19 May 2004	Wednesday	28 Rabi-ul-Awwal 1425

ISLAMABAD, May 18: The World Bank has asked the government to narrow the gap between wages in the public and private sectors by introducing appropriate measures in the next budget.

Official sources told Dawn here on Monday that the World Bank was of the opinion that the private sector was offering good salary packages to its employees, but the public sector was far behind and that the government should take notice of it.

According to the World Bank, there is a substantial evidence that real compensation for senior levels has declined over time and the gap between the public and private sector salaries and emoluments has steadily widened.

For the highest grade (BPS-22), the nominal salary and monetary allowances have increased from Rs3,000 per month in the 1950s to Rs38,000 at present, while consumer prices have risen 30-fold over the period.

Although the share of benefits, especially those in kind, at higher levels has increased, it is certainly not enough to compensate for the sharp drop in real pay, it says.

Real total compensation for civil servants at the highest level has probably decreased over the last half century by at least one-third. In the meanwhile, real incomes in the private sector have at least doubled, reflecting a general increase in the per capita incomes.

Even if one assumes that the gap between the top management positions in the private and public sectors was small initially, it would appear to have grown several fold.

The increasing use of MP grades, originally meant for top managerial positions in the public corporations and approximating more closely to the private sector pay, to attract managerial and technical skills to government also indicates the problems with the present levels of compensation.

Finally, the fact that there has been a historic decline of the pay compression (excluding in kind allowances) also seems to confirm the hypothesis that pay at the lowest level has increased significantly over time while it has declined at the highest level.

The pattern of compensation is undoubtedly contributing to two significant problems. First, relatively generous remuneration at lower levels increases the pressure for patronage-based employment of unskilled staff.

Second, below market rates at senior levels are unlikely to attract the quality of entrant that is needed at the highest level of government. The World Bank also believes that politically-motivated appointments in the civil service and transfer decisions have had a damaging impact on performance of staff.

For this reason, the decision of the federal cabinet to recruit people in grades 11-16 without involving the Federal Public Service Commission (FPSC) sends a disturbing signal.