances.

The idea that all government employees at the same ‘level’ deserve the same remuneration as a public sector employee that clocks in at 11 am and clocks at 4 pm, with long namaaz and tea breaks, and zero work related stress? It is ridiculous. So, over the years, the bureaucrat-politician nexus sought to separate the remuneration of the star public sector employee from the ordinary public sector employee.

The problem is that all public sector employees are tied to a central nervous system of state employment called the Basic Pay Scale (BPS) which decides what ‘level’ you are at. The BPS is the grade system. The highest grade is Grade 22, or BPS 22, and the lowest is Grade 1, or BPS 1.

Several problems exist with this dilapidated and broken system, but two are of special concern as the country enters what is expected to be perhaps the most difficult year for the economy in living memory (remember, average age in Pakistan is just a shade under 23, so at least half of all Pakistanis have no memory at all of anything prior to 1998!).

The first problem that the BPS system has created is what should be called the ‘allowances crisis’. At Rs158 billion, allowances for federal government employees are skewing the entire system of calculating remuneration and destroying the system’s capacity to transparently reward extra effort, or higher risk. All of the premiums in government remuneration are being hidden under this massive blanket. This introduces a range of challenges, from the mundane (it is hard to keep track of all the different allowances and who is getting what) to the very substantial (what determines who qualifies for an allowance and who does not).

In total, there are at least fifty types of allowances that federal government employees receive. My favourites among them? The ‘Dusting Allowance’ with budget code A01230, ‘Raining Allowance’ with budget code A01234, and ‘Dearness Allowance’ with budget code A01205.

The allowances crisis enables the repeated citation of the BPS ‘pay’ as the remuneration that government employees receive, with no reference or accounting for the allowances being paid.

The second problem that the BPS system is creating is the opacity in the public remuneration crisis. The truth is that not all federal government employees receive the same amount of allowances, and thus, some government employees are indeed, ‘poor government servants’ whilst others are not so poor – or certainly not as poor. An opaque rewards and incentives system will not only open up the system to abuse, but will engender entitlement and mediocrity. Any honest assessment of the current state of government capacity reinforces these truths, emphatically.

By the end of the coming fiscal year, barring an act of God, the economic and fiscal crisis in Pakistan will cause the bureaucrat-politician nexus to come up with even more accounting magic tricks to try to continue a facade of normalcy. But these magic tricks have an expiry date. The contest for funds is the ultimate political theater. Attempts to conduct a theater under a massive blanket are amateurish and silly. It is not just the PTI and this government that is guilty; these magic tricks have been normalized over the last two decades, instigated originally by another massive economic crisis that almost consumed the country.

No system can survive permanent stasis. Pakistan’s public sector has not been reformed since 1974. The BPS system is dated, broken, unfixable and the root of both deliberate and unwitting corruption. The allowances crisis and opacity in the public remuneration crisis cannot be solved without a dismantling of the BPS system and the termination of the idea that government jobs are an instrument of social protection. They are not. But they may be cannibalizing the capacity of the system to devise and deliver actual social protection.

The writer is an analyst and commentator.