Report No. 42514-ZR Democratic Republic of Congo Reforming the Public Service Wage System Background Paper September 2007 Public Sector Reform and Capacity Building Unit (AFTPR) Africa Region Document of the World Bank This document has restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization CONTENTS I Introduction:PublicemploymentinDemocraticRepublicofCongo-Status . and RecommendedActions ............................................................................................................... 1 2.Legal status o fpublic servants............................................................................................. 1. Size o f the Public and Civil Services ................................................................................... 1 4 2.1. Civil Service ............................................................................................................ 4 2.2. I1.3 Civil Service, Public Service, andthe transition from centralizationto decentralization.....10 .HumanResource Management Practices............................................................................. 6 Special Statutes: Education...................................................................................... 5 2.Legal framework and definitionof status for civil servants at State, provincial, andlocal 1.Introduction....................................................................................................................... 10 levels; teachers; and health workers ina decentralizedadministration ................................... 13 4. Institutional arrangements ................................................................................................. 3. Managing the transition..................................................................................................... 18 19 I11. 1.Introduction....................................................................................................................... Public Sector Pay systeminthe context o f Civil Service Reformand Decentralization..24 2. Public Sector employment levels and wage disbursement ................................................. 24 -25 2.1, 26 Allowances and supplements ................................................................................. Civil Service wage system..................................................................................... 2.2. 28 2.3. Wage compressionratios....................................................................................... 29 2.4. 35 IV 21. Introduction Service Reform............................................................................................ .. Conclusions and proposed strategy for wage system reform .......................................... Political appointees................................................................................................ 39 ....................................................................................................................... 39 Appendix 1 Public Service Reform: Strategic Plan............................................................. PhasingCivil . 40 -47 List of Tables and public servants inpost-conflict provinces) ............................................................................ Table 1. Summary table of employment levels by functional category (withmechanized teachers 2 Table 2. Groups o f public employees covered by the same Civil Service legislation as civilian central government employees .................................................................................................. 17 Table 3. Increase inpersonnelo f selected functional categories, January-July 2006..................26 25 Table 6. Pay scale for Healthand Agriculture Ministries' administrationpersonnel (2006) .......32 Table 5. Overview o f main allowances and supplements, November 2006 ................................ Table 4. Evolutionbaremique de 2001 A 2006/Secteur Fonction Publique................................. 30 34 Table 8. Proportion o f base salary and supplements inPSE teachers' wages ............................. Table 7. Proportion o f base salary and supplements incivil servants' wages ............................. Table 10.Criteria to define a salary scale for political public servants....................................... Table 9.Proportion o f base salary and supplements inHealth and Agriculture wages ...............35 35 38 Listof Boxes Box 1.Local government staffingpractices inIndonesia: Key features ..................................... 11 Box 2.Management models...................................................................................................... Box 3.Braziland the use o f Constitutional amendments to drive reforms ................................. 13 14 principles o f governance ........................................................................................................... Box 4.DecentralizationinCanada a mosaic o f independent models following common 15 I.INTRODUCTION:PUBLICEMPLOYMENTINDEMOCRATICREPUBLICOF CONGO STATUSAND RECOMMENDED ACTIONS - 1. Following years o f internal civil strife and war, the Democratic Republic o f Congo i s undergoing institutional reforms. The prolonged period of social and political unrest caused important institutional changes. The most significant concern i s the transition o f the constitutional and administrative order o f the State from high centralization to decentralization as partial devolution takes place o f a number o f functions to new subnational entities-the provinces. Under the new Constitution, the provinces have gained renewed political relevance by being recognized as legal entities o f regional self-government with territorially limitedpolitical and administrative jurisdiction. 2. Under the old constitutional order, the centralized model o f administration prevailed. The relationship between the central Government authority and the periphery was managed by the existing administrative services from the top down to the lowest level of subnational government. 3. The Civil Service management model still conforms to the old institutional order. The legislation governing employment in the public sector is unchanged and still responds to centralized administration. The public administration categorizes public employees in two main groups: civil servants and local public employees. Civil servants are governed by legislation that i s neither merit based nor performance and result oriented. Local public employees are governed by labor legislation. Inaddition, the existing framework legislation has been supplemented by some 27 statuts spkciaux, which have made it de facto defunct. 4. Inthiscontext, the DRCGovernmentis faced with five mainchallenges: 0 To modernize the Civil Service system and amend its legislation to elevate it to improved standards o f efficiency in service delivery and human resources management. These can be achieved by instilling values including merit, results, performance, and professionalization. 0 To fill the normative vacuum by setting rules and procedures to manage the new decentralizedCivil Service. 0 To establish interactive consultation tools and procedures among all levels o f public administration. 0 To harmonize the national and subnational Civil Services with the new constitutional order. a To make the public administration a more attractive employer for young skilled professionals by reforming and improving the public sector wage system through systematic and sound reform measures. 0 Civil Service Reform: current issues in the management and organization o f Civil Service 1.SIZEOFTHEPUBLICAND CIVILSERVICES 5. The actual number of employed civil servants andpublic personnel is uncertain. As o f July 2006, the latest available count from the Ministry o f Budget (MOB)payroll revealed that a total of 489,645 public sector staff are actively employed and registered on the State payroll. This number includes actual civil servants, and public servants with a special status such as health professionals, agriculture professionals, teachers, researchers, and magistrates. 1 Active State civil servants amount to 130,472 units, or 26.6 percent o f the public sector labor force. The appointed personnel paid from the budgets annexes amount to 30,494 units, or 6.1 percent o f the entire public sector. The number o f teachers o f primary and secondary education (PSE) amounted to 225,773 (46 percent o f total public employment) in July 2006,' and 244,0522 (49.8 percent o f the entire public employment) inNovember 2006. 6. Recent World Bank projections indicate that, as a result o f the "mechanization" (regularization o f status) o f nonregularized teachers, the number o f PSE teachers i s expected to rise to 295,000 by 2009-well over 50 percent of the public sector labor force. These figures are subject to change over time in relation to the progress made by the census. Establishing the actual number o f public and civil servants i s further complicated by the fact that in the Eastern (post-conflict) regions, a large number o f officials were recruited by the former rebel forces. However, this recruitment i s not recognized by the authorities. The question o f how to handle this issue remains open. Table 1. Summary table of employment levelsbyfunctional category (with mechanizedteachersand public servantsinpost-conflict provinces) I Categories - I Number I % oftotal I of staff staff Civil andmilitarymagistrates 2,592 I 0.52 1Magistratesofthe Cour des Comates I 99 I 0.02 I Generaldirectors of Ministries 3,221 0.65 Civil Servants:(active) 130,472 26.6 Source: Datafrom the RCpubliqueDCmocratique duCongo Ministre du BudgetSecretariat GCneral au Budget Directionde la Paie. 7. Itwould be desirableif-with the agreement of, andinconsultationwith, the Ministry for the Budget-MPS continue to rapidly finalize the census in progress and establish two categories o f civil servants: "regulars" and "irregulars." At the same time, MPS should enforce a higher level o f discipline by adopting and enforcing a hiring freeze on new staff at all levels for not fewer than five years. MPS, with the Ministry o f Budget, also should design a strategy to address the cases of those who were recruited in an irregular manner, that is, whose posts were not established with the permission o f MOB. 8. Selective and limited recruitment of qualified young professionals to create a core of qualified professionals to be trained for senior management positions i s a possibility. The objective would be to enhance the professionalization o f the Civil Services and create conditions for a future senior management in the Civil Service. Action should be taken as soon as possible as a consultative process between MPS and the newly established provincial administrations. They should fast become involved in the census operations, mainly because they are in closer contact with better territorially delimited, and therefore smaller, portions o f 'Accordingto Ministryof Budgetpayrolldata, July 2006. World Bank estimate 2 the public administration. To ensure that this option will work, it is essential that a limit be set on the number of Cabinet staff ineach provincial ministry. 9. The only viable records of civil servants are the payroll data in the hands of the Ministry of Budget. The Ministryfor Public Service i s unable to provide reliable data on civil servants. The personnel files cannot provide viable information because they are manually managed with significant difficulties in tracking and updating staff career progressions. Due to the uncontrolled and unreported recruitment practices that have prevailed over the last decade, MPS i s unable to reconcile the available information with the real situation. Consequently, data on the number o f filled positions, their location, and their classification are fragmented and inconsistentwith the data available at the Ministry o f Budget. 10. Moreover, the Ministry for Primary and Secondary Education (MPSE) has a different database that is not integrated with that of MPS since teachers have a special status regulated by separate and specijk legislation. At the provincial level, for example, in the Province of Katanga, the local MPS office does not have a reliable local Civil Service registry. Registers are still largely incomplete and manually managed. Inthe education sector, payments o f salaries are made to schools based on the number o f available teaching positions as a lump sum, not to the individuallyregisteredteachers. This method generates distortion in the count o f actually employed teachers since positions either might not be filled or more teachers than posts budgetedmightbe present ina certain school inrelation to the number o f children and classes. Inthis particular case, monitoring seems to be irregular, particularly for schools inremote, war-ravaged, and unsafe locations. 11. Recourse to payroll records as reference to carry out the civil servants' census may be a viable solution. Nevertheless, under the current emergency, this solution i s insufficient to put order and transparency in the record-keeping system o f the DRC Civil Service. Consequently, it i s indispensable to develop a modern central Civil Service registry. This human resources management information system should include all updated information relevant to effective HRmanagement, staff planning, andjob classification. This system also should improve pay procedures and interface with the payroll Civil Service system. Payroll records alone cannot constitute the basis for effective, efficient, and modem HR management. The integration o f payroll records with the MPS registry i s to be kept as a key objective that already can be initiated by using the record updates obtained during the ongoing census operations. Reliable central civil servants' records are essential for the efficient, transparent, and smooth transfer o f staff from the State administration to the new provincialadministrations duringthe decentralization phase. 12. As o f May 2007, the census operations of civil and public servants conducted in the Kinshasa capital province have covered 73 percent o f the existing population o f public and civil servants. Administrative staff who have been recorded have received an identification card with a progressive registration code deposited at MPS. 13. A draft government strategy developed by the Public Administration Reform Technical Committee (CTRAP)foresees the rationalization of thepublic administration to ensure effective management ofpersonnel and services. This exercise i s crucial since it will positively impact decentralization. It also can be seen as a key supplement to the ongoing census operations by providing relevant information on the staffing levels o f the existing organizations and eventually on hidden staffing needs for specific branches o f the public administration. The initiatives aimed at the rationalization o f the public administration and its 3 staffing would help greatly to define the roles and responsibilities o f the central as well as the potentially decentralized institutions. Consequently, these initiatives would help in the decision process to redeploy civil servants from the deconcentrated administration to the new decentralized administrative reality. It i s essential that a sound methodology for such an initiative be prepared and implemented. The existing ministries are grouped ina maximum o f 5 functional clusters: State Governance; Finance and Productive activities; Social Affairs; Infrastructure, Environment, and Resources; and Security and Public Order. These ministries are grouped according to criteria o f functional similarity or subsidiarity. Thus, it is possible to identify overlaps, functional vacuums, and redundant functions that can be devolved to subnational administrations and staff who consequently canbe detached. 2. LEGAL STATUS OF PUBLIC SERVANTS 14. Public employkes ((h statut spkcial~ and ((a statut gknkral. )) The State central administration is staffed with civil servants. The local units o f self-government (provinces, cherferies, communes) are staffed with public employees whose status and employment relations are governedby the civil code and labor legislation. 15. Current legislation provides' a special status for certain groups o f public servants. Separate statutes exist for health professionals, agriculture professionals, teachers o f primary and secondary schools, researchers, and magistrates. 16. Whereas the Ministry o f Public Service (MPS) i s formally in charge o f the management o f all civil servants, there is, in reality, no evidence o f any responsible institution that sets common management standards and reference legislation for the civil servants belonging to the subnational and local administration. Teachers; health, agriculture, andjustice professionals; and researchers can be defined aspublic servants. The Ministries o f Health, Primary and Secondary Education, Agriculture, and Justice are individually responsible for the managing human resources (recruitment, salaries, promotions) o f their respective groups and regulating their terms o f employment. 2.1. Civil Service 17. Defining "Civil Service" in the DRC i s a complex issue. All staff on the State wage bill are considered fonctionnaires. No distinction is made among civil servants (staff who prepare, interpret, and execute administrative regulations and procedures), public servants (staff incharge o f ensuring the delivery o f services of public interest), or local administrative personnel inthe centers of local government from provincialto municipal. 18. The current legislation envisions 3 main groups o f civil servants encompassing 35 different categories. The main groups are civil servants with (1) a general statute (very close to the usual idea o f civil servants), (2) a special statute (customs, staff o f the territorial administration, inspectors o f the territorial administration, medical doctors, academicians, scientific researchers, pharmacists, police), and aparticular statute. The third group includes 27 categories o f workers: 1. Hospitals administrative staff andpersonnel 2. Architects and urban planners 3. Archives and documentation centers staff 4. Biologists 5. Staffemployed injobs usingnew technologies 6. Diplomats 4 7. Land surveyors 8. Print-shop and graphic studio personnel 9. PSPE school inspectors 10.Revenue and cadastre inspectors 11. Journalists and employees inthe communication sector 12. Merchant Marine personnel 13. Water and Forests Administration personnel 14. Meteorologists 15. Academic and higher education sector administrative personnel 16. Agriculture and geology personnel 17. National Museums Institutepersonnel 18. Municipalities' personnel 19. Pre-school, primary, secondary, and professional institution personnel 20. Court stenographers 21. Parliament administrative staff 22. Health and social sector personnel 23. Postaland telecommunicationadministrative personnel 24. Penitentiary administrative personnel 25. Labor and social security sector personnel * 26. Public works personnel. 19. It is obvious that very strong corporate interests of professional groups have contributed to create such a variety of professional categories, each with aparticular statute. This "variety" definitely has a negative impact on unified financial and employment conditions applicable to the civil or public service. Thorough review and simplification o f the current arrangements are required. 2.2. Special Statutes: Education 20. The Ministry o f Primary and Secondary Education has a computerized database of 230,00O3-252,O0O4 teachers. MPSE staff are classified as public servants according to a separate system from the rest o f civil servants. However, this classification does not apply to the educationinspectors, who are civil servants. There i s not yet any regulated equivalence o f titles and ranks betweenthe classification o f civil servants and teaching personnel. This lack directly affects the equivalence o f salaries and setting coherent salary scales within the DRC public administration. At the moment, according to the Civil Service classification, a district director of the MPSE is paid the same salary as a chief o f division. If moving to a Civil Service position, he or she would be ranked at a functional level lower than chief o f division and therefore be paid less. 21. MPSE wishes to establish a system ofpasserelles, or bridges, enabling mobility from the Education public service to the Civil Service system. On the one hand, the idea seems seductive. On the other, the risks behind it are several and serious. Due to the large proportion o f teachers in the DRC public administration, any such opening definitely would risk significantly increasing the number of civil servants by becoming the entry point to the Civil Service. Such an opening would distort the types o f tasks and responsibilities to be assigned to administrators or "mutant" teachers who morph into administrators, while retaining the status and benefits reserved to teachers due to their specific qualifications. The Dataprovided by the General Secretary of MPSE. Data from annexes to Thieny Becheret, ((Rapport de missionNovembre 2006 : Reactivation du Projet de Procedure Transitoire simplifiee (PTS) de la paie des personnels civils de 1'Etat en DRC. N 5 public sector wage bill automatically would increase since the equivalence o f rank and salary would be hard to be set at the lower Civil Service levels but could easily escape control during negotiations and be set at the higher education level. Moreover, the equalization o f ranks and pay between teachers and civil servants very likely would create conditions o f shift from equally paid but less appealing teaching positions (mainly out-posted ones) to more conveniently located work-posts across the state administration, thus depleting the teaching services o f needed labor force. Last but important, any equalization in pay and ranking between teachers and Civil Service staff would erode substantially the rationale behind the current separation between staff with general and special status, thus generating conditions for an unclear status o f teachers and consequent applicable legislation. 22. The division o f competencies among MPSE, Ministryo f Finance (MoF), and MPS for payroll procedures setting i s complex and opaque. The MoF Payment Directorate i s responsible for paying the salaries o f the civil servants under MPS jurisdiction. They include all employees o f the line ministries (central) with the exception o f teachers; education inspectors; health, agriculture, andjustice professionals; and researchers. Establishedin 1986, SECOPE (Sewice Comptable de Paye des Enseignants) is in charge o f paying teachers' salaries. SECOPE's payroll database i s not harmonized with that o f MPS. The financial resources for teachers' salaries, managedby the SECOPE, are part o f the budget allocated to MPS. Thus, it is essential to harmonize such databases and make more transparent the overall record-keeping in terms o f actual number o f staff and payroll. In the medium term, the government will have to establish a computerized, integrated human resources management informationsystem (MIS) for transparent staffrecord-keeping and payroll. 3. HUMAN RESOURCE MANAGEMENT PRACTICES 23. The human resource management (HW) rules and procedures for the Civil Service are neglected or bypassed. They need updating and more determined law enforcement. As in many other countries prior to the reform o f their civil services, in DRC the personnel management approach still prevails and the approach has yet to replace it. Moreover, years o f institutional instability have weakened the competent Civil Service authority, virtually eliminating its capacity to conduct oversight over Civil Service management beyond Kinshasa. As a result, conditions for abuses and systematic rule-bending prevail, at the expense o f the efficiency and quality o f the Civil Service as a whole. For example, performance appraisals are not taking place despite the fact that they were foreseen by the current Civil Service legislation. Salaries often are not paid for longperiods, and their levels may vary from monthto month, as happens, for example, to health personnel. 24. The current Civil Service is merit based only on paper. Recruitment procedures are avoided, and performance assessment i s regulated but not implemented. During the last 10 years, no performance evaluation has been made across the entire administration. The rules inthe law oncivil servants' probably originally were conceived to ensureperformance-driven human resources management and development. However, their spirit has been overshadowed by widespread negative practices to the point that performance is a completely ignored management tool. 25. Rules and procedures on performance evaluation are present in the law on civil servants (article 64) but no longer applied. Current norms foresee that performance evaluations will be used to support step increases for higher pay and admission to internal Statut du Personnel de Carrieredes Services de 1'Etat et Reglementsd'Administration (updatedAugust 15, 2004). 6 exams for vertical career progression. The civil servants law contains no language that performance evaluations also can be used as a basis to trigger capacity building actions for civil servants with a poor performance record. Inpractice, good performance i s not rewarded with either better pay or career progression. The government needs to revamp Performance norms and linkthem to the pay and career systems. 26. According to the existing legislation, vertical promotion to higher career levels or horizontal promotion through step increases are merit based. However, the irregular recourse toperformance evaluation procedures do not back upprogression based on merit. Article 15 o f the law on civil servants and articles 66-68 set the criteria for promotions. According to the rule, career progression is primarily performance based. Vertical promotion can take place upon proven good performance for three years with successful participation in competitive selection exams. In practice, this portion o f the law is not implemented, and vertical promotions have not been given since 1993. The law in article 69 links horizontal career progressionto performance. However, due to the absence o f a consistent and respected performance evaluation system, horizontal progression has become purely seniority based. In derogation o f the law, the prevailing practice for horizontal career progression to higher pay steps i s annual and automatic. Over the last years, the authority overseeing Civil Service, the Ministry of Public Service (MPS), has proven too weak to enforce adherence to the existing legislation and curb any unilateral derogation from Civil Service rules andprocedures. 27. I n the DRC, resurrecting adherence to the laws for civil servant recruitment and placement are critical items in the management of human resources. The civil servants law defines in detail conditions and procedures that are to be followed for the recruitment o f new staff (articles 7-14). Hiring can take place exclusively for vacant positions for which budget exists. Recruitment can take place exclusively by preliminary public announcement and open competitive examination. The law permits exceptions to the competitive examination for candidates who have a specialized diploma for the branch o f the administration to which they apply for a position. MPS approval i s mandatory for those cases. Inaddition, the minister, or head o f department within the "regions" (in the near future the "provinces") are responsible jointly with the head o f the recruiting department (plus the governor o f the region incase o f recruitment for administration) to organize admission examinations. These rules, which certainly are adequate to ensure a sound starting point for merit-based competitive recruitment, have not been respected since the start of the 1990s. 28. Since the early 1990s, the majority o f the recruitment o f civil servants has completely violated all legality. Advertisement o f vacant positions i s not taking place or at least i s not reaching the periphery o f the country. There, potential candidates approach individual State institutions to submit unsolicited applications for jobs that are accepted and processed without consultation with MPS. An example was the hiring process for teachers o f Katanga Province. 29. In most cases, recruitment takes place with the unilateral support of the ministers' Cabinets with no budgetary coverage and no approval by the Ministry o f Public Service and the Ministry o f Budget. This practice has dramatically inflated the size o f the Civil Service. In some other cases, posts are unilaterally created by ministries outside of any approved budget. The needed financial resources are allocated for these "new" posts from temporary parallel budgets (budgets annexes) that do not contain any specific provisions linked to the list o f posts approved by MPS and Ministry o f Budget and therefore are not part o f the Civil Interviews with Katangaeducationauthorities, January and May2007. 7 Service systematizationplan. These posts formally do not exist, and no payments o f salaries and other disbursements for their maintenance can be made. For this reason, scores o f irregular civil servants do not receive any pay for months, The consequences are dramatic: MPS has lost control over the actual number o f staff and i s in a very difficult situation regardingthe eventual "regularization" o f these non-accreditedpublic servants. 30. Centralization is very strong and the prevailing management model. The dialogue and functional interaction between the central MPS and its branches, and through them with the rest of the administrationwithin the DRC, shows a very highdegree of centralization that the decentralizationreformmustaddresswith clear andunyieldingdetermination. 31. The Chef de Departement de la Fonction Publique (provincial Head o f Division o f Public Administration, or PCDPA) i s the delegate o f the Ministryo f Public Administration in the province. The chief has been reduced to an exclusively technical role in support o f the governor o f province who, under the not-yet-current decentralized system, i s the delegate o f the central government. Decisions concerning HRM are taken through the governor o f province by MPS. Meanwhile, the Provincial Departments o f Public Administration (PDPAs)~are not authorized to issue any decisional acts in any matter. It simply makes proposals to the governor o f province either to amend or regularize situations concerning public employment. Inpractical terms, the dialogue betweenthe PCDPA and the central MPS i s not direct, and the PDPA has a very restrainedrole inoversight and decision-making, 32. The decision-making roles o f the administrations responsible for the Civil Service (MPS and PDPA) too often are limited. For example, at the provincial level, recruitment procedures, when they are done according to the rule, appear to be highly centralized and cumbersome. Concerning recruitment of ordinary civil servants, a line ministry at the provincial level identifies candidates and proposes them to the PDPA. The latter reviews the documents and passesthe file to the governor o f province, who thenpassesthe file to MPS in Kinshasa. From this point, PDPA i s excluded from the procedure. At the central level, MPS verifies the qualifications o f the candidates and availability o f suitable work posts and budget, and finally approves with a decision to hire the candidates. 33. To hire high executives-Cadres de Comrnandement- such as Heads o f Division and Heads o f Office at subnational level, the concerned line ministry in Kinshasa makes proposals to MPS for approval. The President o f Republic approves and issues a decree o f appointment. In Katanga Province, the last Presidential decree for appointment o f top executives was issued in 1993. Since then, all high executives have been appointed without Presidential decree. According to the existing rules and procedures, PDPA does not take part inthe decisions to designate highexecutives. This function is the exclusiveprerogative ofthe Cabinets o f line ministries, which act without consulting anyone. PDPA in particular is involved when the appointment concerns a provincial administration. According to the legislation, the governor o f province may deploy the appointed high executive(s) or may reject their appointments. Once again, PDPA i s bypassed and subject to decision-making that resides with authorities other than PDPA or MPS. 34. The role and mandate of the Civil Service management structures will need to be redesigned especially to ensure proper implementation of the Civil Service legislation, particularly regarding its perspective on decentralization. The bodies in charge o f Civil Service will have to gain new authority and capacity to enforce order and legislation in a situation that i s largely out o f control. In this respect, the level o f authority and role o f a 'Deconcentratedunitso f MPS. 8 Ministry of Public Service might need to be reconsidered. MPS is experiencing serious difficulties ineffectively managing the Civil Service. Its proven limited capacity to overcome such difficulties in a time o f impendingdecentralization reform requires a rapid intervention to rehabilitate to full capacity the HR management functions across the DRC public administration. The actions needed to strengthen MPS to regain full control over the Civil Service might require time and investments and might not be realistic in light o f the reform that the Civil Service will undergo following decentralization. Alternative scenarios will need to be considered. 9 11. CIVIL SERVICE, PUBLIC SERVICE,AND THE TRANSITION FROM CENTRALIZATION TO DECENTRALIZATION 1.INTRODUCTION 35. Civil service reform is a key condition for effective administrative reform. The timing, substance, and quality of the administrative decentralization may be dramatically affected by the condition o f the civil and the public services. A strategy to adapt the Civil Service (that includes State and subnational civil servants) and the public service (main health and educationpersonnel) to a new decentralized institutional system i s needed. 36. At this stage, it is difficult to visualize whether the decentralization measures will anticipate the Civil Service reform or proceed in parallel. Certainly the model of decentralization and the success o f the process will depend on how the supporting pillar called "Civil Service/public service" will be shaped and modified. Inthe absence o f a clear organic development program covering the administrative reform and the Civil Service together, it i s necessary to set the terms o f the reform before any further action. Certainly, the effective implementation o f decentralization and functioning o f both central State and subnational administrations can be ensured only upon adapting the Civil Service, as well as the public service, to the new organizational and managerial modules introduced with the decentralization. 37. In establishing a new layer of administration, especially at the provincial level, a number o f issues must be addressed along the lines o f institutional hierarchy and assignment o f types and levels o f competence. Attention i s particularly needed concerning the responsibilities and functions o f the provincial administration in managing its own Civil Service. The risks o f a new layer o f administration created and, very likely, expanding with little control, prior to any adequate regulatory initiative supportedby a coherent Civil Service reform strategy and related policies, are real. Therefore, eventual damages from uncoordinated policies must be mitigated. It i s vital to formulate a strategy for the administrative and Civil Service reform that sets the degree o f responsibility to be assigned to institutions and their agents. To facilitate the functioning o f the decentralized model o f public administration and the appropriate use o f the human resources at all levels, six issues need to be addressed urgently: a. Rationalization o f the existing organizational and staffing situation o f the public administration b. Institutional arrangements concerningthe Civil Service: unifiedversus separate for each level o f government c. Regulatory framework and definitiono f status for civil servants at State, provincial, and local levels, as well as for teachers and health workers ina decentralized administration d. Payrollmanagement authority for the provincialCivil Service e. Mobility o f subnational civil servants within the provincialand local Civil Service and betweencentral and decentralizedadministration f. Wage rate-settingfor State, provincial, andlocalcivil servants andfor public servants. 38. Article 194 o f the DRC Constitution declares that framework legislation sets the rules for the organization and functioning o f the Civil Services o f the central State administration, o f the provinces, and o f the decentralized territorial entities. The Constitution i s not clear 10 whether the Civil Service should integrate the central and subnational Civil Service in a unifiedbody under one single legislation, or be divided, coherently with the decentralization process, into harmonized but separate legislations all inspiredby common principles. So far, there i s no evidence o f a clear policy inthis direction. 39. Inthe DRC's administrative context, a separate subnational Civil Service would bring numerousrelevant benefits. Itwould: a. Enhance administrators' responsiveness to localproblems b. Ensure more direct accountability oflocaladministratorsto the immediate beneficiaries o f services c. Ensuremore transparency inthe use o f public funds for local expenditures, particularly for the local wage bill d. Ensuremore direct control over staffing levels e. Improve performance monitoring f. Reinforcedecentralization. 40. World practice supports this orientation. Many OECD and decentralized developing countries have a separate Civil Service and accompanying separate legislation for each government level. For example, Hungary, and Poland have dual Civil Service legislation. In federal countries such as India and Malaysia, each State has its own Civil Service, but federal civil servants are sent to work for regional governments on a rotational basis, often in the most senior posts. Other States, such as Indonesia, operate based on a central legal framework. However, the provincial level has discretion to create rules and procedures for public service management so long as these do not contradict key national legal principles. Box 1. Localgovernmentstaffing practicesin Indonesia: Key features Employer:Regional government (primarilydistricts). Reportingrelationship: To locally elected bodies. Ability to hire,fire, assess performance:This authority rests with the local government; however, the central government is moving to regulate hiringprocedures, for example. In addition, the provinces have the authority to supervise the employment administration. LocalCivil Service commission: Presidential decree 159/2000sets the authority to establish Civil Service agencies; however, it is not clear that any have been establishedyet. Standards for recruitment and other employment policies are to be set by the central Civil Service commission. Pay scales: Wage rates (including basewage, positionallowances, andfamily andrice allowances) are set centrally. Infact, during the year of transfer, the central government awarded a significant pay increase that was not factored into the calculation o f grant transfers. Settingestablishmentceilings, staffing norms: Centralministries(and provinces) have the responsibility to set delivery standards and norms. The head of the region has the authority to determinethe number of civil servants inthe region (government regulation 97/2000). Payrollmanagement:Payroll management hasbeentransferred to regional government. As part of the transitional provisions, central government continuedto pay the salaries of devolved staff for five months following transfer, and deducted the amount from the calculation o f the general grant transfer. This measure helped considerably to reduce some expectedtransition problems. Source: Basedon "Administrative Decentralization:A Review of Staffing Practices during Decentralizationin Eight Countries," draft paper preparedfor the World Bank, Anne Evanswith Nick Manning, September 21,2004. 41. The course o f action to pursue depends mainly on the division o f roles and responsibilities between central and subnational administrations. These need to be streamlined and defined in detail with particular attention given to the provincial and 11 subordinate levels o f local administration. Civil service reform cannot be a standalone initiative since it i s a key component o f the broader public administration reform. 42. However, a separate subnational Civil Service needs to be under some degree o f central supervision that can be exercised from a central Civil Service administration through the definition of general and common human resources management standards (such as recruitment, promotions, performance), codes o f conduct, capacity building activities, definitiono f salary scales, and wage negotiations inline with commonparameters. Moreover, the interaction among levels of Civil Service is to be preservedfor the sake of national unity and efficient management o f public services. In Germany and Indonesia, the subnational Civil Service i s obliged to perform central tasks as an agent o f the central government (co- administration), thereby ceding some o f their independence from the center. Subnational tasks financed through earmarked grants have similar effects, with the center exercising at least some influence over the subnational Civil Service. Other unifyingelements are common training for national and subnational civil servants, national standards o f service delivery, and the qualificationlevel ofparticular categories ofpublic servants (such as teachers, doctors).* 43. This standardization i s essential to manage local pay and career development disparities. Moreover, this role o f the central control should focus on (a) ensuring fair and equal treatment and recognition o f meritfor all public personnelat all levels o f administration and professional category, and (b) ensuring the possibility for subnational civil servants to access the central Civil Service (and vice-versa) across the entire country according to equal standards o f capacity and selection. 44. The separation o f Civil Services within a context o f decentralization poses the problem o f relationship model that i s to be established between the central and the subnational administrations. The degree o f control and tutelle that the central administration i s to exert over the decentralized subnationaladministration may vary according to the degree o f devolution o f tasks and responsibilities. The models can range from a very tight and centrally driven administration to a more autonomous regime o f self-management, To identify the most suitable formula for the process of decentralization in the DRC, box 2 proposes the most recurrent models o f relationship between central and subnational administrations. * World Bank, "Administrative and Civil ServiceReform: Subnational Government," 2004. 12 Box 2. Managementmodels Model 1 National and subnational Civil Service is unified, with no significant Total CentralAuthority subnational distinctions. Consequence is that there are no significant differences between civil servants placed innational or subnational governments. Model 2 Subnational Civil Service exists, but center sets legislation that tightly defines CentralDominance andprescribes its workings. Consequently, there are minor differences between central and subnational civil servants, with possibility of some variation prescribedby center. Model3 Center sets standards and other parameters in legislation covering subnational CentralGuidance Civil Service, giving considerable discretion to subnational government. Significant differences can emerge between center and subnational governments, and among subnational governmentsthemselves. Model4 Center shapes subnational Civil Service structure and practices through CentralLeadership reference power, that is, customary leadership, professional influence, and demonstrated best practices. Significant differences can emerge between center and subnational governments, and among subnational governments. Model5 Subnational governments set their own Civil Service policies. Consequence is Autonomous that potential exists for wide variation between central and subnational governments, and among subnational governments. 45. Currently, DRC i s very close to Model 1,Total Central Authority. The change inlegal status o f the provinces opens the potential for transition to a more liberal model among those outlined in table 1. The transition should be gradual and steady toward a relationship based on Central Dominance mitigated by a rationalization in the distribution o f central controls. These should be exerted not primarily by one ministsre de tutelle (for example, the Ministry o f Interior mostly alone) but by a State Commission o f Ministries sharing responsibilities for guidance and control over the subnational administrative entities according to their mutual respective areas o f competence. 46. The State Commission should consist o f four permanent members: the Ministry of Finance, Ministry o f Budget, Ministry o f Public Service, and Ministry o f Interior. The main tasks o f the State Commission should be to (a) support and guide the institutional and economic development o f the subnational administration and (b) exercise oversight over subnational administrative management, In addition, as a proactive participant, the commission should (c) implement permanent consultation mechanisms through the activities o f Standing Commissions, namely, the Standing Commission on State-provinces, State Commission on State-Municipalities, and State Commission on State-Decentralized Territorial Entities. In Brazil, the establishment o f consultative bodies and procedures has proven vital for the sustainability and progress o f the reform. 2. LEGAL FRAMEWORKAND DEFINITIONOF STATUS FOR CIVIL SERVANTSAT STATE, PROVINCIAL, AND LOCAL LEVELS; TEACHERS; AND HEALTHWORKERSINA DECENTRALIZED ADMINISTRATION 47. The increase in levels of administration and categories o f public employees and the need to differentiate such categories puts in question the validity o f the current regulatory framework. It must be amended and improvedprimarily to create a merit-based Civil Service that i s result and performance oriented and aims at fostering the professionalization o f public employees. In this respect, Brazil's experience i s fairly innovative (box 3). There, the legislature established an authoritative base o f reference for the administrative and Civil Service reforms by inserting the guiding principles o f Civil Service management in the Federal Constitution. These principles include open competition as a mandatory principle for the selection of civil servants, career management based on explicit written regulations, and 13 job security limits that can be invoked when public expenditures are excessive. These principles are binding to both federal and subnational authorities and thus are above all constituent parts o f the Federation. At the same time, as in the other cases, the organization and management system of subnational authorities is defined by individual subnational authorities and i s not predefinedby central government. Box 3. Brazil andthe use of Constitutionalamendmentsto drive reforms Constitutional amendments introduced in 1998 provided a direct powerful tool for public sector management reform. They stipulated the followingprinciples, applicable to both federal and subnational authorities: Introduction of efficiency as one of the guiding principles that any o f the powers and levels of the Union shall obey, inaddition to morality, impartiality, lawfulness, and publicity, which were already prescribed Possibility to dismiss public servants due to excessive personnel expenditure or inadequate performance, with some protection given to state careers to be defined in lower-level legislation Suppression of the mandatory adoption of a single labor regime for civil servants, enabling the existence of multiple regimes, with or without tenure, and specific pension system regulated by the common labor law andthe general social security system, accordingto the characteristics and needs of each sector o f Civil Service Possibility to pay bonuses for productivity or measurably improved quality of the services Provision for the enactment o f a Fiscal Responsibility Law to enhancebudget discipline Impediment for the federal government, state governments, or their financial institutions to transfer funds voluntarily or to grant loans to meet payrolls Limit to the expenditures with personnel, to be detailed by law (in 2000 the limit was established), that, if surpassed, might result in dismissal of employees in a stipulated sequence. The sequence would be a proportion of freely nominated commission offices or positions of trust, nontenuredpublic servants, and tenured public officials Imposition o f limits and more rigorous controls over civil servants' wages to combat the proliferationo f distorted wages due to corporate power and legal tricks Greater autonomy for the Executive branch to reorganize the public administration Interactionbetween centraland subnational governments e InBrazil, since the election of PresidentLula, the federal government hasplayedamuch less prominent role in drivingreforms. As a result, subnational authorities increasingly set the pace of reform, with modernizations increasingly occurring bottom-up. For example, Sao Paulo, CearB, and Minas Gerais lead reform efforts in key areas such as the creation o f autonomous agencies for service delivery and management o f relations between agencies and government-based performance principles. The State of Bahia's very successful implementation of the one-stop- shop for citizens was studied by the federal government and then recommended to other States. Bahia offers multiple public services, including identifications, birth certificates, social security and tax documents and information, and drivers' licenses, at the same location, The States of SZo Paulo, Pernambuco, Minas Gerais, and MaranhZo adapted the model to their own reality with good results. However, it i s important to note that these citizen shopping centers do not often reduce costs, owing to the increaseddemand for services that were not previously available for all. Consultation mechanismsin support of reform implementation e Brazil has used consultation mechanisms extensively inreform implementation. The CONFAZ* structures inBrazil continued to review public management reform implementation once the designwork was completed, which has provedto be one of the important factors in ensuring cross-fertilization among the public management innovations that have characterizedBrazilian reforms. Source: BasedonC. Costin, "State ReforminBrazil 1995-2005." BackgroundPaper. Note: = CONFAZ i s the IntergovernmentalConsultativeStructureon Administrative Reform. * 14 48. Besides the need to introduce more modern management standards in the Civil Service, the transition from a centralized to a decentralized administration imposes a legislative review process able to introduce new patterns o f administrative and political culture. The Canadianmodel mightinspire DRC legislators and reformers inthis respect (box 4). Box 4. Decentralizationin Canadaa mosaicof independentmodelsfollowingcommon principlesof governance The Canadian reform agenda leans heavilyon the introductionof performancemanagement practices.At the same time, there i s not actually a concept such as "Canadian public management reform." The reason is that reform content and implementations vary significantly between the constituent parts of the Canadian federal system. Canadian subnational authorities have the highest degree of de facto autonomy over public sector management issuesgenerally, although, as inother States, autonomy inbudgetmanagementpracticesi s more limited. Limits are due mainlyto the fact that the Constitutiondoes not empower the federal government to implementreformsby law inmost policy areas (and Constitutionalamendments are virtually impossible to achieve), includingpublic sector management (PSM). There are some exceptions in this regard. For example, in the health care sector, owing to specific conditions and agreements between federal and regional authorities, the obligationto provide healthcare services continues to rest with the provinces. Meanwhile, the federal government's obligation to provide funding has de facto decreased. The situation i s entirely different at the level of provincial-municipalrelations, where provincial governments can, through performance-related fiscal transfers, have a high degree of impact on the way that local authorities function. As a result of the specific nature of the Canadian governance system, it is not possible to speak of one direction of reform but rather of "independent experimentation" within the boundaries of generally agreed principlesunderlyingthe Canadiangovernance system. These principlesare: A professional,politically nonpartisanpublic servicewhose members do not changewith each election Electedpoliticiansare responsiblefor policy, while the role of the public service is to advise, and then to carry out the decisions of, the electedofficials Hierarchicalaccountability Prudence, efficiency, economy, andhonestywith publicresources Proceduralfairness andthe equal treatment of all citizens Appointment andpromotionon merit, reasonablyobjectivelymeasured, principally throughcompetition Logic, analysis, rationality,andthe rule of law as guidingprinciplesfor decisionsandactions. It is in particularly the principle of procedural fairness that constrains the ability to reform, especially the introduction of business management practicesinthe public sector. On the other hand, the principles of prudence, efficiency, economy, and honestywith public resources have createdan overall institutional culture inCanadathat is strongly gearedtoward the measurement and outcome evaluation of government programs. Thus, methods and reform substance may differ between federal and provincial governments as well as among different provincial governments.Nonetheless, there is an overall concern with performance as a key element of PSM that has driven the introductionof enhancedperformancemanagementprinciplesat all levels of government. The best known example of such reforms remains Ontario. This province put in place a highly sophisticated performance management system in the public sector, with a cascading hierarchy of objectives reflected in the individualpay envelope of each civil servant. Inthis regard, Canada also providesone of the best examples ofhow performance-basedpay practices can coexist with the principleof an impartial and professionalCivil Service, with very low levels of politicization. Canadianreformsprovideone of the world's best examples of how results in improving public sector performancc can be achieved without the use of hierarchical tools and imposition, but rather by broadly agreed principle; underlyingthe governance system. 49. There i s an urgent need to re-examine and modify the Civil Service legal framework to provide an updated and comprehensive set o f rules and clarify to which categories of public personnel they are intended to apply. The legal framework proposed in the Reform Strategy prepared by the Technical Committee for Public Administration Reform (CTRAP) is 15 not synchronized with the administrative decentralization. As formulated, the reform strategy still does not distinguishbetween civil and public servants. Rather, it maintains the different statuts (statut giniral, Ci statut special, and a statut particulier) for all public employees. The reform strategy does not differentiate among staff belonging to the central or the decentralized administrations. The varying classification o f public employees in the three groups results in excessive normative fragmentation, making it difficult to set common management standards and pay scales. Decentralization i s starting from scratch without the requisite preparation. The financial, normative, and organizational frameworks and supports required to advance the complex reallocation o f administrative responsibilities between central and subnational administrations without major shocks have not beenprepared. 50. In this precarious institutional and normative environment, it is wiser to adopt an incremental approach by simplifying the current institutional setting and normative framework. First, it is advisable to adopt a new Civil Service framework law for all State civil servants belonging to the central (State) administration. It i s responsible for defining, implementing, and controlling State administrative regulations and procedures. Second, it i s necessary to adopt a law on civil servants who belong to the decentralized administration. It i s responsible for the administrative personnel who define, execute, and control administrative regulations and procedures at the provincial and local levels. Third, it is necessary to adopt a framework law for the public servants responsible for the delivery of services o f public interest (health, education, rural development). This third normative text i s required by the fact that it is still unclear whether health, agriculture, and primary education personnel will be decentralized. Depending on which sectors will be decentralized, the number o f normative acts may vary. Inthis respect, it i s possible to envisage two scenarios: 0 Scenario A: Health and primary and secondary education along with university education and scientific research, and agriculture remain under the central administration. In this scenario, there should be one law on Civil Service, one on public service, and one on provincialand localpublic service. 0 Scenario B: Health, primary and secondary education, and agriculture are devolved to the provincial administrations. University education and scientific research remain under the central administration. Inthis scenario, the most appropriate option would be to have: o I state law on Civil Service o I law on statepublic service o I law onprovincial and local Civil Sewice o I law onprovincialpublic service. 51. The experience o f other countries can be a viable support for decision- and policy- makers. For example, subnational government employees (excluding education, health, and police) are defined as national civil servants inAustralia, Austria, France, Germany, Portugal, and Spain. In contrast, in Canada, Italy, Japan, Korea, and Mexico, there is a separate Civil Service for subnational government. Medical personnel and teachers are covered by the state civil servants' legislation in Austria, Denmark, France, Germany, Italy, Korea, Mexico, Sweden, and UK. For example, in the OECD, judges rarely are civil servants. Table 3 summarizes world practice inthis area. 16 Table 2. Groups of public employees coveredby the same Civil Servicelegislationas civilian _ central governmentemployees r - - Groups of publicemployeescovered bythe same Civil Service I I leglslatlonas civiliancentral governmentemployees II .. - Subnational government (excludingeducation, health, and police) ---__-I__ Separate Civil Service Covered by same legislation legislationas offering similar, Country Health Education civilian central but distinct, employees employees Police jAustralia-----"- ____ government? status? __ Ir--- /Austria /Belgium -- I /Canada /Denmark 17 i ---------I kelect Non-OECD Central and Eastern EuropeanCountries Source; WorldBank, "The Scope of the Civil Service inOECD andSelect CEE Countries." www.worldbank.org" 52. The following factors are important for DRC policy-makers to consider: 1. The administrative personnel of the provincial Civil Service cannot exist as a de facto unregulated reality. Nor can it operate in a legislative vacuum without specific norms regulating status, duties, benefits, wages, recruitment, and promotions. 2. Excessive fragmentation o f the legislative framework into several legislative texts for different categories o f public employees creates regulatory inflation. Problems result regarding harmonizing rules, particularly the definition o f responsibilities, classification o f positions, and making ranks and pay scales equivalent. Fragmentation also creates difficulties in redeploying civil servants governed by specific legislation within the overall public administration (central or subnational) and between different levels (central and subnational to local). 3. Simplification and re-regulation o f the different categories o f civil servants might be time-consuming, particularly if new drafts o f legislation must be prepared and added to the existing legislation. 3. MANAGINGTRANSITION THE 53. Transitional measuresfor state civil servants transferred toprovincial governments. It is essential that inthis phase of establishment of the provincialadministrations transitional provisions be adopted to mitigate disruption. It may happen that, rather than filling the new provincial administrations with scores o f newly recruited staff, a number o f qualified staff from the existing Civil Service in the provinces shift to the new subnational governments, Such a move would depend on the amount and types o f functions that have devolved from the central to the provincial administrations. The legislation being prepared to regulate the decentralized administration should set more precisely the degree of devolution and range o f areas passed to provincial responsibility. The number o f skilled workers who will pass from the national to the subnational administration depends largely on this definition. N o evidence exists o f any administrative plans, or ongoing measure or policy to regulate such flux o f staff. Initially, policy-makers need to conceive transitional-and subsequently, permanent- 18 measures (legislative and organizational) for state civil servants to shift from the central to the provincialadministration. 54. The most practical formula for ensuringa smooth transition o f public personnel from the State to the provinces would be to facilitate in a systematic manner the secondment of State civil servants to the provincial administrations. The temporary move from one administration to another should be regulated and could be supported with time-limited financial incentives (secondment allowance). 55. The risk o f a mass exodus from the central to the subnational administrations couldbe reduced by setting staff ceilings on the number o f personnel that can be employed by the provincial administrations and by introducing a system o f staff planning based on actual needs related to the fulfillment o f mandated functions. Staffing plans should be jointly approved and authorized by the provincial Departments of Public Administration and by the provincial Ministry o f Budget. This special secondment could be the initial step in the regularization and redeployment o f work force within the public administration. This secondment period could be used as a sort o f probation to assess the civil servants' skills and buildcapacity. The duration shouldbe exactly one year. 56. Concerning nontransitional remedies in this field, the DRC government will need to clarify whether the subnational government will have the authority to transfer staff from one job to another, or will need authorization or approval from either MPS or the relevant MinistBre de TutBlle. It would seem awkward to submit this function to the approval of any central authority. The right o f deployment and redeployment o f subnational civil servants should be the exclusive competence o f the provincial Civil Service administration. The same should apply to the health personnel and teachers according to the needs for their presence in the provincial territory. Centralized control and decision, which indaily experience prove to be inefficient, especially in education, should be devolved to the provincial authorities through the provincialpublic service administration. 4. INSTITUTIONAL ARRANGEMENTS 57. The role of the MPS and the institutional authority responsible for subnational Civil Sewice needs to be urgently defined Since the provinces as well as subprovincial entities are foreseen to be incharge o f their human resources it is a priority during this phase of institution buildingto have a clarification inthis respect. 58. As yet, no evidence exists o f provincial institutions competent to manage provincial civil servants besides primarily the Divisions o f Public Administration (PDAPs), which, so far, are exclusively responsible for the civil servants belonging to the State administration. There are still insufficient policy statements or normative indications suggesting whether the management and regulation o f the national and subnationalpublic servants will be ensuredby one central institution (Ministry o f Public Service for both central and subnational Civil Services) or assigned by the provincialCivil Service to Provincial Civil Service Management Agencies (PCSMA). The creation o f provincial Civil Service managementbodies i s expected within not less than one year from the appointment of the provincial governments. The speed will depend on the existing capacity o f local agents and the progress made by local human resources management staff inbuilding capacity. 59. The PCSMAs will be responsibleto: 19 0 Ensure the correct implementation o f the general rules governing the provincial Civil Service 0 Ensure the implementation of personnelpolicies inperformance management, career development, career progression, social benefits, and staff mobility within the provincial administration 0 Manage outsourcing agreements for the delivery o f public services 0 Manage performance according to standards 0 Recruit provincialcivil servants 0 Manage retirement and separation procedures for provincial civil servants 0 Participate with the MPS to define wage policies and legislation for provincial civil servants. 60. The public service in the DRC requires urgent interventions to ease the HRM difficulties in the central administration. The role o f a national authority to guide and facilitate the decentralization o f HRM services i s crucial, particularly in this phase o f initial institutional development. The reform o f the central Civil Service is needed to establish a set o f standards for bothlevels o f administration (central and subnational). Without a functioning central authority for the Civil Service, reform cannot be effective. However, it must be focused, rapid, and effectively phased. DRC policy-makers should consider introducing reforms to rehabilitate central Civil Service management capacity by intervening directly in the MPS. 61. TheMinistry of Public Service(Ministkre de la Fonction Publique) needs to remain fully competent to define and execute Civil Servicepolicies and legislation at the national level. During the initial period of one year from the establishment of provincial governments, MPS temporarily will keep responsibility for the subnational Civil Service through thePDPAs. Inthe context o fthe imminentdecentralization, MPS needs to retainfull jurisdiction over the staff employed by the State and administration at the central and subnational levels. It will share with the Ministry o f Interior the role o f coordinator o f reform and development programs for the subnational Public Service. The MPS shall ensure the "management" side o f decentralization. The Ministry o f Interior shall ensure the respect for the "legality" o f the process. Inthis context, the MPS will retain the leading role in setting standards for the conduct o f public employees and wage definition for both civil and public servants. It also will define the performance standards and ensure harmonization between national and subnational regulatory frameworks for both civil and public servants. Finally, MPS will prepare framework legislation and prepare development programs and activities for the provincial public services. All of these activities will take place in close and permanent consultationwith the provincialministries and authority for public administration. 62. This scenario foresees the division, upon decentralization, between the State Civil Service and the subnational Public Service and ensures a certain degree o f autonomy for the provincial public service administration from that o f the MPS. The low capacity o f the current provincial Civil Service administrators i s a weakness that needs to be taken seriously, particularly regarding the transfer o f professional know-how in HRM and administration o f the Civil Service from the center to the new subnational level. Intensive capacity buildingand internal reorganizationwithin MPS i s necessary to bringit up to effective performance. 63. I t is clear that the Ministry of Public Service has limited capacity in oversight and guidance in managing the Civil Service and needs to be strengthened to develop a more authoritative institutionalframework The low level o f authority that characterizes the MPS i s detrimental to the functioning o f the central Civil Service, the definition o f reform policies 20 and their implementation, and the development o f a strategy for the decentralization o f Civil Service management functions and its implementation. The line ministry responsible for the public administration and Civil Service as primus inter pares among other ministries often suffers from inadequate political authority to ensure implementation o f personnel and reform policies due to the resistance to change from other line ministries.Authority and decision- making capacity could be enhanced by revising the functional attributions o f the MPS. A thorough rationalization process must start from MPS itself. 64. The impact on the State budget of the decentralization and reform of the public administration and CivilService very likely will be high. Transitional financial arrangements with the provinces to sustain the creation of provincial Civil Services will be needed and closely monitored to prevent uncontrolled spending. New wage policies and legislation for both central and subnational Civil Services will need to be rapidly adopted. The body responsible for the administrative and Civil Service reforms will need to operate invery close consultationwith the Ministry o f Finance and Budget. 65. The administrators of ministries at both central and subnational levels neglect conducting staffing needs assessments and preparing staffing plans prior to submitting annual budgetproposals. These omissions are particularly true for MPS, which does not take any initiative in this direction. Furthermore, MPS does not operate in consultation and interact sufficiently with the provincialDepartments o f Public Administration. 66. Currently, each administrative structure defines its staffing needs without checking the availability of funds within their budgets or consulting or coordinating with the services responsible for the definition o f budgets. The synchronization between budget estimates and the actual needs o f ministries interms o f staff numbers i s weak. Too often, administrators o f ministries and departments do not have any knowledge or clear perception o f their budgets. This lack of planning and budgeting delays disbursements. In the worst cases, frequently, disbursements do not take place at all-causing great to the employees, who do not receive any salaries for several months. The irregularity o f salary payments encourages corruption withinthe public administration. 67. It is essential to reinforce the institutional capacity of the MPS in the consultation phases of budget formulation to ensure availability o f financial resources to cover staffing needs. Strong interaction between the MPS and the Ministry o f Budget, and the exclusive competences o f these two ministries are essential elements particularly for the Civil Service. 68. Regarding the decentralized provincial administration, the same formula o f close interaction between the two provincial ministries-administration and budget-is to be replicated for local recruitment. This close interaction is particularly important not only as a control but also as good governance. 69. Recruitment of provincial public servants. To date, no rules establish setting an independent, merit-based recruitment mechanism for the provinces or indicate whether the provincial administrations will have the authority to hire staff. The new legislation i s expected to grant this right to the provincial administrations by subtracting recruitment from MPS and devolving it to the provincialpublic service authority. Duringthe transitional period o f the establishing the provincial administrations and Civil Services this function can be left, for approximately one year, to the branches o f MPS present inthe provinces (PDPAs). 70. The local recruitment o f teachers and health personnel i s an issue that the DRC government must address and resolve in the context o f the type o f decentralization that i s 21 appropriate to the health and education sectors and the status to be assigned to their staff. Currently, they are special civil servants governedby national legislation. 71. Payroll management authority for the provincial Public Service As the provincial administrations progress and staff their institutions, timely payment o f staff will be essential. So far, there i s no evidence o f any norms defining the payment modalities during the first months o f life o f the provincial administrations. Also yet to be defined for the transition are (a) whether and how the provincial administrations will process payrolls for their staff, and (2) how the central State administration will ensure payroll operations.. Regarding the other local government structures (municipalities), each province will be fully in charge o f its own staff payroll, with a progressively diminishingdependence on the central State administration (MinistryofBudget). 72. The duration of the transition will depend on how fast and how precisely the financial rules and autonomy o f the provinces will be defined. In Indonesia, for example, payroll management was transferred to the regional governments. As part o f the transitional provisions, central government continued to pay the salaries o f devolved staff for five months following the transfer and deducted the amount from the calculation o f the general grant transfer. This measure considerably reduced some expected transition problems. In Uganda and in India, payroll management i s centralized for education and health workers, while for employees of the subnational administration, salaries are paid locally. The same happened in the Philippines and Poland. 73. Wage-rates-setting authority for subnational Public Service and in particular for the provincial administration. Who will be in charge? As the first step in the pay system reform, the central government must clarify what entity has authority to set wage rates for subnational public servants. The authority responsible for setting common standards and controls across the country during the transition for the central and decentralized pay system needs to be assigned without ambiguities. The central government also needs to make a statement designating the competent authority. 74. So far, no new normative text defines the terms and conditions for setting the wage rates for the public servants o f the provincial administrations. Recourse to the best international practice might help DRC policy-makers to introduce innovative regulations in this area. To start with, the current situation, characterized by weak HRM capacity at the central level and even weaker capacity at the periphery, requires a solid central control and management authority. Such authority should be able to ensure reliable and reformed human resources management rules procedures and controls extending to the pay system and pay bargaining, both centrally and at subnational levels until a sound subnational Public Service management authority i s established in each province. The experience o f Denmark and Finland can be considered. Both combine central responsibility for pay bargaining with responsibility for overall staff regulations within the government sector. They also separate responsibility for pay bargaining from responsibility for budget form~lation.~ 75. In Indonesia and the Philippines, for example, wage rates (including base wage, position allowances, and family allowances) are set centrally, although supplements may be paid by local authorities. In Pakistan, wage rates are established by the provincial governments but effectively by the federal government through framework legislation. In K.Rexedand others, Governanceof DecentralizedPay-settinginSelectedOECD Countries," OECD Working Papers on Public Governance 2007/03, OECD Publishing, 2007. www.oecd.org/publishing. 22 India, pay scales for the subnational administrations are determined by the subnational governments. 76. Poland and Ugandaprovide a more flexible model that respects local peculiarities and therefore local autonomy. There, pay scales are set by the State while subnational governments have the ability to supplement the base salary and are free to provide incentives and allowances. For at least an initial period o f five years, untilHRMcapacity is established at the provincial level, the central government should limit the margin o f discretionary authority to set salary supplements for the provinces. This i s necessary to avoid the build-up, in the long run, of a disproportionate salary gap between central and subnational administrations. A common pattern i s that provincial salaries become substantially higher than those paid in Kinshasa for the same ranks and same types o f jobs. Furthermore, the varied and high salary differentials among provinces make the whole pay system completely unmanageable and financially out o f control. 77. Under those conditions, the central control and management option i s the most suitable for the DRC because it would not deviate from the central government's practice o f setting wage rates (base salaries). The reformed pay system for central and subnational civil services i s to be regulated with a new Civil Service pay law and a public service pay law. These laws will set the standards for more transparent, merit-based, attractive, and fairly rewarding wages. Meanwhile, the Bank i s urging the DRC government to take a clear position and define three points: a. Whether subnational governments do or do not have competence to set wage rates b. How provincialgovernments will interactwiththe State competentauthority to define wage rates andpay system c. Whether, or within which limits,the provincialadministrations will have the authority to provide local hardship or remoteness allowances to subnationalpublic servants, includingteachers and health workers, within the framework o f a new wage system. 23 1II.PUBLIC SECTORPAY SYSTEMINTHE CONTEXT OF CIVIL SERVICE REFORMAND DECENTRALIZATION 1.INTRODUCTION 78. The DRCpublic administration is far from being the best or the most competitive employer. The wage factor is one o f the main causes makingthe DRC public administration a noncompetitive employer. Due to poor employment conditions, including poor remuneration, the public administration i s incapable o f attracting, retaining, and motivating skilled professionals. Consequently, the central government is unable to provide quality services to client citizens. Salaries are paid irregularly and, in some cases, not at all. Their levels are inadequate and do not (a) provide a basis for the delivery o f quality public services, (b) ensure the respect o f basic professional ethics and loyalty to the institutions, and (c) ensure responsiveness by civil servants to client citizens' quest for services. 79. The existing salary scales for differing professional categories within the Civil Service are excessively compressed, thus disincentivizing staff to accept higher level responsibilities and make meaningless career progressions. The way that wages are structured and managed far from rewards merit and performance. Benefits added to the base pay barely provide the supplementary compensation for specific personal or service conditions (allowances for housing, hardship, transfers to other locations within the country). There i s no doubt that the current situation i s not the ideal for motivating civil servants to work more and better and raise their prideinservingthe State and the public. 80. This section o f the review deals primarily with the core Civil Service, although many aspects of reform options also couldbe applied to other parts o f the public service. 81. Due to uncertainty about the number of stafl and management, and the control problem over thepay procedures, DRCs pay system is in critical condition. A large number o f staff, particularly in the provinces, and mainly teachers, are receiving their salaries late or have not received any for several years. The mechanisms inuse are not streamlined and are not concentrated in the hands o f the bodies that should have exclusive jurisdiction over the Civil Service: the Ministries o f Public Administration and of Budget together. Ministerial Cabinets and other subjects are issuingpayment orders, thus creating confusion, inefficiency and double-dipping by enterprising people. 82. In conjunction with the census of civil servants, the government is introducing simplified the Transitory Simplified Pay-System (TSP; otherwise known in French as PTS for Procidure Transitoire Simplifiie). TSP i s designed around the concept that each ministry will be able to modify the database and introduce all necessary changes related to its personnel (including recruitment and promotions). According to this system, ministries could modify the database at will whereas the payments are to be disbursed for three months at a time with regularizations o f staff done at the end o f the three months. This mechanism would enable reconciliation o f the need to account for turnover with the need for wage bill control based on a reliable database o f staff. 83. The main risk o f this procedure i s that essentially it i s an accounting procedure without much concern for the human resources management side. Moreover, it i s exclusively managed by the Directorate o f Pay o f the Ministry o f Budget (MB) with no participation and role for MPS. The risk o f regularizing personnel with little concerns for Civil Service 24 management rules and staffing policies i s as real as the strong possibility o f increasing the staffing levels without much control. 84. It is crucial that in this context MPS and MB work in close consultation and with respect for the existing HRMprocedures, legislation, and policies that, although outdated, can still be viable inthe emergency inwhich the DRC Civil Service finds itself. It i s essential that the "right" o f ministries to enter personnel data be constrained by restrictions on the freedom o f ministries to hire staff. Hiring i s unrestricted, and formal financial coverage with doubtful resources from budgets annexes creates serious budget management problems. Thus, the decentralizedmanagement o f the PTS should include mechanisms for tightening the rules on staff recruitment, that is, requiringadvance joint permission from both the Ministryo f Budget and the Ministry o f Public Service. 85. The objective is to create transparent, reliable, regular, fair, and durable remuneration. The top priority o f the wage reform i s to engender sustainable higher remuneration levels over time for both civil and public servants. Another priority is to pay salaries that are reasonably inline with market pay levels and thereby minimize any tendency for staff to seek illegal ways o f supplementing their incomes. Adequate mechanisms will be introduced not only to bring contingent pay increases, which can fast be eroded by inflation or economic instability, but also to set conditions that, over a maximum time o f five years, contribute to consolidate progressively higher and more reliable revenue for civil servants. Through restructuring the base wage, the reform also aims to set solid conditions for durable income earnings by civil servants for more meaningful pension levels. Under the new system, pay increases no longer will be based exclusively on seniority but on performance, skills, and professional experience. 2. PUBLIC SECTOREMPLOYMENT LEVELSAND WAGE DISBURSEMENT 86. Staf$ng levels are unstable and, despite adjustments due to the outcomes of staff census, they tend to increase rather than decrease or stabilize. Some adjustments to the number of employed personnel in the DRC public sector already are taking place with the first data of the ongoing census. From January-July 2006, the number o f staff o f some categories increased: civil servants (+ 8.15 percent for the actively employed ones), primary and secondary teachers (+ 7.3 percent), higher education and university teachers (+ 3.1 percent), health (+ 8 percent) and agriculture personnel (+ 13 percent), and appointed staff (+ 6.6 percent). These numbers increased the total staff to 489,645. The ongoing census may increase this number. In addition, the Ministry o f Primary and Secondary Education has identified some 50,000 teachers to be regularized, adding significant numbers o f public servants to the wage bill. This will take the number o f public servants on the wage bill well above levels that are sustainable, a point recognized by the authorities. Categories Number of Number of staff Increase staff July 2006 (%I . . January 2006 Civil servants: 121,624 131,545 +8.15 Primaryand secondary school teachers 210,416 225,723 +7.3 Highereducationand universityteachers 26,254 27,072 +3 Healthpersonnel 47,869 51,705 +8 Agriculturepersonnel 9,929 11,211 +13 Appointedstaff andbudget annexes 28,606 30,494 +6.6 25 87. During 2005, wage disbursement passed from CDF 10,573,914,408 to CDF 12,261,824,542 with an increase o f CDF 1,687,910.134 (+ 15 percent). At this level o f spending, the wage bill represents 1.17 percent o f the overall 2006 state budget and 0.55 percent o f GDP (core Civil Service only). The increases have taken place due to an increase o f the transportation allowance (CDF 1,000) for the State civil servants in the provinces; o f the housing allowance (CDF 2,500) for the State civil servants residing in Kinshasa; and o f the allowances for the job o f the primary and secondary education teachers, the teachers o f the professional and academic institutions, and the personnel o f the scientific research sector. Also contributing to increase o f the 2006 wage billwere the increase o f the riskallowance for out-posted medical doctors; increase of the bonus for teachers in 2005; allowance for the census to the State civil servants in Kinshasa and in the provinces; computerized payroll registration o f teachers o f the primary, secondary, and superior education levels; re- adjustment o f the salary o f medical doctors; regularization o f salary levels and payment o f arrears o f the regularized civil servants; and liberalization o f certain services financed by budgets annexes. 2.1. Civil Service wage system 88. The current wages are inadequate to createfair and reliable remuneration. Since 2001, the structure o f Civil Service wages in the DRC for all categories o f personnel in the public sector has been progressively modified by adding supplements to the base salary. Meanwhile, the latter has insignificantly increased in value since March 2004, whereas supplements have experiencedmore significant increases (table 4). Table 4. Evolutionbaremique de 2001 B 2006/SecteurFonctionPublique REPUELIQUE DEMOCRATIOUEDU CONGO HINSTERE W BUMiET SECRETARIAT GENERIL AU W W E T T W I P O R1 TI NETA lRANSPORTl W T A TRANSPORTI NETA TRINIPORTI NET A N. GWOE BASE KINSHASA PAYEWKIN BASE K I N M A PAVEWKIN EASE KINSHASA ,LObEMENl PAVEWKIN W E KINSWSA LOGEMEN1 PRIMES PAYEWKIN Source: Ministryof Budget, 2006 89. The table shows the ranks startingfrom Director because the levelo f General Director has been de facto suppressed. Table 4 does not show the level o f General Secretary since it i s not paidby the MB General Directorate for Pay but by the Cabinet o f the Minister of Budget. 90. The salaries of public personnel (civil andpublic servants) contain a high number of pay supplements based onfunctional category, status, and tasks. Inaddition to the base salary and the transportation and housing allowances, a number o f pay supplements vary according to the functional category (statut) o f the public servants and the types o f tasks that 26 their positions entail. Consequently, civil servants receive (statut ginkral) pay supplements according to the ministry inwhich they are employed. 91. Civil servants, for example, are called Primes de Recensement. This term i s applied only up to the rank o f Director; it excludes General Directors and General Secretary o f Ministries. Civil servants located in Kinshasa and those out-posted there have two different rates. Theprimes de recensement for the civil servants located in Kinshasa are scaled with a different value for each echelon and represent 59 percent o f the full salary. Incontrast, those paid to the civil servants inthe provinces have a flat value for all echelons and represent from 40 percent o f the full salary for the highest civil servant in the province equivalent to Secretary General to 76 percent for the lowest rank inthe hierarchy. 92. The Transportation Allowance for Civil Servants is a flat rate monthly allowance equal for all ranks but i s paid at different rates for Kinshasa and inthe provinces. For staff in Kinshasa, the allowance i s superior in value to the base salary, thus contributing to wage distortion. This allowance i s 115 percent higher than the base salary o f the highest echelon o f the Civil Service up to 1153 percent higher than the base salary o f the lowest rank. For civil servants in the provinces, the applied rate i s nine times lower than that applied in Kinshasa (DCF 1000 versus DCF 9202). The wage distortion is much less impressive for the civil servants inthe provinces than for those inKinshasa. 93. The Housing Allowance for civil servants is payable only to the civil servants residing in the Kinshasa area. It i s a flat monthly rate, and the same amount is paid to all ranks o f the hierarchy. This allowance represents less than 10percent o f the overall salary for each echelon of the Civil Service hierarchy 94. The personnel o f the Ministry of Finance and Budget receive a supplement called prime de rktrocession. The civil servants in the Ministry o f Public Service receive a special supplement "for the assigned tasks" (prime spkciale defonctions). The Minister for Public Administration i s preparedto introduce a pay supplement for the educational level applicable across the entire public administration. The civil servants employed in the Ministry o f Planning receive a supplement for "planning." 95. The variety o f pay supplements that exists for the civil servants employed in the Ministry for Higher Education is problematic. There is a supplement for studies completed (prime de diplo"me), one for technical skills (prime de technicite?, one for membership in the commission that validates foreign degrees (prime d 'homologation), one for the exercise o f academic authority, one for special administrative functions, and one seniority supplement. 96. For Ministry o f Finance personnel, there i s a supplement for budgetary control functions, one for the definition o f the wages, one for the management o f budget implementation, a supplement d 'intendance, and one supplement for IT functions. 97. The situation i s much more opaque in the Ministry o f Health (MoH). It has a supplement for professional risk reserved for medical doctors. Paramedicalpersonnel receive an further supplement for "curative functions" (prime defonctions soignantes). The Ministry o f Budget grants to the Ministry o f Health an annual amount for salaries and supplements. The pay o f each person employed in the health sector i s managed by the Wage Commission o f the MoH, and salaries are paid by dividing the total amount assigned by the budget for wages by the number o f employed staff. Individual pay i s decided case by case by the Wage Commission. Consequently, when the number o f staff i s higher, individual salaries are lower. 27 The wage levels thus vary greatly each month. Socialjustice and fair treatment o f workers are principles completely neglectedinthis case. 98. Salary compensation supplementsfor PSE teachers. All teachers receive two such supplements, which are defined as primes with no particular denomination. There are different rates for different ranks, and they vary for the teachers working in Kinshasa, or in Lubumbashi, or inthe provinces. They constitute 50 percent-60 percent o f the full salary for PSE teachers in Kinshasa, 50 percent-70 percent inLubumbashi, and 50 percent40 percent inthe provinces. For the transportation allowance for PSE teachers, the same rates used for the civil servants apply to the PSE teachers in Kinshasa (DCF 9202) and in the provinces (DCF 1000). The distortion is the same as noted inthe case o f civil servants. The Housing Allowance for PSE teachers (in Kinshasa only) is paid monthly in the same way as for the civil servants and at the same rate. Similarly, PSE teachers in Lubumbashi and in the provinces do not receive such supplement. 2.2. Allowances and supplements 99. A number of "pay supplements" cannot be codified as required by the PTS. According to the PTS, supplements that cannot be codified and recorded cannot be paid. This represents a particularly serious problem, especially for public servants whose pay consists almost exclusively o f supplements with a very limitedbase salary. 100. The current central pay system with the great variety of supplements: I s particularly opaque, extremely complex to manage and highly inefficient for accounting purposes; and does not facilitate the calculations for the fiscal impact assessment needed to reform the pay system . Cannot ensure that the actual wages are equitable and cannot ensure stable wage levels across the administration; Defeats any possibility o f makingpay a motivating factor. Favors the "personalization" o f wages and i s detrimental to the establishment of a fair pay system. Contributes to fragmenting functions assigned to a position into a number o f tasks. Fragmentation undermines accountability because performance concentrates on some better paid tasks within the functions rather than on the exercise of functions as a whole. Distorts the pay scale applicable to civil servants at the same career level but working in different areas of the administration by creating inequalities. Does not permit fixing satisfactory levels o f pensionable remuneration commonto all civil andpublic servants. Inflates the wage bill without remarkable long-term benefits for staff (unchanged base for pensionable remuneration). Increases wage compression for all pay scales applicable to the different professional categories o f the DRCpublic sector. 101. Concerning other allowances, more evidence is to be sought. Particularly concerning the allocations familiales, it i s necessary to explore the applicable ratedamounts and their percent o f the final pay. It also i s necessary to explore whether public personnel receive other 28 forms o f nonmonetized fringe benefits (insurances, exemptions from income tax for revenues earned from employment inthe public administration, free access to education). 102. According to the evidence offered by the official salary scales, it i s possible to conclude that past governments have opted for an incremental public sector wage policy rather than introduce appropriate mechanisms that couldpreserve wages' real value and a fair and reliable way o f remuneration. The prevailing wage policy consists mainly o f compensating for the decline inreal salaries by adding monthly supplements. 103. Another distorting element of the wage system is the selective payment to staff of supplements (housing or transportation) at different rates depending on the their job location (Kinshasa, provinces, Lubumbashi). This practice strongly diminishes the equity o f remuneration for civil servants who are discharging equivalent types o f functions across the country and increases wage compression. Inpractice the variety o f supplements and o f base salaries for different professional categories (civil servants, teachers, health and agriculture personnel) creates multiple salary scales and systems within the public administration, furthermore undermining motivation and the possibility of setting modern management standards within the public administration. 2.3. Wage compressionratios 104. Wage decompression ratios are far too low, and wage differentials for different categories across the public administration are too high. A compression ratio o f 1:4 between lowest and highest paid career official i s internationally seen as the minimum needed to assure a relevant level o f motivation to pursue additional responsibility. In the DRC, wage compression has reachedlimits inwhich the salaries are unable to provide asuch dequate motivation and minimum satisfaction of basic needs across the hierarchies o f the different professional categories o f civil servants. Table 5 provides interesting elements with which to assess the actual wage compression o f the pay system inthe DRC. The table shows the actual pay grid for civil servants including the General Secretary level as o f November 2006. It is important to note that this grid does not include a number o f specific supplements, notably the ones discussed insection 2.1 above. 29 Table 5. Overview of main allowancesand supplements, November 2006 Agent 1 10 Auxiliary 1,436,OO 9,202,OO 1,000,OO 2,500,OO 13,000,OO 6,000,OO 26,138,OO 8,436,OO Agent 2 11 Porter 798,OO 9,202,OO 1,000,OO 2,500,OO 8,000,OO 6,000,OO 20,500,OO 7,798,OO 106. For the civil servants located in Kinshasa, the allowances for transportation (CDF 9202) and for housing (CDF 2500), when added to the base salary, automatically have a negative effect on the wage decompression ratio, drops drastically from 10 to 1.4. The payment o f equalized supplements irrespective o f different ranks and living standards leads to such low decompression rate. This drop could be easily avoided if only those supplements were scaled proportionately. Further to this, a supplement for census (without a proper rationale) was added in 2005. The very high supplement (DCF 139,200) paid to General Secretaries, although it keeps the overall decompression ratio high(7.7), inreality adds more distortion to the pay grid itself. Infact, DCF 139,200 remains an "extravagant" supplement in comparison to the amounts granted across the entire grid. Inreality, for those to whom a more coherently scaled supplement i s granted, such as the range from Chief o f Division to Porter, the decompression ratio i s 2.2 for the civil servants based inKinshasa. This wide discrepancy has a significant impact on staff motivation because it affects the intermediate and intermediatehigh ranks o f the Civil Service hierarchy, who consequently have little incentive for ensuring a higher quality o f service, loyalty, and overall professional motivation. 107. The Census Supplement paid to General Secretaries i s 5 times higher than that paidto Directors and 23 times higher than that paid to Directors out-posted in the provinces. This vast difference constitutes an element o f unfair treatment within the Civil Service contributes to demotivation, particularly o f civil servants who have leadership and decision-making responsibilities. 108. Further analysis o f the civil servants' wage decompression indicates that, for the mid- level staff Agent de Bureau I and Chef de Bureau, the decompression ratio i s 1.2, which i s still too low to raise career ambitions among the staff ranked within that bracket of positions. It is obvious that this scale is not merit based and that wage levels have been set without taking into account responsibility, accountability, complexity o f work, type and quality o f decisions to be taken, coordination, and supervision. 30 109. It also is possible to see that the government's policy orientation thus far has been to keep a low ratio to minimize the pay differentials between higher and lower echelons. The containment of the salaries at the top o f the hierarchy and the raising o f salaries o f the unskilled or semiskilled labor force would signal the government's commitment to an egalitarian pay structure that needs to be reverted and pay levels that need to begin to match with skills and responsibilities. In practical terms, low decompression ratios do not help substantially to improve either wage bill spending or the professionalization o f the public service and certainly are not instrumental to ensure improved governance. 110. The decompression rate for the civil servants living in the provinces depends on the pay structure, which does not include the monthly housing supplement and does contain a lower (CDF 1000) transportation supplement than that paid in Kinshasa (CDF 9202). Considering that such supplements paid at flat rates are conceived to ensure a higher salary rather than to reimburse actual costs, there are obvious elements o f unfair treatment among equally ranked staff based on the different job locations. It i s important that in reforming the pay system, this type o f discrimination be removed. Inaddition, the absence o f compensation for staff out-posted constitutes a disincentive for many civil servants, who strive to concentrate in the central administration in Kinshasa rather than move to the provinces. This element needs to be taken seriously into account, especially in the impending establishment o f decentralized subregional governments, which will require a number o f staff in the provinces. The salary decompression ratio for the Civil Service in the provinces i s extremely low at 1.9. There is no way that civil servants would be keen to accept any out-posted work assignment, particularly in areas that offer very high levels o f risk to personal security and hardship. 111. The wages paid to teachers of primary and secondary education have substantial differences from those paid to civil servants. The first difference i s inthe denomination o f the functional ranks for which it i s fairly complex to establish an exact equivalence. For each echelon, there are 10 steps (0-9). For the teaching staff o f the Kinshasa area, between the first step and the last, the salary ranges from 20 percent between lowest and highest step for Grade 12 (the highest step within echelon) to 10 percent for the lowest echelon that contains steps (Grade 32). Grades 33, 34, and 35 do not foresee any step progression. InKinshasa, a teacher ranked at Grade 12 is equivalent to a civil servant ranked as Director (inKinshasa) and earns from a minimum o f DCF 54,495 (step 0) up to DCF 64,358 (step 9), versus CDF 45,423 for the Director o f the Civil Service, that is, 20 percent-30 percent less. Nevertheless, despite the higher pay, the decompression ratio across the scale o f 12 echelons is fairly low (3.2) but definitely is better than that o f the Civil Service. 112. For out-posted teachers, the system distinguishes between those posted in Lubumbashi and those posted inthe provinces. For the teachers in Lubumbashi, the salary i s particularly lower than that paid to their colleagues at the same rank inKinshasa. The average difference i s approximately 54 percent less for the teachers in Lubumbashi. Compared to Civil Service salaries paid to staff outside o f Kinshasa, the teacher at grade 12 step 9 earns CDF 42,454 (and CDF 32,591 at grade 12 step 0). Incontrast, an out-posted Chef de Bureau o f the Civil Service earns CDF 12,746. That is 233 percent less than the higher step o f the grade 12 for teachers, or 155 percent for teachers at the lowest step o f the same echelon. The compression ratio for the PSE teachers' pay scale (from grade 12-32 included) in Lubumbashi i s 2.3. 113. In the remaining provinces, the PSE teachers still earn substantially less than those employed inKinshasa. The salary averages 85 percent less than the one paid inKinshasa, and 31 the decompression ratio i s 2.4 for the teaching staff (excluding support personnel) ranked at echelons 33, 34, and 35. 114. For all teachers in Kinshasa, Lubumbashi, or in the provinces, contrary to what happens for civil servants, salaries contain two supplements plus housing and transportation allowances. The two supplements have different values in each location (Kinshasa, Lubumbashi, provinces) and for each echelon, but the same value for each step within echelons. These supplements and allowances are the main factors in compression. Without such supplements and allowances, since the base salary is the same, the decompression ratio would be equal for all three locations: 19.8. Moreover, the base salary for each echelon o f the hierarchy for PSE teachers i s substantially higher than the equivalent rank for civil servants. 115. The situation i s further complicated by the pay scale used for employees o f the Ministries of Health and o f Agriculture. As a matter o f fact, for the Health and Agriculture personnel, a common pay scale has been established different from the one adopted for the PSE and Civil Service. The MoWMoA scale i s structured on levels o f base pay different from those paid to the civil servants and to PSE personnel, and it includes 14 functional levels versus the 11 foreseen for the civil servants and the 10 for the PSE. Under these conditions, it is very difficult to establish the equivalence o f functional levels and elaborate a unifiedbase pay that would be applicable across all public and Civil Service sectors. 116. Inthe pay scale intable 6, EC stands for "En Chef." It is not clear to what this level corresponds since these positions are above the levels o f Chief o f Clinic or of Plantation (for agriculture), Chief o f Service, or Chief o f Sector. It is stressed that there i s no equivalence between the functional levels 9-14 o f this scale with the functional levels 1-8 o f the Civil Service pay scale. The fact that the base pays are almost identical is purely coincidence. Table 6. Payscale for Healthand Agriculture Ministries'administration personnel(2006) 117. The scale shows elements o f distortion that affect the compression rates for the personnel working inboth Kinshasa and the provinces. For the Kinshasa personnel, base pay without allowances shows an encouraging compressionrate o f 11. However, the rate drops to 2.45 after adding the housing and transportation allowances. It is important to take into account that the compression rate o f the salary after adding allowances can be substantially different when special pay supplements (prime de risquk and other "ad hoc" supplements) are 32 added to the total indicated in the scale in table 6. It i s highly unlikely that the additional special supplements would improve the compression rates. In any case, the adjustment or improvement would be limited to individual cases rather than to the whole category o f employees. 118. The situation in the provinces is definitely worse in many respects. First, it i s very hard to understand for what reason there are five different levels o f EC when their pay i s exactly the same. The compression ratio o f 1.0 makes it superfluous to have so many levels. Moreover, compared to 11 in Kinshasa, the overall compression rate before allowances i s 3.68. Adding the transportation allowance drops it to 2.78. Once again, this pay scale does not include any additional special pay supplement that might furthermore reduce the compressionrate primarily at the level o f individuals. 119. This pay scale certainly i s not suitable to motivate personnel posted in the provinces to better perform or to aspire to higher levels o f responsibilities. It especially frustrates the ambition to reach the functional levels classified as EC. The current scale encourages particularly the medical and paramedical personnel to seek employment in Kinshasa rather than in the provinces, where the pay averages 25 percent lower for no reason. On the contrary, the base pay for the out-posted medical and paramedical personnel as well as the personnel o f the provincial ministry o f agriculture in charge o f rural development programs should be higher than inthe capital. 120. All data so far reported are very basic and provide only a simplified view of the distortions that affect the different pay scales and consequently the overall pay system for the public sector in the DRC. It i s important to be aware that a large number o f special supplements, plus seniority pay coefficients, are added to the wages. After such additional wage components, it becomes virtually impossible to draw a general pay scale for each sector (PSE, Health, Agriculture, Civil Service) inboth the central and the provincial Civil Services. 121, It is vital to change the pay scales to re-equilibrate the decompressionrates to higher levels. It also i s important to integrate as many supplements as possible in base pay. Inthis last hypothesis, however, there i s an immediate need to dismantle the system o f special pay supplements to gain more transparency and strengthen the values o f the base pay for all sectors o f the DRC's public administration. Inthe last decade, various African countries have pursued the path o f either high or low decompression ratios. Benin, Burkina Faso, and Senegal have kept their salary decompression ratios below 10. However, their top salary levels also are too low to attract or retain professionals in the public service. Botswana and Uganda have adopted high decompression ratios o f 20 and 30 respectively. Tanzania has a moderate decompressionratio o f 15-20. 122. The amountpaidfor supplements is higher than the base salary. The evolution o f the pay structure inDRC has degenerated into paradox inwhich, inmost cases, base salaries represent a small, or often too small, portion o f the pay, whereas supplements are far larger than they should be. Tables 7 and 8 portray the situation for the Civil Service and Primary and Secondary Education (78 percent o f public personnel). 123. It is obvious that the supplements added to the base salary represent a main factor of distortion. For the civil servants and the PSE personnel inKinshasa where the transportation allowance i s paid the differential in percentage between base salary and supplements i s higher than in the provinces. Concerning the Health and Agriculture personnel, while in Kinshasa from the mid level o f the hierarchy to the lowest one the percentage o f allowances 33 i s higher than the base pay, inthe provinces the differential betweenbase pay and allowances i s more reasonable preserving at a higher level the portion o f pensionable remuneration. It i s obvious that the number and nominal value assigned to the allowances has a distorting and negative impact on the repartition between base pay and non pensionable additional pay supplements. The inadequacy o f the levels of pay in nominal value becomes particularly evident for the low and midechelons o f the hierarchy where the wage is almost exclusively a sum o f supplements. The situation needs to be modified and an improved balance between base salary and supplements needs to be re-established to create conditions o f transparency and equity as a platform for a coherent pay system within the public administration particularly inview o f settingpay levels for the decentralizedadministration Echelons Kinshasa Provinces Basesalary Supplements Basesalary Supplements (%) (%I SecretaryGeneral 5 95 53 47 Director 15 85 49 51 34 Table 8. Proportionof basesalary and supplementsin PSE teachers' wages Echelons Kinshasa Lubumbashi Provinces Basesalary Supplements Base salary Supplement Base salary Supplement (%I (%) (%I e?) (%) e?) Grade 12(D) -step 0 13.4 86.6 22 78 23.4 71.6 -step 9 27 73 40 60 48.3 51.7 Grade 13 (CD) -step 0 16 84 21.4 78.6 29.2 70.8 -step 9 30.5 69.5 41 59 49.3 50.7 Grade 14(CB) -step 0 14 86 21 79 27 73 -step9 28 72 39 61 47 53 Grade21 (ATB1) ~~~ -step 0 11.4 88.6 19 81 24 76 -step 9 23.3 76.7 35 65 43 57 Grade22 (ATB2) -stev 0 10 90 16 84 22 78 20 80 30 70 39 61 Grade 31(AGB1) ~~~ -step 0 84 91.6 15.5 84.5 20 80 -step 9 18 82 30 70 37.5 62.5 Grade32 (AGB2) -step 0 7 93 14 86 18 82 -step 9 15 85 25.3 74.7 34.5 65.6 Grade33 (AA1) 8 92 18 82 23 77 Grade34 (A.42) 7 93 16 84 20.5 79.5 Grade35 (H) 4 96 10.6 89.4 14 86 Table 9. Proportionof basesalary and supplementsinHealth andAgriculturewages 2.4. Political appointees 124. There is a need to define the pay scale for political appointees in the public administration at both the central and subnational levels by linking it to the wage system 35 and dynamics of the Civil Service pay system. The pay o f the politically appointed and elected representatives o f the State and provincial administrations i s remarkably higher than that o f the Civil Service and i s not linkedto the pay o f public and civil servants. It is common that the wages o f the political staff are substantially different (either higher or differently structured) than those paid to career civil servants. In addition, given the different and separate wage dynamics in which synchronization o f reviews and increases occur according to different schedules, political priorities and criteria may occur. These are to be avoided and any possibility o f a pay gap between career civil servants andpolitical staff for the same work i s to be prevented or eliminated. 125. The scope o f this reform i s twofold. First i s to establish a pay scale and a salary structure that attract non-civil servants to work, even temporarily, in the public administration. Second, the reform will establish a coherent link between the salaries o f career civil servants and those to be paid to politically appointed staff within the Cabinets o f line ministers as well as to Cabinet members; and ensure that increases in the Civil Service pay scale are reflected in the Cabinet and their staff pay system and vice-versa. I t should be the goal of the reform to achieve a harmonized and interdependent pay system without gapsfor career civil servants, Cabinet members, and theirpolitically appointed stafJ 126. According to a proposal recently advanced by the Minister o f Public Administration, the political staff can be classified according to the following scale: ..... . Category 0: Heado f State Category 1: Chiefs o f the State legislative assemblies and Prime Minister Category 2: State Ministers and equivalent Category 3: Ministers and provincialministers Category 4: Vice ministersand governors o fprovinces Category 5: Elected members o f State and provincial legislative assemblies Category 6: Staff of State and provincialministerial Cabinets 127. The formula proposed by the Minister for Public Service needs to be considered a transitional solution since it incorporates political staff belonging to the central and subnational administrations. This solution i s contingent on the fact that, so far, all central and provincial staff (civil servants and political appointees) are paid from the State budget. The provincial political staff will need to be separated from the State political staff as soon as the decentralization i s in advanced development so that the reformed regulatory and financial instruments will be enforced. At that point, the pay scale for provincial political staff will be linkedto the pay system designed and adopted for the provincialCivil Service. 128. The pay grid for staff o f ministerial Cabinets should apply the same principles as the gridestablished for the general career civil servants. For the sake o f transparency, it would be appropriate to establish a pay grid for those who can be called Executive Politicians, including the Prime Minister and State Ministers, Ministers, and heads o f State agencies; a grid for Elected Politicians, that is, members o f Parliament; and a grid for the Cabinet Staff Appointed by line ministers. The applicable criteria shouldbe the same for all groups but with a lower coefficient for the ministerial Cabinet personnel. 129. To ensure linkage with the Civil Service pay scale, a number o f countries use the base pay o f the highest Civil Service position as a starting reference value for the base pay o f the 36 lowest level o f the scale. Inthis way, any increase at the level o f political personnel has an immediate impact on the whole pay system within the public administration and vice versa. 130. Thus, the reformedpay grid shouldbe structuredto: Take as a starting reference the highest salary paid to the highest position inthe Civil Service to ensure linkage with the career Civil Service pay system and reduce to a minimumany gap, or prevent the widening ofany gap 0 Define the pay of politicalmembers and their appointed staff to take into account that: Inview ofthe politicalrole ofthe staff, the workload, responsibility, impact of decisions taken andpolicies prepared, and degree o f decision-making mustbe more valued than for civil servants. The pay must be adequate, competitive, and attractive and therefore conceived as a compensationrather than as a standard salary for highly qualified professionalsengaged inpolicy- and decision-making. The duration o f mandate (tenure) i s limited for Cabinet staff, particularly for those appointed from outside the Civil Service. The duration o f assignment with increased responsibility i s temporary also for civil servants who have beenassigned to Cabinet positions. The remunerationmightnot be used to calculatethe pension. Often, political public servants and their staff are excluded from participating inCivil Service pension funds or are allowed a limitedperiodo f contribution due to the short durations o f their mandate. Insuch cases, their remunerationmustbe adjusted with additional pay. There i s no career progression for Cabinet staff not belonging to the Civil Service. The political exposure and accountability are expected to be higher for Cabinet members and proportionately higher for their Cabinet staff compared to general civil servants who are discharging administrative tasks. No severance payment (indemnitk defin de carri8re) should be payable to Cabinet members or their staffwhen their assignments end. The criteria to define a salary scale for political public servants are summarized intable 10: 37 Table 10. Criteria to define a salary scale for politicalpublic servants Rationalefor a specific pay scale Criteria for payingspecifically Most frequently recurring types for Cabinet staff designed salary different from of benefits ordinary civil servants Competitiveand attractive pay Workloadundertaken Base salary set inapay scale conceivedas acompensationrather specificallyelaboratedinsidethe than a standard salaryfor highly Level ofresponsibility Civil Service pay scale. The base qualifiedpolicy- and decision- salary i s higher(%) than a makers reference basesalarypaidto the highest civil servant. Limitedduration ofmandate Size of organization Basic salary individually (tenure) for Cabinet staffappointed negotiatedinclusiveofbonusesand from outsidethe Civil Service allowances Temporaryassignment following Complexityof assignment Tax-freeallowances detachment from Civil Service Degree of decision-making Paidcosts (travel, relocation, insurances) Exclusionfrom participatingin Impactof decisionstaken and Child allowance Civil Servicepensionfunds for policiesprepared non-civil servants due to limited Housingallowance duration of their mandate Absence of career progressionfor Earningsfrom activitiesexternalto non-Civil Service Cabinet staff public administrationor from other special assignments withinthe public administrationallowed No severance paymentupon completionof mandateas Cabinet staff High political exposure and accountabilitycomparedto general civil servants discharging administrativetasks 38 IV.CONCLUSIONSAND PROPOSEDSTRATEGYFORWAGE SYSTEMREFORM 1.INTRODUCTION 131. The current wage system in the DRC's public sector corresponds to "Grade-Related Pay" (GRP). It i s an older pay system. Wages increase automatically on a periodic progression (usually annual) along a predefinedpay grid in which each pay grade contains a number o f "steps" usually linked to job seniority. By ensuring an automatic and guaranteed incremental salary progression, this system disincentivizes employees to improve their performance and creates conditions for reactive management among public servants. The alternative to GRP i s the "Performance-Related Pay" (PRP) system based on periodic step increases uponprovengood performance. 132. Conclusion 1: The overall long-term objective of thepay system reform for DRC's Civil Service is the gradual removal of the factors that contribute to maintain the GRP system to gradually introduce a more modern PRP. I t should be in place within the next five years. 133. The decompression ratio inthe various pay scales (civil servants, PSE teachers, health professionals) i s dangerously low. It i s depressing the morale o f civil servants and their motivationto remain inthe public administration and improve their performance. Particularly treacherous i s the situation o f the civil servants' pay scale inwhich the excessively highlevel and large quantity o f "ad hoc" pay supplements distort wages, resulting in too high a differential in final pay between the highest rank and the rest o f the hierarchy as well as a constellation o f individually tailored wages that undermine the principle o f equal pay for equal job. Moreover, the sharp difference between wages paid to public personnel at the central and local levels o f the administration i s to be reduced always to be in line with the principle o f equal pay for equaljob. 134. Conclusion 2: All of thefactors causing high wage compressionneed to be removed as early as possible and adjustments made to the pay structure to re-establish value and credibility to salaries and ensure fair and reliable remuneration for all categories at all levelsin thepublic administration. 135. The pay system within the public administration has evolved into a constellation o f subsystems that are drifting ever farther apart, concealing privileges and increasing opacity, fragmenting the Civil Service, and increasing disparity o f treatment and distinct staff ranking systems. Fragmentationo f standards and principles within the Civil Service necessarily leads to more complexity inHRMand more difficulties inensuring staffmobility within the public administration. Fragmentation also lays the groundwork for even greater difficulties in determining the applicable standards and parameters of management and remuneration for the new decentralizedsubnational administrations. 136. Conclusion: Common standards must be re-established and renewed, particularly concerning remuneration. To this effect, theprimary obligation of the DRC government is to review and rationalize thepay structure by intervening in theformulation of new wages based on the value of base salaries and number and weight of supplements. 137. Pay reform alone cannot succeed and the reform cycle cannot be completed unless parallel Civil Service reform takes place to ensure the modernization o f HRM principles, 39 rules, and practice. Performance and results-oriented management are the main common guiding principles o f both the Civil Service and the Civil Service wage reforms. To create conditions for an effective and functioning PRP inthe future, the Civil Service legislation and HRM practice need to undergo substantial improvement to establish a merit-based and results-oriented Civil Service. 138. Conclusion: Consolidatedlegislation andpractice is the essential support to design the new pay scales of performance-related pay. The DRC government is urged to undertake the appropriate initiatives to ensure the reform of the Civil Service within the next twoyears, starting with revising the legalframework along the linespresented in this Note. 139. The current Civil Service wage accounting system includes the balances for both actively employed and retired personnel, thus distorting the actual wage bill size. This practice results from the absence o f a separate pension fund supported by individual public employee contributions. The fact that the State budget i s the primary source o f the funds needed to ensure financial coverage for retired personnel, i s not a sufficient reason to maintain the situation. The current system i s not cost efficient since there i s no pension fund that can rely on both contributions and subsequent investment o f such capital as mechanisms to ensure self-sustainability. The current level of base pay i s too low to ensure adequate financing o f any fund. Furthermore, the absence of a gross and net pay prevents levying contributions from salaries according to a defined scale. Iti s urgentthat the reform o f the pay system introduce the distinction between gross and net pay by incorporating pay supplements. This distinction would set the mechanisms necessary to finance a pension fund. It also would strengthen the certainty of the availability o f financial resources and the future levels o f payable pensions for retirees as elements that make employment inthe public sector attractive. Finally, the existence of a pension fund for civil and public servants would provide more transparency inpayroll management, wage bill size, budget management for the public sector, stable pension levels, and constant availability o f financial resources. 2. PHASINGCIVIL SERVICE REFORM 140. Wage reform as a phased process. Civil service wages will be reformed following a progression o f measures over a maximum o f five years. The particularly critical conditions o f the overall Civil Service management system; impending decentralization o f the State administration with the creation o f the new provincial governments; and necessity to determine the existing and future staffing levels, particularly resulting from decentralization, should galvanize public sector personnel to tackle more specific and sophisticated aspects o f public sector reform. Moreover, the need to re-establish discipline and the rule o f law within the DRC Civil Service necessitate the rehabilitation o f the wage system as a key support tool to reduce corruption and improve good governance standards overall. 141, Wage bill and employment rationalization supported with systematic head-counts through more rigorous a Civil Service census and transfer o f State civil servants to decentralized subnational administrations, certainly would contain any wage bill growth that the Civil Service employment growthmightgenerate. 142. The reform should concentrate onthe reform of the institutional authority and responsibility for wage setting and on the reform o f the wage structure. The proposed approachto reform the institutional aspect should focus on: 40 (9 Setting appropriate mechanisms for control and decision-making on the size o f the public workforce and the wage bill (ii) Setting financial disbursement procedures and payroll reform procedures (iii) Establishing a functional HRMauthority able to enforce appropriate pay- setting regulations and standards (iv) Decidingon the applicable model to conduct decentralizedpay-setting and management. 143. The immediate adoption o f policy measures to stabilize public employment levels and wage bill size should consist o f a. Stopping civil and public service employment growth through hiring freezes for new staff for no fewer than five years b. Ensuringtighter and more selective control over the regularization of personnel hired in partial or total violation o f Civil Service hiring procedures or without financial coverage c. Freezingpromotions for not fewer than five years o f civil servants who have been regularized duringcensus operations d. Providing some form o f monetary incentive (either as adding 1 or 2 bonus years toward retirement date or percentage increase to base salary) for the civil servant opting to be transferred to the new subnational decentralized administrations (provinces) e. Defining the wage bill ceiling for central and subnational administrations to promote fiscal stability and support against uncontrolled civil service employment growth. The approach would demand adjusting salaries to stay within the wage billenvelope. 144. Reform o f the wage disbursement and payroll management procedures should ensure that wages are disbursed directly to individual public employees by the State or provincial treasuries according to the data and salary levels established by a single State, or provincial, payroll system. This reform would depart from the current practice o f leaving wage payments and case-by-case pay-setting to the individual ministerial "pay commissions." 145. The reform also should ensure that a solid link o f data on staffing levels and unified remuneration standards across the central and subnational public administrations be established. It also would ensure that the MPS for an initial period be the primary authority responsible to set rules and procedures and monitor their implementation for both central and subnational administrations. Upon establishing a reliable and functioning system, MPS should play the role o f controller over the provincial public service authorities regardomg HRMandwage-setting standards. 146. The recommended model i s the "consensus model" similar to the one adopted in Denmark and Finland. This model i s based on pay bargaining at two levels. First, a central collective agreement covering all central government employees i s negotiated with the relevant trade unions. This agreement is then implemented through secondary negotiations at the subcentral level. Coherence across the central administration i s ensured by the clauses in the central agreement. One advantage o f this model i s that the parameters governing and confining the subcentral bargaining (corresponding to the bargaining parameters in the remit 41 model) has been agreed to by the central trade union organizations. Therefore, these parameters should also govern the behavior o f the local trade unionrepresentatives. However, at the same time, it means that the government cannot unilaterally set any parameters. 147. Regarding wages, an important step to be undertaken in the reform progression is to intervene directly in the pay system to enhance its transparency, equity, and efficiency with the ultimate aim o f also improving the post-employment compensation structure as an additional staff incentive. At the moment, in the DRC, wages are far too low and insignificantly remunerative according to any standards. The wage-distorting bonuses have altered the compression rate so that the pay i s no longer a motivating factor for all levels o f the hierarchy. 148. The legislative work to write new rules to define wages and their management i s to take place into two phases. During the first phase, the existing pay grids (for civil servants, teachers, health personnel) should be revisedto set at least a common base o f values for each pay component. Following the decision on the decentralization o f the health and educational sectors, the pay scales o f the employees o f these two categories can be revised and reformed separately from those for State and provincial civil servants. Upon clarification on the devolution or not o f these two categories to the provinces, the reference base pay allowances and pay supplements should be defined and harmonized with the rest o f the public sector. In any case, a new pay scale for state civil servants and one for public servants (including provincial public servants) should be defined. A coherent pay scale also would be prepared for appointedtop executives inthe Civil Service andpublic service. The new pay scale would be based on the minimumsalary to ensure the minimumacceptable standard o f living for the public personnel working in Kinshasa or in the provinces. The differential between wages paid at the central and subnational levels should be drastically reduced to avoid uncontrollable initiatives at the provinciallevels to obtain more rewarding pay. Standards and strict criteria and control mechanisms to contain this riskare to be introduced. 149. After the pay structure and system based on a simplified pay structure is rationalized, the job classification for the definition o f common parameters for the work posts within the public administration will be completed across the entire administration. The job classification will have two main goals. First, it will establish a base o f common standards to easily determine the equivalence o f ranks and titles across the administration between civil servants and public servants. Second, it will define jobs according to principles (such as complexity o f work, level o f responsibility, level o f autonomy in decision-making, workload, professional experience, and skills and competence required for the job) that will facilitate the definitiono f pay levels and the introduction of a performance-relatedpay system. 150. The final step in the reform will be the adoption o f one PRP system for civil servants and one for public servants. The possibility o f setting a pay scale for top officials harmonized with the one for civil servants also will be examined, and ifpossible, a new pay grid for that category o f staff will be elaborated. The last grid should include teachers and health personnel. 151. The pay reform should be developed and implemented in3 phases, each introducing a new reform element over 3 4 years: Phase 1: A temporary reformed wage system will introduced. During this phase, the wage structure will be decompressed for all civil servants from the rank o f director to the lowest one (porter). Since Secretary-Generals' wages have become a significant outlier in the wage 42 system, it i s suggested that the wage o f the huissier to the director i s used as the basis for calculating compression ratios. At this point, the Secretary-General position would remain in the Civil Service wage grid (to avoid politicization) and wage increases for this function will follow those o f other civil servants. Thus, it i s suggested that this position be excluded from the discussion on re-establishing a functioning grade system. A common base salary averaging the current levels used for different categories would be used as a starting base. Decompression could be raised from the current level below 2 o f civil servants and 3 o f PSE teachers to an average o f 1:6 over 4 years. Phase 2: Starting one year after the end o f phase 1, phase 2 will be marked by further decompression and restructuring o f the pay to reach a target ratio o f 5. Inthis phase, the pay grid would be standardized for all categories. No more than 1allowance o f no more than 10 percent o f the overall pay could be allowed for specific categories. Levels within echelons would be reduced to half, changing from 10 (or 12) to maximum 5. Phase 3: Would complete decompression and rationalization, bringingthe ratio to 8. Levels within echelons will be eliminated, and a pay grid with a horizontal step progression for performance payments will be adopted. 152. On completion o f this gradual transition from the existing system, a PRP system should have the appropriate conditions for being launched, provided that Civil Service reforms have introduced new and functioning performance management procedures. 153. It could be possible to test phases 2 and 3 inpilot ministries. 154. Wage rationalization options. Restructuring the current wage system is the most immediate need. Rationalization should be based on three milestones: a. Decompressing the salary structure to create incentives for mid- and high-level staff b. Eliminating distortions and nontransparent compensation created by allowances or salary-compensating supplements by consolidating allowances, and monetize benefits into a base salary c. Establish a salary scale for appointed Cabinet staff and link it to the Civil Service salary scale. 155. Prior to tackling the outline o f possible remedies to ensure a more transparent and realistic wage system, it is important to note that the distortion caused by the introduction o f salary-compensating supplements and allowances constitutes an average o f 70 percent-80 percent o f wages. The distortion has been such that the base salary had become a negligible element o f remuneration in some instances. This deterioration o f wages requires a more drastic intervention on the levels o f paid supplements than on the base salary. The best approach to remodel current wages i s to intervene heavily in the compression caused by the supplements. This can be done by raising base salaries in a scaled manner and redesigning allowancesprior to integrating them inthe base salary when and ifneeded. 156. Common base salary for all public administration. Separate base salaries for the public administration seriously distort job classification and mobility o f human resources. They also create unbalanced distribution o f personnel with higher concentrations o f staff in one sector rather than in another. Higher and better paid salaries for the education sector make employment as a teacher more attractive, but create a distorted system fostering inequality and therefore discontent within public administration. Due to higher wages in the 43 PSE sector, almost half o f DRC public personnel i s concentrated in it. By standardizing the fixed components o f the PSE salary, a natural readjustment o f the staff distribution can take place. 157. This does not mean, however, full equalization o f wages across all sectors o f public administration. Specific functions and tasks need to be sustained with a limited number o f meaningful financial incentives that should not overwhelm the value o f the base salary. Above all, the pay supplements called primes spkciales should not be a constant component o f the final pay, as it is happening now. Rather, they should represent a specific occasional compensationpayable exclusively upon occurrence o f particular circumstances. For example, compensation for having participated in a commission should be paid only for that one participation and not become a permanent reward. However, this does not mean that the current system o f supplements should be protected and kept with few changes. A thorough review of thepay supplementsfor each sector and category of public employeesmust take place urgently. As much as possible, supplements for the exercise o f functions that are normally part o f the assignments foreseen for a certain position are to be suppressed and integrated in the base pay. Upon completion o f this review and integration o f supplements into the base salary, the compression ratio needs to be re-assessed and a new pay scale designed. 158. Decompressing the salary structure to create an incentivefor mid- and high-level staf$ The compression ratio o f 10 that exists for the base salary (only) for all pay scales for the different categories o f public personnel could be a very good reference and certainly an important starting point. The base wage levels currently applied are anachronistic although the compression ratio between the minimum and maximum echelon is good. It is important, therefore, to raise base salary levels to be adequate to provide decent living standards for public personnel. Regardless o f whether the macroeconomic performance and the current and projected levels o f public expenditure will permit an increased wage bill, the wage bill must be carefully calculated to ensure a sustainable and affordable increase o f livable base salaries. 159. The best option would be to set a schedule o f periodic base salary adjustments scaled over 2-3 years to reach a maximum ceiling without provoking unnecessary and sudden income effects that would once again erode the benefits o f wage increases. The ceiling could be set by taking into account an average o f private sector reference salaries, and the decompression ratio should progress from the current ratio. These measures would make remuneration, if not fully competitive, at least more attractive and motivating. Wage differentials should be more obvious and should divide the total echelons into three main groups: one for low-skilled staff, one for medium-level administrative staff, and one for higher-level executives. This plan follows in a certain way the scheme that currently divides civil servants into cadres d'hxe`cution, cadres de collaboration, and cadres de commandement. From one bracket to another, the pay raise should be proportionate to the level o f increased responsibility and decision-making. 160. Eliminating wage distortion by incorporating pay supplements. What actually needs to be redesigned in a decompressed way are the salary-compensating supplements (primes) and the allowances that are highly compressed themselves and transfer their negative effects to the base pay. Primes that are not special and therefore are limited to one per category at a flat rate and foreseen in the different pay grids (that is, prime de recensement) should be recalculated and harmonized with the scale o f progressive value set for each echelon in the pay grid. Consequently, they should be incorporated inthe base pay. Inthis way, the payable wage would become remunerative enough and less compressed. The so-called primes 44 spkciales also should be eliminated upon redefining the base salary to adequately reward a job according to all the tasks that it entails without a separate reward for each task. 161. Therefore, three scenarios could considered: Scenario A: Conservative. The base salary should be decompressed to reach a ratio o f not less than 6. All primes and allowances should be decompressed accordingly. This scenario would allow more decompression but not necessarily a more transparent wage system and definitelywould not increase pensionableremuneration. Scenario B: Incremental. The same approach as in Scenario A would be used for the base salary, but in Scenario B the housing and the transport allowances would be integrated into a single allowance. This combined allowance would be renamed, for example, Indemnitk de service. Its new value would be substantially lower (for example, no more than 10 percent o f thebase salary that integrates the Prime de recensement) than the sum ofthe two allowances. Scenario C: Strategic. As in Scenarios A and B, the base salary should be initially decompressed to a ratio o f 5. The primes should be decompressed accordingly prior to their incorporation in the base salary, with attention that incorporation does not generate further compression. After its decompression, the transportation allowance very easily could be incorporated in the base salary as a percent increment scaled along the wage levels. There i s no need to give separate visibility to this pay component, particularly because it is not associated with facilitating specific functions or operations. 162. The housing allowance very easily could be extended to all staff in Kinshasa and in the provinces. The allowance also shouldbe decompressed and incorporatedinthe new wage since there i s no need to keep it as a separate wage component. This pay component should be determined as an additional percentage to the base salary that already incorporates the transportation allowance. The determination and calculation o f this component should be done across the entire public administration according to standard criteria. 163. The design o f the pay grids will be scaled with a number o f progressive pay steps to be used for performance payment. The echelons of the pay grid should be kept as simple as possible, and no internal scale o f levels (as in the PSE teachers' pay system) should be allowed. This system o f vertical subdivision o f echelons, so far based mainly on seniority, does not match the system that the reform plans to introduce. The latter will be based on horizontal progression based on merit within the echelon (rank). It will result in accelerated promotion to the immediately higher echelon upon repeated outstanding performance and proven competence/capacity. 164. Indefining the levels, the optionof a gross andnet pay shouldbe consideredinview o f starting a system o f contributions deductible from the gross salary and, in the long run, having wages subject to social contributions (health, pension, work safety insurance) and income taxation. 165. Contingent allowances to facilitate relocation and undertaking new responsibilities as well as the welfare o f civil servants and a number o f additional incentives contingent on specific situations can be foreseen for the new pay system. For example, a once-in-a-lifetime relocation grant might be given to staff who are moved from one work location to another across the country for an assignment o f more than 12 months. 45 166. To provide an incentive to move out o f the capital to areas in which harder living conditions are a reality, the pay system should foresee a hardship allowance payable upon relocation to a place classified as a hardship location. This special allowance should be payable monthly only for the duration o f the relocation inthe difficult area. 167. A sort o f family allowance should be considered. It should not be in the form of a separate additional supplement, but the base salary could be defined at dependency or single rate. "Dependency" should consist of havingresponsibility for a close relative or spouse with or without children. The number o f children or declared dependents should not affect the rate o f the allowance. This option i s meant to avoid the risk o f abuses by workers increasing the number o f dependents to earn more salary. The base salary at the dependency rate couldbe at least 25 percent higher than the one at the single rate. 168. Decentralization and wage system reform. Decentralization also requires the definition o f a salary system for the new provincial administrations. This new salary system couldbe phased as follows: 0 For the first six months o f the establishment o f the provincial Civil Service, the same salary paid to the State civil servants should be ensured and paid to the provincial civil servants by the State administration. The provinces would not have yet established adequate financial coverage and mechanisms to ensure regular payments. 0 In case personnel from the administration should opt to transfer to the new provincial administration, the transfer should be treated as a secondment leading to transfer. To facilitate payment procedures for the State and provincial administration, salaries should be paid by the central administration with an additional secondment allowance. This incentive also should be payable for no more than six months 0 While the provincial administrations are being consolidated (maximum 2 years), new legislation for public subnational service should be established including norms on wages. Such legislation should be in line with the national Civil Service legislation regardingprinciples and standards. 0 Wage levels for provincial public servants should be marginally higher than those paid to the central administrative staff located in Kinshasa. The provincial levels should be determined by taking into account responsibilities o f assigned tasks; level o f accountability to clients, which, at the local level, i s more direct and therefore higher than in the Capital; hardship, which can entail higher costs for essential services; complexity o f jobs; and required competence. The standards should be common to all provinces. Provinces should be allowed to add a variable value in percentage (under the limit o f a ceiling common to all provinces) to the wages o f provincial public servants. 46