#

title

author

year

Cambodia: Selected Issues and Statistical Appendix

IMF

2007

2
2
2
2
2

Mongolia:
Mongolia:
Mongolia:
Mongolia:
Mongolia:

IMF
IMF
IMF
IMF
IMF

2008
2008
2008
2008
2008

Mongolia Public Expenditure Review

WB

2001

Albania Public Service Assessment

SIGMA

2008

Kosovo Public Service and the Administrative Framework

Assessment

SIGMA

2008

Montenegro Public Service Assessment

SIGMA

2008

Montenegro Public Expenditure Review

WB

2008

Salary Systems and Performance Related Pay

SIGMA

2008

Salary Systems and Performance Related Pay

SIGMA

2008

Serbia Public Service Assessment

SIGMA

2008

10

Belize Public Expenditure Review

WB

1996

11

Belize: A Review of Public Expenditures

IADB

2006

12

Yemen Economic Update: Fall 2004

WB

2004

Selected
Selected
Selected
Selected
Selected

Issues
Issues
Issues
Issues
Issues

and
and
and
and
and

Statistical
Statistical
Statistical
Statistical
Statistical

Appendix
Appendix
Appendix
Appendix
Appendix

13
14
15
15
15
15
15
15
15

Final Document on the Initiative for Heavily Indebted Poor

Countries (HIPC): Mozambique
Mozambique Capacity Building Study
Towards a Public Sector Management Strategy for West
Central Africa
Towards a Public Sector Management Strategy for West
Central Africa
Towards a Public Sector Management Strategy for West
Central Africa
Towards a Public Sector Management Strategy for West
Central Africa
Towards a Public Sector Management Strategy for West
Central Africa
Towards a Public Sector Management Strategy for West
Central Africa
Towards a Public Sector Management Strategy for West
Central Africa

IMF

1998

WB

1993

WB

1990-94

WB

1990-94

WB

1990-94

WB

1990-94

WB

1990-94

WB

1990-94

WB

1990-94

16

Zanzibar Public Expenditure Review

WB

2002

17

Lao PDR Country Economic Memorandum

WB

1994

18

Malawi Staff Appraisal Report - Institutional Development

Project 2

WB

1994

19

Philippines Growth with Equity:The Remaining Agenda

WB

2000

19

Philippines Growth with Equity:The Remaining Agenda

WB

2000

20

Comparative Institutional Diagnosis of Civil Service

Systems - Summary of 17 Country Evaluations

IADB

2003

20

Comparative Institutional Diagnosis of Civil Service

Systems - Summary of 17 Country Evaluations

IADB

2003

20

Comparative Institutional Diagnosis of Civil Service

Systems - Summary of 17 Country Evaluations

IADB

2003

20

Comparative Institutional Diagnosis of Civil Service

Systems - Summary of 17 Country Evaluations

IADB

2003

20

Comparative Institutional Diagnosis of Civil Service

Systems - Summary of 17 Country Evaluations

IADB

2003

21

Evaluation of Civil Service Systems - Case Study: Jamaica

IADB

2002

22

Background Documents for the Caribbean Regional Policy

Dialogue Meeting on Civil Service Reform

IADB

2004

22

Background Documents for the Caribbean Regional Policy

Dialogue Meeting on Civil Service Reform

IADB

2003

22

Background Documents for the Caribbean Regional Policy

Dialogue Meeting on Civil Service Reform

IADB

2003

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

23

Towards Government at a Glance - Identification of Core

Data and Issues related to Public Sector Efficiency

OECD

2006

Venezuela - Public Administration Study

WB

1992

Government Employment and Pay: A Global and Regional

Perspective

WB

1970s - early
1990s

Rehabilitating Government: Pay and Employment Reform

in Africa

WB

<1990

The State after Communism: Administrative Transitions in

Central and Eastern Europe

WB

early 1990s

country

ratio

Cambodia

5.5

Mongolia
Thailand
Philippines
Cambodia
Indonesia

3.4
14.4
9.5
5.5
2

Mongolia

2.7

Albania

Kosovo

<3

Montenegro

Montenegro

4.95

Moldova

2.5

Spain

Serbia

Belize

6.5

Belize

9.8

Yemen

Mozambique

<10

Mozambique

20

Benin

13

Burkina Faso

Cote D'Ivoire

Ghana

13

Niger

10

Nigeria

Togo

13

Zanzibar

4.4

Lao PDR

Malawi

32

Philippines

4.7

Figure for
China,
Indonesia,
Korea,
Germany,
Netherlands,
United
Kingdom,
United States
Jamaica

15

Brazil

22

Dominican
Republic

33

Uruguay

3.4

Colombia

Jamaica

15

Barbados

5.5

Bahamas

10.6

Suriname

2.6

United States

3.3

Luxembourg

3.1

Australia

2.8

New Zealand

2.4

Netherlands

2.3

Finland

2.3

United Kingdom

1.5

Venezuela

17 low-income
countries
21 low-income
countries
Hungary,
Poland

reference
the compression ratio is 5.5, well below the benchmark of 12 used internationally (source
Lindauer & Nunberg 1994)
The pay scale has been highly compressed. The ratio between the highest and lowest salary
during 200407 remained very low at 2.7, which is well below Thailand (14.4), Philippines
(9.5), and Cambodia (5.5), but above Indonesia (2.0). A closer look at the classification
categories and even at the grade level within each classification shows that the salary
scales were even more compressed. With this highly compressed pay scale, it is difficult to
attract and retain qualified staff in the civil service. Therefore, in January 2008 the
Frequent and poorly targeted wage increases have compressed wage ratios within the civil
service from 3.1 in 1997 to 2.5 in 199 to 2.7 in 2001.
The salary scheme is too compressed. The current compression ratio is 1:3, which makes
the acceptance of higher responsibilities unattractive and discourages good achievers from
taking further steps towards promotion within the system.
The salary system does not allow for salary progression, and neither performance nor
experience is taken into account. The average compression ratio between the lowest and
highest salaries, excluding permanent secretaries, is not even 1:3, which is very
compressed (1:6 and in advanced transition countries 1:7 or 1:8 would be more
appropriate).
The compression ratio of the lowest to the highest salary is close to 1:6, with more than 36
salary grades fitting in between and with minimal difference between grades. This salary
scheme has little motivating effect and does not help to retain staff (advancing from one
grade to the next amounts to some 5 EUR, i.e. to a percentage of between 1.8 and 2.9 of
the salary).
The public wage structure is too compressed. The wage compression ratio in Montenegros
civil service is about 4.95. This is not comparable to the levels prevailing in other countries.
In the OECD countries, for example, this ratio falls within the range of 8 to 9 (that is, the
difference between the highest and lowest wages is considerably larger). For the majority of
employees in Montenegro, the basic salary range is within a narrow band. As a result, public
wages for managerial posts are significantly below the private market in Montenegro.
Anecdotal evidence suggests that this may be causing difficulties in recruiting and retaining
well-qualified staff.
Moldova: On the other hand, the decompression ratio between the lowest and the relatively
highest salaries (except top managers) is only 2.5, providing only little incentive for career
development and for keeping people in the civil service. I was told that it is almost
impossible to recruit technicians or even workers for the Moldavian road construction and
maintenance department.
Spain: They range from 2.1:1 for the sueldo to 4.5:1 for the level supplement and 19.7:1
for the specific job supplement.
The new system provides for a compression ratio of 1:9. Pay has increased in 2007 by an
average of 41.2%, except for the lowest grades. The new salary system should make it
easier for the government to attract and retain qualified staff in the administration.
The wage compression ratio has fallen from 10.9 in 1989-90 to 6.5 in 1995-96.
The wage compression is reasonable, reflecting a ratio of 9.8 between the higher and the
lowest pay range for career positions.
However, the higher proportionate increase to lower grade staff would aggravate the
problem of wage compression. Prior to the current increase wage compression ratio in the
civilian sector was estimated to be around 2.4 at the entry level. With the recent changes
wage compression ratio would worsen to 2.0, making it difficult to attract and retain
talented persons to government service.

The objective is to raise the wage compression ratio (the ratio of the highest to the lowest
salary), which at present is less than 10:1.
Wage compression ratio: 20:1
Based on 1990-94 average: Benin 13:1, Burkina Faso 8:1, Cote D'Ivoire 9:1, Ghana 13:1,
Niger 10:1, Nigeria 7:1, Togo 13:1

It is interesting to note that between 1999 and 2002 the wage compression ratio declined
from 5.4 to 4.4.
At present compensation for civil servants is considerably below comparable wages in the
private sector. The wage compression ratio is approximately 3:1, from top salaries of 33,000
kip/month ($45) to an entry salary of 13,000 kip/month ($18).
For the most part, remuneation levels were adequate - in contrast to many SSA countries and the wage compression ratio of 32:1 compared favorably with the average of 13.5:1 in
the same group of countries. Staff have generally been better qualified, better motivated
and less corrupt than in other SSA countries.
Unfortunately, the wage compression which emerged from the process did little however to
improve morale. At the final stage (decompression under a proposed SSL3), the process was
aborted due to the advent of the Asian crisis, leaving the wage compression ratio at 4.7,
down from 8.8 before SSL2, a ratio which only observed in countries (like Korea) where the
overall distribution of income is also more equal than in the Philippines (see Figure 4.2). The
situation is rapidly becoming untenable however, as agencies are encountering growing
difficulties in retaining good staff, while others exploit existing loopholes to give extra pay to
their staff, further exacerbating morale problems in the rest of the public sector.

There are large differences among the countries in the indices for wage compression (see
the table of indicators). The extremes are Jamaica (1/15), Brazil (1/22) and the Dominican
Republic (1/33) as regards decompression and Uruguay (1/3.4) and Colombia (1/4) as
examples of compression.

Vertical Compression of Wages ratio 1:15

Barbados 2004 - 1:5.5
Bahamas 2003 - 1:10.6
Suriname 2003 - 1:2.6
Barbados 2004 - 1:5.5
Bahamas 2003 - 1:10.6
Suriname 2003 - 1:2.6
Barbados 2004 - 1:5.5
Bahamas 2003 - 1:10.6
Suriname 2003 - 1:2.6
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
Pay compression in the civil service (see pages 99-101)
Note: The ratio is measured by dividing the 9th deciles to the 1st deciles of earnings.
The wage compression ratios of top to bottom salaries of Venezuela vary from 2.4:1 to 5:1
as the following table shows. Typical compression ratios for the public sector in
industrialized countries would range from 8:1 to 12:1. Consequently, it is not surprising to
find a severe shortage of qualified, experienced civil servants in policy-making positions.
Data on 17 low and middle-income countries for 1970s (average) and early 1990s
(average0

Data before 1990

Data from early 1990s

year
region
1990-94
AFR
1990-94
AFR
1990-94
AFR
1990-94
AFR
1994
AFR
1998
AFR
1990-94
AFR
1990-94
AFR
1990-94
AFR
2007
EAP
2008
EAP
2008
EAP
2008
EAP
2008
EAP
2008
ECA
2008
ECA
2008
ECA
2008
ECA
2008
ECA
2004
LAC
2006
LAC
2003
LAC
2003
LAC
2003
LAC
2002
LAC
2003
LAC
2003
LAC
2004
MENA
2006
OECD
2006
OECD
2006
OECD
2006
OECD
2006
OECD
2006
OECD
2006
OECD

country
Benin
Burkina Faso
Cote D'Ivoire
Ghana
Malawi
Mozambique
Niger
Nigeria
Togo
Cambodia
Indonesia
Mongolia
Philippines
Thailand
Albania
Kosovo
Moldova
Montenegro
Serbia
Barbados
Belize
Brazil
Colombia
Dominican Republic
Jamaica
Suriname
Uruguay
Yemen
Australia
Finland
Luxembourg
Netherlands
New Zealand
United Kingdom
United States

ratio
13
8
9
13
32
<10
10
7
13
5.5
2
3.4
9.5
14.4
3
<3
2.5
4.95
9
5.5
9.8
22
4
33
15
2.6
3.4
2
2.8
2.3
3.1
2.3
2.4
1.5
3.3

OECD*

2004
2006
2006

2006
2003

2004
2006

OECD*
LAC

2002

2002
2003

2008

LAC

1994
1998
2007 2008

2008

1990-94

ECA

ratio
13
8
9
13
10
7
13
32
9
5.5
2
3.4
9.5
14.4
3
2.5
2.5
4.95
9
15
22
4
33
2.6
3.4
5.5
9.8
2.8
2.3
3.1
2.3
2.4
1.5
3.3

ECA

1994
1998
2007
2008

country
Benin
Burkina Faso
Cote D'Ivoire
Ghana
Niger
Nigeria
Togo
Malawi
Mozambique
Cambodia
Indonesia
Mongolia
Philippines
Thailand
Albania
Kosovo
Moldova
Montenegro
Serbia
Jamaica
Brazil
Colombia
Dominican Republic
Suriname
Uruguay
Barbados
Belize
Australia
Finland
Luxembourg
Netherlands
New Zealand
United Kingdom
United States

EAP

EAP

year
1990-94

AFR

region
AFR

0
Wage Comp

0
5
10
15
20
25
30
Wage Compression Ratio (the ratio of the highest salary to the lowest on the central government's main

25
30
35
l government's main salary scale)

LAC

OECD*

OECD*
LAC
ECA

ECA

ratio
13
7
10
9
32
13
9
8
13
14.4
9.5
3.4
2
5.5
9
4.95
2.5
2.5
3
3.4
2.6
15
33
4
22
9.8
5.5
3.3
1.5
2.4
2.3
3.1
2.3
2.8

EAP

EAP

country
Togo
Nigeria
Niger
Mozambique
Malawi
Ghana
Cote D'Ivoire
Burkina Faso
Benin
Thailand
Philippines
Mongolia
Indonesia
Cambodia
Serbia
Montenegro
Moldova
Kosovo
Albania
Uruguay
Suriname
Jamaica
Dominican Republic
Colombia
Brazil
Belize
Barbados
United States
United Kingdom
New Zealand
Netherlands
Luxembourg
Finland
Australia

AFR

region
AFR

10

15

20

Wage Compression Ratio

25

30

30

35