Civil Servant’s Compensation is Higher then Private Sector in Pakistan

A study conducted by Pakistan Institute of Development Economics (PIDE), Estimates of the total compensation of the civil servants, including monetary wage plus allowances, and quantified in-kind and intangible rewards, show that civil servants are not underpaid since a large chunk is not declared on the salary slip.

In a study conducted in consultation with the United Nations Development Programme (UNDP), the PIDE notes that various pay and pension commissions took arbitrary decisions for revisions in remunerations and housing and transport facilities are being massively misused by the civil servants.

The report says the total cost of a grade-21 officer is estimated to be 12 per cent higher than a UN national officer’s. 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 estimate that the public sector wages in Pakistan are 53pc higher than the private sector wages.

The report notes that as civil servants go up grade ladder, the proportion of cash allowances in total pay increases, and so does the proportion of quantified perks in the total cost. Government housing facility, given as an in-kind benefit, is never accounted for in the total cost of the civil servants – something that has a huge opportunity cost to the government.

“Perks and different allowances add to the total cost of civil servants substantially, and if monetised, would break the myth of low salaries in the public sector,” the report notes. Instead of indexing salaries and developing a proper payment system, the pay and pension commissions’ approach has been to provide arbitrary allowances.

“These allowances, such as housing and conveyance allowances, are often unrelated to the market conditions. The system causes further disparities when the more powerful service groups can get more plush housing than their counterparts in the occupational groups,” says the report.

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