The merger and migration of some government agencies appears to have resulted into more wage costs contrary to the planned efficiency saving, undermining government reforms on remuneration in the public sector .
According to the budget framework paper recently approved by cabinet, government wage bill registered a huge leap between 2008 and 2011 even as treasury froze increases in public sector pay.
The increase is partly due to the merger of some institutions. Various government agencies were merged to form institutions like Rwanda Development Board, Rwanda Governance Board (RGB) and the National Agriculture Board (NAEB), among others to create efficiency.
For instance, RDB’s wage bill is set to increase by 127 per cent since 2008 to Rwf3.7 billion in 2012/13. RDB was formed by merging eight government institutions. On the other hand, total wages and salaries paid to workers of Rwanda Education Board will increase by 100 per cent to Rwf1.5 billion in the period under review.
Total government wage bill rose to Rwf91.7 billion in the fiscal year 2011/12 from Rwf40.5 billion in 2008. The figure is expected to reach Rwf121.8 billion in the next fiscal year, which begins on July 1 2012, representing an increase of 201 percent since 2008.
In the next fiscal year, treasury plans to increase wages and salaries for civil servants by Rwf28.6 billion to Rwf176 billion, which represents 3.7 per cent of GDP, in the face of constraints to raise resources for financing development.
The increase, it says, would allow government to implement a new policy aimed at enhancing its capacity to attract, retain and adequately motivate personnel with the requisite skills to the public sector. Government also seeks to improve service delivery under the new policy.
Nearly two thirds of the proposed increment is expected to be used in bridging the gap between the lowest paid and highly paid civil servants where lower public primary teachers are likely to be the biggest beneficiaries.
Government seeks to finance the increase by slashing spending on what it termed as non-priority programmes like meetings, seminars, trainings and the purchase of office paper.
“We have to forego certain things not because they are not important but because the investments in these areas would bring more returns in other sectors,” said Elias Baingana, Director General of National Budget in the Ministry of Finance and Economic Planning.
He added that: “It is a sacrifice aimed at increasing budget efficiency.”
According to Dmitry Gershenson, the Resident Representative of the International Monetary Fund (IMF), there is need to create a balance.
“You have to be balanced because you can have all these wonderful projects but if you don’t have people to take care of them, there could be a problem,” he said.
However, the treasury plans to freeze increases in the wage bill for the subsequent two fiscal years, 2013/14 and 2014/15.
“It was observed in the recent assessment of the public sector pay and retention environment that the 2006 pay reforms were greatly undermined by ad hoc and piece meal adjustments which later created distortions. The implementation of the 2012 Pay and Retention Policy is prone to the same risks if no measures are taken to the contrary,” the budget framework paper states.
The recent increase in wage bill is also partly a result of some government agencies that hire contractual personnel over the staff limit provided in the organisational structure.
This, according to the Ministry of Finance and Economic Planning, translates to a parallel wage bill which can sometimes impose a significant financial impact.
To control government agencies from hiring contractual staff above the number provided in the organisational structure, the move should be approved by cabinet or the Ministry of Public Service and Labour.