Every Pakistani government, elected or self-appointed, has attempted to reform the bureaucracy. And this government is no different: less than a month after Prime Minister Imran Khan took office, he set up a task force with this objective. His predecessor Nawaz Sharif tried to do the same under his ambitious but now abandoned Vision 2030. Before Sharif was the powerfully-named but ultimately inconsequential National Commission on Government Reforms that had been set up in 2008. Despite these attempts, the bureaucracy and its structure remain remarkably constant since Bhutto’s much-criticised reforms in the 1970s and its colonial origins continue to permeate in practice.
The current attempt at reform is ambitious and wide-ranging. Amongst the first reforms to be notified were the new retirement rules, published on 15th April 2020 under the title Civil Servants (Directory Retirement from Service) Rules 2020. On April 30, the prime minister instructed the Establishment Division to implement the rules and compile the names of civil servants serving in different ministries to review their performance. In July 2020, at the start of the new financial year, the scrutiny of civil servants to be compulsorily retired began under these new Rules, with a news report stating that the Establishment Division had sent 565 names from across cadres and pay scales for review.
The background on the framing of these new rules is difficult to pin down. They were first mentioned in a news story in February 2020, in which a government source explained that the new rules were meant to jog the complacency of civil servants who had no incentive to innovate or perform due to an “assured career path to 60 years”. This assurance was the result of the government not utilising the legal option provided by Clause 13 of the Civil Servants Act to retire officials after 20 years of service. However, in perusing the minutes of the first 16 meetings (available on the Institutional Reform Cell's website; no further minutes or working papers are available) of the Civil Service Reform Taskforce (henceforth CSRT) and the Austerity Measures and Government Restructuring Taskforce (AGRT), the discussion on retirement is focused on retirement age and compulsory retirement is not explicitly mentioned. It is possible to link the new rules to the AGRT’s desire for a “lean, efficient and responsive” government (meeting 1). The AGRT began its deliberations with a discussion on the size of the government and its wage bill. For 2008, the federal government employed (excluding the military) 622,676 officers, with nearly 97% of them falling in BPS 1-16. The wage bill for that year for the federal government (excluding the military) was Rs 88.7 billion, of which nearly 90% goes to officials in BPS 1-16. But the AGRT’s deliberations do not mention the government’s pension liabilities and as we show later in this piece as well, pensions surprisingly do not seem to factor into deliberations on these new rules. Instead, the minutes for the first meeting of the AGRT note that the Chair, Dr Ishrat Hussain, proposed “to reverse the lopsided structure and reallocate resources (wage bill savings) from BPS 1 to 16 to BPS 17 to 22". Unsurprisingly, therefore, reforms proposed by these task forces such as the creation of a National Executive Service and the creation and upgradation of posts have been received with hostility by civil servants who occupy BPS 1 to 16 and particularly those who belong to the provincial civil services.
Old rules, new rules
Before the introduction of these new rules, the Efficiency and Discipline Rules 1973 dealt with misconduct and compulsory retirement. Some have questioned the need for the new retirement rules, commenting that the existing definition of misconduct in the 1973 rules was sufficient to encompass bureaucrats that the government wanted to get rid of. However, we believe that there is a reasonable case to be made that there are gaps in the process for compulsory retirement outlined in the 1973 rules, particularly in providing a neutral review of bureaucratic performance, that merit updated rules. The Civil Service Reform Taskforce saw this and took on the task of amending the 1973 Rules, with a particular focus on defining ‘efficiency’ and 'inefficiency’, and refining expectations of civil servants with regard to accountability, performance management systems and KPIs. However, until the 16th meeting (no further minutes are available), there was no consensus on how to define these terms.
The new rules seem to compress the categories of compulsory retirement, removal from service, and dismissal from service. They divide civil servants into three categories based on their grade and establish a separate retirement board for each category. Each of the boards has representation from the Establishment Division, the Finance Division, and the Law and Justice Division. While this ensures some diversity and equity in those making recommendations regarding bureaucratic performance and compulsory retirement, the foundation of the new rules is flawed.
In scrutinising the rules, we ask the following questions:
• Do these new rules reduce the discretionary power of senior bureaucrats?
• Is it possible to implement these rules in a fair and transparent manner in the absence of other reforms to the civil service structure and performance management system?
• How will the compulsory retirement of inefficient, incompetent, or corrupt bureaucrats reduce wage and/or pension spending?
Do these new rules reduce the discretionary power of senior bureaucrats?
The new rules state that the decision to retire a bureaucrat lies with the competent authority — not the retirement board. The rules provide the competent authority considerable discretionary power that will likely keep intact the existing incentive structures bureaucrats work under.
Under the new rules, the competent authority will review the recommendations of the retirement board. If they decide to proceed, they will issue a show-cause notice and proceed further. Depending on the Basic Pay Scale, the competent authority varies: for the federal secretariat, it is the Prime Minister, the department’s Secretary, or an officer notified by the Secretary, as outlined in the Civil Servants Act 1973. Effectively then, a bureaucrat’s fate is in the hands of the competent authority. Should they choose, the authority can overrule the retirement board’s decision based on the response a bureaucrat has given to the show-cause notice, or they can choose to ignore the retirement board's recommendation entirely and not even issue a show-cause notice.
As such, the new rules are perpetuating the kind of discretionary power contained in the Efficiency and Discipline Rules. This is not a new issue. For example, in a 1979 Office Memorandum (No. 6/8/79-D.I.-1979, ESTACODE 2015, page 829), the Establishment Division notes that the Services Tribunal overturned a case of compulsory retirement since the officer was issued no show-cause notice and had been given no opportunity to present their side of the story. The new Directory Retirement Rules do little to reduce such discretionary powers. In fact, the new rules allow the competent authority the discretion to allow bureaucrats who have been found guilty of corruption to receive a pension.
Is it possible to implement these rules in a fair and transparent manner in the absence of other reforms?
The new Directory Retirement rules are based on the expectation that the civil service has extensive, objective, and meticulously maintained performance records. It doesn’t. The rules specify that the recommendation to retire a bureaucrat must be made when at least one of the following five conditions are being met:
1) Average Performance Evaluation Reports (PERs, previously known as ACRs) or “adverse remarks” across at least three PERs from three separate officers “for a period not less than six months”;
2) Superseded for promotion twice by the relevant selection board or promotion committee;
3) Guilty of corruption;
4) Placed in category ‘C’ by promotion committee or selection board more than once;
5) “Conduct unbecoming”.
These conditions require that the bureaucracy's broader structure to work effectively: performance records have to be objective and regular, corruption allegations properly examined, and decisions on matters such as promotion issued such that they can withstand legal scrutiny. But this isn’t the case. For example, while PERs are widely accepted as a means of measuring performance, senior bureaucrats admit that filling PERs is sometimes a compromised process as there is considerable negotiation over what score a bureaucrat will get.
Another concern is disputes and how they are resolved in our legal system. Superseding officials for promotion, categorisation in category ‘C’, and accusations of conduct unbecoming will very likely be controversial decisions. Many bureaucrats will appeal while others will approach service tribunals and courts where the process can take years, placing additional burden on the state. It is very likely that the process to recommend and finalise retirement will be long drawn out, contested, and fraught. The CSRT did envision this and there were discussions around improving internal accountability processes and amending the rules of the federal and provincial service tribunals. However, the notification and implementation of the Directory Retirement Rules 2020 precedes any such changes, leaving a gap in implementation.
These gaps are widened by what anyone with even a passing familiarity with the bureaucracy can tell you: paperwork has a life of its own. Files disappear and reappear with regularity, bureaucrats dispute comments and signatures on paperwork, and simple documents take months to draft and finalise. Such negotiations offer the opportunity for transactional relationships amongst bureaucrats — bribes can be paid to make paperwork disappear and promises can be made to expedite some files, and slow down others.
Until reform targets all of these features, any exercise dependent on measures of performance or detailed records will remain flawed and controversial — undermining the attempt to streamline the compulsory retirement process. In a story published soon after the new rules were notified, it is evident that Dr Ishrat Hussain is well aware of this when he says that “it would be a mistake to examine each component as stand-alone without realising its inseparable linkages with other parts of the chain [of reform]”.
Dr Hussain also unveiled proposals impacting the entire life cycle of a bureaucrat — from recruitment to training to performance management and career progression to retirement. From the minutes of the CSR Taskforce meetings (meeting 11), there was an awareness that retirement rules can only be assessed once other aspects of civil service recruitment and performance are addressed and reformed. However, the question then is why were these Directory Retirement Rules introduced prior to the introduction of other, more fundamental reforms to the civil service structure? This might be indicative of the priorities of the government or its desire to aim at low hanging fruit. On the face of it, the new rules do not require an overhaul of systems or significant expenditures. But they do require that existing processes function properly, which is not the case — in effect, undermining the entire reform effort.
How will compulsory retirement of inefficient, incompetent, or corrupt bureaucrats reduce wage and/or pension spending?
The new rules are not exactly going to reduce the burden of the pension bill on the treasury. As per clause 7 of the new rules, a civil servant who is directed to retire will “be eligible for pension or other retirement benefits as the competent authority may, in public interest, directs”. In effect, by forcibly retiring under-performing bureaucrats, the state is potentially signing on to pay more in pensions rather than less, in a manner very similar to pensions in defence services. In an article published in July 2020, Afshan Subohi quotes sources as saying that 25-30% of the pension bill is for BPS 19-22 officials and that the defence services pensions bill is "almost triple the size of the pension bill of civil servants".
The pertinent term in the determination of whether or not a pension will be paid to a compulsory retiree and in deciding upon directory retirement is whether doing so is in ‘public interest’. This is a phrase commonly used in bureaucratic codes but it is difficult to define, making this an avenue prone to misuse by the government. This is particularly important as the mechanisms for citizens to hold the state accountable in Pakistan are weak or non-existent, giving the state (in this case, the bureaucratic elite) an all-encompassing discretion over determining what does and does not constitute “public interest”.
In effect, if a bureaucrat is compulsorily retired at age 45 for poor performance, and the competent authority determines the pension is to be paid (perhaps because they don’t want the bureaucrat to challenge the decision), the state will likely end up paying their pension for the next 20-30 years. Though the government's Pension Rules state that pensions granted to those compulsorily retired shall not be more than two-thirds of the amount they would have received had they retired for a medical reason, there is no mention of this in the new rules. These gaps are surprising because the CSRT working paper on retirement age clearly notes the inflation of the pension bill as retired officers have increased to over two million and recommends an increase in retirement age to utilise the ‘ample potential’ of retired officers currently employed through contracts.
While any employee is and should be entitled to a pension as a moral principle, the government needs to think carefully about the impact of new policies and reforms on its already significant pension and salary commitments. Business Recorder notes accurately that pension payments make it more lucrative for civil servants to opt for early retirement (permitted after 25 years of service), draw a pension, and take up other work — possibly contractual work with the government itself. In effect, these new retirement rules require pension reform, of which Dr Ishrat Hussain and the government are well aware. However, progress on this front has been slow with the members of a newly constituted Pay and Pension Commission resigning.
In effect, the new retirement rules seem to place the cart before the horse. Performance evaluations of civil servants are a welcome step, but directory retirement of civil servants regarded as “dead wood” has consequences for matters such as pensions and litigation. It is important to ask whether these rules bring about sufficient changes in decision making structures to incentivise civil servants to perform. We argue that in the absence of reform to structures and processes they do not.
The authors are grateful to retired senior civil servant Mr Suleman Ghani for his input on this article.