How to deal with the bloated civil service

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By Ramon Navaratnam

Finally, the government has itself described the civil service as bloated.

To his credit, Second Finance Minister Johari Abdul Ghani openly and honestly stated that the civil service, although bloated, will not be reduced, but it will be made more multi-tasked, to improve productivity. This statement is serious but is also worrisome.

We now have one civil servant serving 19.37 people. The ratio is 1:110 for Indonesia, and for China 1:108, while it is 1:50 for South Korea. We won’t compare ourselves to the low ratio of 1:71.4 in Singapore because it’s a small island and with hardly any rural population.

But why is our civil service so bloated?

1. We recruited rapidly to give jobs for the boys when the output from the education system expanded. We even had an “Operasi Isi Penuh” programme at one time. That is, we rushed to create jobs and filled them fast.

2. Unlike the private sector, we rarely retrench staff even in bad times. We hardly sack anyone for inefficiency and even for wastage of public funds.

3. The civil service has become a sacred cow, which has to be handled gingerly for fear of reaction against the federal and state governments at the ballot box.

4. Life is relatively comfortable especially at the lower levels of the civil service. Salaries are better than before, pensions are secure, health services are generous, and the drive to be more productive is soft.

In fact there is now a strong “manja-manja” attitude towards the civil servants. So the demand to join the civil service is high, but the supply of jobs is slowing down considerably, as the whole economy declines.

How can we cut the fat in the civil service?

1. The government should decide to reduce the size of the civil service to avoid the strain on the budget deficits, especially in the future.

2. The salary and pension bills are going up, whereas productivity is not publicly perceived to be going up. Those who deal with government often enough, will tell us more about the undue delays, the corruption and the often “tidak apa” or lackadaisical attitude shown on the ground, towards the public.

3. The government should appoint a high level task force, if not a royal commission, to examine ways and means of cutting the civil service down to an efficient and reasonable size.

To start with, the government should change its stand that it has “no plans to to reduce the 1.6 million bloated civil service”. If the government finds it difficult to reduce the civil service, then please freeze recruitment into the civil service or make recruitment more sparing and definitely much more selective. Please go for more quality and less quantity.

4. The civil service is huge because the public sector has been designed to be inordinately large.

This has evolved because the private sector has been denied and deprived of greater opportunities to serve the public. There are many government services, facilities and works and supplies that can be provided more efficiently by the business sector.

In fact this could be the way forward, for more Bumiputera contractors and other races to participate more actively and competitively, to serve our society better.

5. The costs of maintaining the civil service, at RM74 billion in 2016 for salaries and allowances is not sustainable.

The pension bill of RM19 billion per annum, without any contribution to the GDP by retirees, is also unbearable in the longer term. At the same time, according to Johari, the revenues from palm oil and oil and gas have been falling drastically.

So where do we go from here?

In conclusion, it is basic economic and financial logic that we cannot afford to cope with rising salary expenditures and lower revenues. It is much more difficult to raise revenues than to cut expenditure.

The government has said that our fundamentals are strong. Indeed, they are reasonably healthy at this time. But at this rate of a growing civil service that is now acknowledged as bloated, and therefore not very efficient, we cannot afford to assume that the economic and financial fundamentals, can continue to be strong for much longer.

My appeal then is for the government to more actively seek to reduce the size of the civil service and to act soon, without undue delay. Our good economic fundamentals are being seriously threatened and we must preserve and protect them from further risks.

Ramon Navaratnam is chairman, Asli Centre for Public Policy Studies

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