Public servants cost national kitty over Rs8tr, study reveals

ISLAMABAD: The federal government spends over Rs8 trillion on paying its 1.92 million employees and providing pensions on top of over six dozen kinds of perks, privileges and other dole outs, yet knowing little about their contribution, outcome and impact on taxpayers.

While the judiciary gets the highest in perks, it is the Pakistan Administrative Services (PAS) — erstwhile DMG — that manipulates special benefits instead of allowing the professionals of other cadres to excel and return the taxpayers with outcomes.

This is the crux of the latest study conducted by a five-member team of state-run Pakistan Institute of Development Economics (Pide) led by Nadeemul Haque.

Pide says PAS favoured with ‘non-monetary benefits and better appointments’

“In Pakistan…the cost of paying these employees is about Rs3 trillion, and pensions cost about Rs1.5 trillion. Project workers, people working in government companies, and other organisations cost approximately another Rs2.5 trillion” while the total amount spent on wages and salaries of the military becomes around Rs1tr, the study, titled ‘Life time Cost of Public Servants’, said.

Pay scale revision

It said the Basic Pay Scale (BPS) of 1983 had undergone a series of revisions, with a total of 12 updates implemented since its inception — the latest revision in 2022. “Sadly, none of these revisions were based on modern human resource principles to develop modern public sector incentives with market conditions and the needs of modern management,”

It said the BPS system continued with the socialist one-pay scale structure across the entire public sector with a few minor tweaks but PAS was increasingly favoured with non-monetary benefits and better appointments. The technical or professionally skilled remain sidelined in terms of grades and in terms of non-monetary benefits.

While the national pay scales later sought to enter the system to lateral entry to BPS for technical or sector specialists in management payscales and special payscales (MPs & SPS) but this was made difficult and yet “all subservient to PAS”.

The study on perks and benefits of civil servants concluded that as generally believed, civil servants are not at a salary disadvantage; in fact, there was a lot more which never reflected on their salary slips.

The study noted that with higher grades, the proportion of cash allowances in pay and quantified perks in the total cost increases and government housing facility, given as an in-kind benefit, has never been accounted for in the total cost of the civil servants.

The use of official vehicles for personal use by grade 20-22 officers increases the total cost by more than 1.2 times the basic pay. In addition are the medical allowances and medical bills reimbursements.

The study noted, “Perks and different allowances add to the total cost of civil servants substantially, and if monetized, would break the myth of low salaries in the public sector. The judicial employees receive the highest number of perks… The secretariat and other ministries’ staff also gain 150pc of their basic salary as an allowance.”

Unproductive employees

Pakistan is facing a growing financial challenge due to the high number of non-productive government employees. Politicians pride themselves on placing their favourites in the public sector knowing that the taxpayer has no say in the process and will pay the cost.

“Yet no one looks at what the cost of this dirigisme politics is! Not only are most political employees mostly employed in positions where they are not productive, they are also a drain on the budget,” the study found out.

The cost of bad recruitment can be significant, both in terms of financial losses and the opportunity cost of lost opportunities. The employment practices of political governments in developing economies often stem from a combination of political motivations, short-term focus, lack of economic expertise, and societal expectations.

“While immediate job creation can have positive effects, it’s crucial …[to] strike a balance between short-term gains and sustainable fiscal policies,” it concluded.

Published in Dawn, October 16th, 2023