Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
May 7, 2021

Pay and Pension Commission: Chairperson says time for serious reforms

ISLAMABAD: Chairperson Pay and Pension Commission Nargis Sethi has said that they would prepare an implementation plan along with a detailed report in order to give way forward to the government. A total of 29 Pay and Pension Commission/Committees were formed since the country’s inception but with no tangible impact.

“It is time for serious reforms, or we would not be able to cope with the contemporary requirements for governance and a few years down the lane, the bureaucratic apparatus would be gearing faster towards dysfunctionality,” stated the findings of a research report on civil service reforms launched by the Pakistan Institute of Development Economics (PIDE) here on Thursday. The report was prepared by PIDE team under the supervision of economist Dr Durre Nayab along with others in collaboration with the support of UNDP.

Ms Nargis Sethi said on the occasion of launching of the report that she recognized distortions within different allowances that call for an exercise of rationalization. However, she also reminded that the civil service extends beyond Islamabad and includes provinces and other allied departments and organizations. While answering a query, she agreed that there was no need to adopt piecemeal approach as comprehensive approach and strategy could tackle problems for bringing reforms into civil service.

Vice Chancellor PIDE Dr Nadeem Ul Haq asked for transparency as data was not available making any in-depth research more difficult. He criticised the World Bank-funded PIFRA project and said that millions of dollars were utilized but there was no data available in the public domain.

The report titled “Cash Poor, Perks (Plots, Privileges) Rich: Civil Service Compensation, Incentives, Dissatisfaction and Cost” launched in an online webinar states that there are distortions with the pay and packages within the civil services as there are different pay structure.

The report highlighted that there are 15 judges and the chief justice of the Supreme Court of Pakistan (SCP), along with around 130 judges in the provincial high courts, getting special pay packages.

Their remunerations range from Rs 1 million to Rs1.17 million. In addition to the monetary salary, numerous perks and privileges are also offered to the higher judiciary in Pakistan, such as cars, contingent staff, and unlimited utilities.

Civil servants are not at a salary disadvantage when compared to their counterparts in the private sector. The total cost of a Grade 21 officer is estimated to be 12pc higher than a UN national officer. Non-monetary benefits are much higher in the public sector than in the private sector, with 80pc of the private sector workers having no non monetary benefits.

In contrast, almost 80pc of public sector employees have more than three non-salary benefits. Except for an MPhil/PhD degree, there is a wage premium in the public sector at all education levels. Perks are an inefficient form of compensation as they are not linked to performance and efficiency. The World Bureaucracy Indicators of the World Bank estimates that the public sector wages in Pakistan are 53pc higher when compared to the private-sector wages.

The public sector pension system in Pakistan is rather generous. Although, the pension is calculated as 70pc of the last drawn basic salary at the time of retirement, if the raises granted by successive governments are included, it raises the pension to 122pc-140pc of their last drawn basic salary in some cases. On average, a person who serves the government for 25 years or more draws a pension until they turn 80. After their death, at least 13 heirs can claim family pension, including wife, unmarried daughter, underage children, widowed daughter, divorced daughter, disabled child, and other dependents.

Pakistan’s public sector pension system is also generous when compared to the pensions in the private sector. In the private sector, only those employees receive after-retirement benefits who work in the formal sector. The informal sector employees do not have any such system for their security in old age. Moreover, the blue-collar workers in the formal private sector only get meagre social security payments after retirement.

The study suggests the following measures for any future civil service reform effort in Pakistan.

Competitive compensation: The reform should begin by adequately compensating all civil servants so that their welfare is not compromised. Previous pay commissions’ recommendations failed because they recommended only an increase in pay and allowances while sticking to the existing system. The salaries of the civil servants must be on 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 who cross a mutually agreed-upon and predetermined efficiency bar.

Monetisation: The monetisation of all the perks should be a priority as it would give not only a more accurate picture of the remunerations but also reduce the disparities that exist within the structure. Government housing must be monetised. The monetisation of the housing facility can be started sequentially by grades within specified time limits, starting from grade 19-22 employees. Government housing assets have a market value of approximately Rs1.45 trillion. The government 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 leasing arrangements involving banks. It would ensure that the officials will have a fully maintained car from the very first day of the contract. The advantage of this model is that the bank would do the monitoring of the asset.