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Politics of Pay Reform Politics of Pay Reform Lessons of Experience Lessons of Experience
from Africafrom Africa
Kithinji KiraguDenyse Morin
Rwekaza MukandalaMay 2003
OverviewOverview
• Pay is a Key Public Service IssuePay is a Key Public Service Issue
Comparatively poor pay has remained a feature of most public services
Major feature of concern for public services in most countries
The ProblemThe ProblemWhy have efforts made to bring about
pay reform not resulted in more success?
Why have pay levels remained low?Why has implementation been difficult?Has this happened because of:
o Poor implementing capacity of relevant agencies?
o Institutional environment within the concrete circumstances of each country?
o What is the influence of politics?
Study ObjectivesStudy Objectives
Explore and describe the context and limits to which models have guided pay reform strategies and policies
Collect and organize data and information on public service pay reform experiences
Explain the political contexts and rationales underlying pay reform policies and strategies adopted
HypothesesHypotheses
Technical solutions to public service pay reform without due attention to a country’s political context are not sustainable
A successful strategy for public service pay issues is underpinned by choice of correct tactics and sequencing of the appropriate measures
Approach/MethodologyApproach/Methodology
Two-stage process to see if there is a match between the technical choices, political developments, and pay reform implementation:
First StageFirst StageMap out in detail the solutions
(choices), the tactics and the sequences Identify & analyze any major political
considerations and developments Illustrate and trace implementation of
public service pay reforms including identifying implementation stages
Attempt to see if there is a correlation between the three variables mentioned above within the country
Second StageSecond Stage
Comparatively match the experiences of the countries under study on the basis of the three variables mentioned above
Establish if there is any correlation across countries along these variables
Country FactsCountry FactsVARIABLES COUNTRIES UNDER STUDY
BENIN BOTSWANA
BURKINA FASO
GHANA
TANZANIA
UGANDA
ZAMBIA
Estimated population (in millions), about 2000
6.0 1.6 10.0 17.0 30.0 19.0 9.0
Average Rate of Population Growth (per cent per year), 1990-2000
2.9 2.5 2.7 2.9 3.2 36 3.0
Average Real GDP (in million USD), 1990-2000
2,059 5,060 2,297 6,544 5,417 5,788 3,733
Average GDP per capita, 1990-2000 (in USD)
372 3,461 228 382 183 297 419
Average Rate of Real Economic Growth (Percent per year), 1990-2000.
5.0 5.0 3.0 4.0 3.0 7.0 1.0
Average Budget surplus/Deficit (in million USD)
(52) 183 (82) (326) 17 (132) (No)
Average consumer Price change (percent change over previous year), 1990-2000.
9.0 11.0 4.0 27.0 19.0 16.0 90.0
OverviewOverview
Pay Regimes
Politics and Pay
Politics matters
Institutions matter
Significant Definitions:Significant Definitions:Pay & SalaryPay & Salary
Pay=salary+monetary benefits+ in-kind benefits [including retirement]
Nevertheless, salary remains the core element of pay
When salary is replaced by benefits and allowances there are explicit or implicit technical and/or political considerations
Salary trend is a good pointer to the decisions underlying pay changes
Median Real Salary Median Real Salary TrendsTrends
0
2000
4000
6000
8000
10000
12000
14000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001year
Am
ount
(U
S $
p.a
)
Benin Botsw ana Bukina Faso Ghana Tanzania Uganda Zambia
Salary Compression RatiosSalary Compression Ratios
Figure 2.3: Nominal Salary decompression ratio: 1992-2001
Source: Annex Table 2.3
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Year
Rat
io
Benin Botswana Bukina Faso GhanaTanzania Uganda Zambia
Summary of Trends in 1990sSummary of Trends in 1990s
Botswana: consistently high and decompression
Ghana & Zambia: overall deterioration, increased use of benefits
Bénin & Burkina Faso: declining salary levels and compression
Tanzania & Uganda: rising levels and decompression to a point
Models, Tactics & TechniquesModels, Tactics & Techniques
Models Tactics and Techniques1. Corporate National incomes policy, review
commissions, moderated collective bargaining
2. Salary indexation Politically preemptive, controlled collective bargaining
3. Wage bill & employment modeling
Invoking affordability constraints, controlling numbers
4. Pressure-driven /patronage
Ad hoc awards to politically strong or favored groups
5. Cost of living/MLW Emphasis on egalitarian objectives
6. Job evaluation /salary regrading
Job specification, workload assessment, emphasis on equity
7. Market benchmarking
Comparator studies, decompression
8. Performance-related
Performance management systems and productivity measurement
Three Pay Model CategoriesThree Pay Model CategoriesMODEL CATEGORY
MODELS
Technically rational (TR)
•Performance-related•Market benchmarking•Job evaluation and regrading•Wage bill & employment modeling
Politically rational (PRA)
•Cost of living/MLW•Salary indexation•Corporate/consensus
Politically reactive (PRE)
•Pressure-driven/patronage
Model Trends since 1960sModel Trends since 1960s
TR •Ghana
•Botswana•Uganda
•Botswana•Tanzania
PRA
•Burkina Faso•Benin•Zambia•Botswana•Ghana•Uganda•Tanzania
•Botswana
•Zambia•Tanzania
•Botswana
•Tanzania
•Burkina Faso•Benin
•Uganda
•Burkina Faso
PRE
•Ghana•Burkina Faso•Benin
•Uganda
•Zambia
•Burkina Faso•Benin•Uganda
•Tanzania•Zambia•Ghana
•Zambia•Benin•Ghana
PERIOD 1960-75 1975-85 1985-90 1990-95 1995-2000
Politics MattersPolitics Matters
What constitutes the essence of politics is the constraints under which political actors operate and the strategic maneuvering that they occasion and that occurs within them
Politics is a complex game of strategic calculations. Politicians often face the so-called “politicians’ dilemma” in deciding among a set of policy preferences:
Politician’s DilemmaPolitician’s Dilemma
CONFLICT:• To survive in office• To govern effectively &
efficiently• To build a loyal political
organization
TRADE-OFF:• Technical considerations
for effective performance• Partisan loyalty
Institutions MatterInstitutions Matter
Variations among politician’s preferences largely depend on the nature of the political system, and the nation’s institutions.
ActorsActorsTHE POLITICAL SYSTEM
ADMINISTRATIVE INSTITUTIONS Chief Executive Ministers Public Sector
Bureaucracies and Technocracies
THE DONOR COMMUNITY Donor Agencies Consultants
MARKET INSTITUTIONS Private Sector The Business
Community
POLITICS OF RESOURCE MOBILIZATION AND ALLOCATION (The Budgetary Process)
CIVIL SOCIETY INSTITUTIONS
The ruling political party
Political Parties in opposition
Trade Unions Media Others
REPRESENTATIVE INSTITUTIONS Parliament Local Government Councils/Assemblies
Political SystemsPolitical Systems VARIABLE BENIN BOTSWANA BURKINA
FASO GHANA TANZANIA UGANDA ZAMBIA
Political System Monopolistic Uncompetitive
Pluralism Competitive
Pluralism
X
X
X
X
X
X
X Political Stability Unstable Unpredictable Fairly Stable Stable
X
X
X
X
X
X
X
Regime Legitimacy Low Medium High
X
X
X
X
X
X
X
Institutionalization (a) Low (b) Medium (c) High
X
X
X
X
X
X
X
Social Basis of the State/Regime Factional basis `National’ basis
X
X
X
X
X
X
X
Politics and Pay ReformPolitics and Pay ReformVariables Uncompetitive
PluralismCompetitive Pluralism
Uncompetitive Monopolistic
Political Competition
Tamed Politics Highly Competitive
Non competitive
Institutionalization
High Low Low
Legitimacy High Medium Low
Stability High Fair Unpredictable
Pay Models Technically Rational
Politically reactive
Politically reactive
ConclusionConclusion Politics Matters. The nature of the political
system, regime legitimacy and stability, and the dynamics of the political process are all critical variables in pay reform
Institutionalization of political life and organizations matter. Acceptance and respect for rules of the political game by major political actors and the general citizenry is very important, especially for competitive political systems
Ultimately and ideally, technical models can fully and sustainably prevail in a competitive political system that is highly institutionalized, stable, and enjoying high levels of legitimacy.
The Way ForwardThe Way Forward
Political and Institutional Environment
Policy and Strategy
Stress-free •Scope for technically-rational models•Watch out for stress
Stressed systems
•Long-term perspective•Politically-driven strategy•Consensus building•Strengthening institutions