Pay rise and increasing number of civil servants would increase salaries and pensions by 64%

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The pay rise and increasing number of civil servants would increase salaries and pensions by 64% or RM 87.2 billion to RM 224.5 billion under the Ninth Malaysian Plan (9MP) from RM 137.3 billion under the Eighth Malaysian Plan (8MP)

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Speech at Forum “Civil Service Excellence: Quality Vs Quantity"

by Lim Guan Eng

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(Kuala Lumpur, Wednesday): The pay rise and increasing number of civil servants would increase the salaries and pensions by 64% or RM 87.2 billion to RM 224.6 billion under the 9MP(2006-2010) from RM 137.4 billion under the 8MP (2001-2005). The principal question is whether our country would be able to afford such a salary and pension load on our nation’s finances if the civil service is allowed to go bloated unchecked.

This RM 224.5 billion for salaries and pensions is a huge expenditure amount, even larger than the RM 200 billion development expenditure ceiling. Before the salary hike, emoluments (RM 154.6 billion) and pensions (RM 41.9 billion) amounted to RM 196,552 million. After the RM 8 billion extra annually as a result of the pay hike, the total bill under the 9MP comes up to RM 224.6 billion. This compares with the RM 137.4 billon under the 8MP, a huge 64% increase of RM 87.2 billion as the table below shows. Worse this expenditure does not include the salaries of the nearly 167,000 vacancies in the civil service yet to be filled.

Federal Government Operating Expenditure, 2000-2010

Item	RM Million					Average Annual Growth Rate (%)
	2000	2005	2010	Cumulative		Average Annual Growth Rate (%)
	2000	2005	2010	8MP	9MP	8MP	9MP
Operating Expenditure	56,547	97,744	135,723	396,722	595,529	11.6	6.8
Emoluments	16,357	25,587	34,677	108,772	154,647	9.4	6.3
Supplies and Services	7,360	17,984	28,943	70,557	119,384	19.6	10.0
Debt Service Charges	9,055	11,604	18,877	52,373	79,449	5.1	10.2
Pension and Gratuities	4,187	6,808	9,638	28,583	41,905	10.2	7.2
Grants to State Government	2,077	2,616	3,374	12,183	14,136	4.7	5.2
Asset Acquisition	572	1,603	2,440	7,083	10,374	22.9	8.8
Subsidies	4,824	13,009	6,404	29,712	30,941	21.9	-13.2
Others	12,115	18,533	31,370	87,459	144,694	8.9	11.1

Do we need so many civil servants? Are we getting value for money from a quality civil service?

This forum is intended to let UMNO Youth Deputy President Khairy Jamaluddin prove his credentials as a politician by engaging in public discourse in the finest traditions of British universities on whether the alarming deteriorating state of the Malaysian service is due to short-sighted policies and political expediency. The end-result is a bloated civil service that is long in numbers but short in quality.

My economics advisor Tony Pua explains that part of the problem lies in short-sighted policies that allows the civil service to be used as a dumping ground especially for the ever growing number of unemployed university graduates to find some meaningful employment. I would say that that the other part of the problem lies in government leaders who are intelligent but refuses to see the problem for what it is by pretending to be stupid in continuing to play the numbers game.

The numbers speak for themselves. In 1990 there were 773,997 civil servants rising to 894,788 in 2006 and nearly 1.2 million now. What happened to the privatization policy which was supposed to reduce the number of civil servants to 500,000 but has instead increased by nearly 150%? This is more than just the failure of the privatization policy, it is also about the failure of deregulation entailing a smaller government that is leaner, cheaper and more expenditure efficient as well as reducing the financial burden to public finances.

Where is the use of cost-benefit analysis, output impact analysis, maximum benefits with minimal leakages and high multiplier effect?

The ratio of the country’s civil service to the population is proportionately higher than other countries at 4.68 per cent, which is much higher than compared to neighbouring countries. This is a 1% increase in a mere 6 years when the proportion in 2000 was 3.6%. Yet despite the increase, do we enjoy a corresponding increase in quality whether in terms of performance or better service to the people?

We know the answer to this question. DAP does not deny that there has been some improvement in certain sectors. After all if the number of civil servants have increased, there is improvement in absolute terms but there is certainly no 150% improvement in performance relative to the 150% jump in number of civil servants.

Unfortunately, any improvement in performance is more than offset by ever more rampant corruption or the worsening lack of accountability and transparency and widening abuses of power and wastage of public funds. For this reason, Tony is not wrong in saying that the civil service is used as a dumping ground just to allow the government to cater to its primary voters and sacrificing the nation’s long-term interests and competitiveness.

When incompetency, mediocrity and even corruption is associated with the civil service, it is most depressing that the government is still looking to increase the number of civil servants by 166,659 to 1,366,079. A pay rise should result in more talented and productive workforce but when there are no tests or examinations for the civil service, is civil service a right in exchange for votes or a privilege to serve?

The 7.5% to 42% pay rise in the civil service must be accompanied by good governance showing a corresponding rise in performance, integrity, efficiency and a better service to taxpayers

DAP hopes that the RM 8 billion extra spent annually for the salary increase which is derived from higher tax collections will be accompanied by good governance showing a corresponding rise in performance, integrity, efficiency, productivity and better service to taxpayers.

For too long have the public suffered from a small group of civil servants who victimized them with delays or poor service or even acts of corruption. DAP supports such a pay rise because improving integrity and performance will not work if their basic pay is not even above the poverty line. In fact the 15 year wait for a salary rise is too long and such salary review should be shortened to three yearly periods.

If their basic pay is lucrative, there is no need to turn to such corrupt practices to feed their families and focus can be given on improving the government’s poor delivery system. How inefficient and poor the performance and delivery system of the government is highlighted by the faulty electrical wiring and shameful leaking roof in Parliament on April 2005 in the Dewan Rakyat Chambers that disrupted proceedings and in the media center on 9 May 2007 despite the nearly RM 100 million spent on renovation works?

The shame that is the RM 270 million Court Complex in Jalan Duta continued when a leaked pipe caused flooding in 90% of the cafeteria on the ground floor with the water level ankle deep. Since the court complex started operations the shame of exposes of faulty and defective construction work continues unabated. Some papers even described it as a nightmare that began on April 30, just before the official opening on May 3, when two ceiling panels collapsed together with some lights. Less than a week after that, cracks measuring at least 3m long began appearing outside Magistrate's Court 4. On May 7, the air-conditioning in one of the High Courts malfunctioned, while on May 9 the entire complex experienced a blackout, resulting in several cases being postponed.

Malaysians are angry that despite spending RM 270 million to build the second largest court complex in the world, instead of feeling pride we feel shame at the poor quality of our construction work. Such failures only highlight the lack of transparency and accountability that resulted in poor delivery system such as:

On April 11, a burst pipe at the Immigration Department headquarters in Putrajaya caused widespread damage and brought daily operations to a halt. Operations resumed at 9am the next day;
On April 28, part of the ceiling of a multi-purpose hall at the Entrepreneurial Development and Co-operative Ministry in Putrajaya collapsed, causing a water pipe to drop and burst;
On April 30, two parts of a ceiling panel collapsed and there were deep cracks on the walls the new RM 270 million Jalan Duta Court Complex, the second largest complex in the world;
The Sultan Mahmud Airport in Terengganu was closed for night landings on two nights on 5 & 6 May 2007 because of a malfunction of the runway navigation lights.

The time has come to promote excellence upgrade the civil service with objective tests and examinations replacing self-appraisal or subjective evaluations by their bosses. More importantly errant civil servants must be severely punished.

That civil servants are rarely disciplined appear to give them immunity and make the public helpless from such excesses. The government should be more rigorous in taking action and strictly discipline non-performing civil servants who breach rules, caused public loss of funds, are rude or give poor service to taxpayers that caused unnecessary hardship to the people.

(30/5/2007)

* Lim Guan Eng, Secretary-General of DAP