In Civil Service Overhaul, Pay Raises Spark Hope, Inflation Fuels Doubt

Nov 24 , 2024. By AKSAH ITALO ( FORTUNE STAFF WRITER )

The federal government is to establish a Merit & Wage Board, chaired by the Prime Minister, to oversee wage adjustments for the country's 2.4 million civil servants. The seven-member board includes representatives from the ministries of Planning and Finance, the Ethiopian Statistical Service, the Ethiopian Civil Service Commission, and private sector members.

The federal government has launched a major overhaul of its public service sector, pledging to enhance efficiency, transparency, and service delivery. A new bill before Parliament introduces wage reforms and structural changes.

"The legislative framework was necessary to make the reform practical," said Negeri Lencho (PhD), chairperson of the Standing Committee on Human Resource Development, Employment & Technology Affairs, while presenting the bill to Parliament.

The government has allocated a budget of 91.4 billion Br to implement salary increases for public sector employees. Of this, 71.8 billion Br is earmarked directly for civil service employees, with the rest designated for higher officials and security personnel. Wage increments will vary across different pay grades. Employees earning around 1,100 Br a month, the lowest-paid workers, can expect substantial raises of up to 332.7pc. Those in a high-wage bracket, up to 20,468 Br, will see more modest increases, ranging down to five percent.

"Wage adjustments have begun to be implemented," said Yigezu Jemaneh, head of work evaluation and payment research at the Ethiopian Civil Service Commission. "Wage reforms are crucial for boosting productivity and enhancing the public sector."

A committee is being formed to conduct timely studies on wage adjustments in response to inflation. Despite the wage increases, some civil servants express scepticism about the reforms' ability to meet the rising cost of living.

Meselech Tariku is a civil service employee in Addis Abeba, earning 8,000 Br a month. Even with the proposed 17pc increase, she believes the wage increment will not adequately cover her expenses amid soaring inflation.

"It's getting hard to live on," she said.

According to a study by the International Labour Organization (ILO), while nominal wages in Ethiopia have tripled over the past decade, real wage growth has increased by only 7.4pc due to persistent inflation. About 48pc of civil service employees, approximately 1.1 million people, earn less than 6,000 Br a month, placing them below the extreme poverty line.

The bill also established a new institution responsible for training, examining, and certifying public servants. Prime Minister Abiy Ahmed's (PhD) administration hopes this body will ensure all public service employees meet required competency standards.

"We're making major changes in public services," Negeri said, stating the importance of competency testing for new and existing employees. "Failure to obtain certification could lead to dismissal."

State Minister for Finance Eyob Tekalegn (PhD), disclosed an impending restructuring of the civil service, a shift in the government's role as a primary employer.

"The civil service is not the sole employer in the country," he said, advocating that reprioritising the public service from quantity to quality would decrease budgetary strain while improving services.

However, the bill has sparked debate about the role of inclusivity in the public sector. While the government asserts that ethnic and religious inclusion will enhance efficiency and transparency, some members of Parliament expressed concerns. Desalegn Chane (PhD), an MP from the National Movement of Amhara (NaMA), voiced strong opposition to incorporating ethnic inclusivity in public institutions, arguing that it contradicts fair judgment and merit-based recruitment.

"Giving power to an employer to move an employee upon its wish will open the door for human rights violations," Desalegn said, expressing worries about potential abuse of power and infringement on labour rights due to provisions that allow employers to transfer civil servants within the same institution and pay grades.

Awoke Amzaye, an MP from the Ethiopian Citizens for Social Justice (Ezema) party, echoed these sentiments and cautioned that prioritising ethnic values and inclusivity could compromise efficiency.

"Skills are more important than inclusivity," he told Parliament, drawing comparisons to companies like Google, where hiring is based on skills contributing to their success.

Despite the concerns and debates, Parliament ratified the bill into law with a majority vote, with three MPs voting against and four abstaining.

The Addis Abeba City Administration is finalising regulations for disbursing the increased wages to its 168,000 public service employees across 71 institutions.

"Preparations are underway, and the wage adjustment will be disbursed within a few weeks," said Melaku Alemu, head of human resource development at the Public Service & Human Resource Development Bureau.

According to Melaku, civil service reform is essential to improving service delivery, boosting productivity, and enhancing civil service management. He cited low salary satisfaction, inadequate resources, limited professional development opportunities, and low prestige as factors contributing to low motivation among civil servants.

A development economist and labour market researcher, Jemal Mohammed (PhD), acknowledged the government's efforts to address productivity issues within the public sector through performance-based merits.

"Civil servants' underperformance was affecting the economy," he said, pointing to deep-rooted issues that have undermined productivity.

However, Jemal disagreed with the push for ethnic inclusivity in all offices, arguing that it could undermine efficiency. He also questioned the effectiveness of small wage adjustments in improving the lives of the civil service army.

"In-kind adjustments, such as providing affordable housing options, could be a more sustainable solution," he said.

Despite wage increases, many public sector employees remain below the poverty line because inflation has eroded their purchasing power. The government's reforms are seen as an attempt to address these issues by adjusting wages and restructuring the civil service to focus on quality.

PUBLISHED ON Nov 24,2024 [ VOL 25 , NO 1282]