The costs of financing Malaysia’s bloated civil service of 1.6 million – which is the world’s largest – will reach its breaking point soon if nothing is done to remedy the situation.
KUCHING: The costs of financing Malaysia’s bloated civil service of 1.6 million – which is the world’s largest – will reach its breaking point soon if nothing is done to remedy the situation.
Second Finance Minister Datuk Seri Johari Abdul Ghani in a quote to Oriental Daily earlier this year said in 2003, the pay of public servants totalled RM22 billion, but increased to RM74 billion by 2016.
In 2007, the pension of civil servants was RM5.9 billion and in 2017 the amount soared to RM19 billion, he added.
According to The Edge Weekly (April 17 – April 23 edition), remuneration and pensions costs of civil servants are expected to reach RM98.64 billion or 45.92 per cent of projected operating expenditure in 2017.
This figure, according to local media outlet, has more than doubled over the past decade whereby only RM39.62billion or 28.32 per cent of operating expenditure was allotted in 2007 for the same expenses.
The surge, according to the financial weekly, is expected to only rise further as the projected compound annual growth rates (CAGR) for the civil service remuneration and pensions to be between 9.04 per cent and 11.66 per cent respectively.
“The government’s revenue has struggled to keep up with this growing figure as it recorded only a 57 per cent growth from RM139.89 billion in 2007 to an estimated RM219.73 billion in 2017,” The Edge Weekly stated.
It projected government revenue CAGR to be around 4.62 per cent if things are left unaddressed.
Based on The Borneo Post’s analysis, these figures indicate that the costs of sustaining the nation’s civil servants will overtake government revenue in the long run, indicating that the government may face an imminent debt if things are left unchanged.
These fears have in turn prompted much public discussion on the issue following members of Parliament speaking on the matter.
Most notably, Second Finance Minister Datuk Seri Johari Abdul Ghani has been a huge advocate in calling for a reduction in the number of civil servants which currently stands at a ratio of one civil servant to 19 people.
In terms of civil servants to population, Malaysia was indeed found to be ‘bloated’ in comparison to neighbouring regional countries such as Singapore (1 to 71), Indonesia (1 to 110), Korea (1:50), China 1:108, and Japan 1:28.
Johari, in the statement to a Chinese daily, said he was adamant that this figure was ‘an issue that needed to be addressed’ as the ratio represented the world’s largest proportion of civil service to its country’s population.
As part of the measures to address the issue, Johari told The Edge Weekly that the most obvious course of action was to redeploy redundant employees into the private sector.
“The government could start with retaining redundant employees by giving them free courses on skill development, computers, English, basic accounting, corporate law and so on.
These are skills needed to make them employable in the private sector.” Johari went on to call for a need for increased investors and foreign direct investments within the private sector in order to ensure that they would be a major employer for the nation in the future.
“We could hope that with a smaller civil service, the economy as a whole will be more efficient and with dynamism and growth in the private sector activity, the government will collect more taxes to recover the cost of the separation issue (redeployment of redundant civil servants).”
While Johari’s call for a smaller more streamlined civil service force sounds like a reasonable way to reduce our growing expenditure on the public sector, there seems to be some discrepancies on the issue, as data published by The Edge Weekly showed that 78.7 per cent of the nation’s civil service is concentrated in crucial front-line social services such as healthcare, education, home affairs and defence.
In the education sector alone, 37.2 per cent of the civil service are employed in primary and secondary educations services.
The financial weekly pointed out that those who say that Malaysia’s civil service is not as bloated as it seems are quick to point out that other countries often include the military and police in computing the ratio of civil servants to the population.
According to data derived from the Singaporean Department of Statistics, the number of civil servants at the end of 2015 was 83,713, matching previous claims from local media outlets of a one to 71 ratio of civil service to population.
Based on this information, this statistic may not be comparable to Malaysia, as the definition of Singaporean civil servants are classified only as employees working directly within government ministries and not within statutory bodies or organs of state.
This means that teachers, doctors, armed forces, and local enforcement are all not categorised as civil servants in Singapore, but rather as public servants, of which amounts to 143,183 as at the end of 2015.
Based on this information, a calculation done by The Borneo Post showed that the total number of civil and public servants in Singapore is 226,896 or 1 to 26 – which is relatively much closer to Malaysia’s ratio.
However even with a closer gap, why does there seems to be such huge disparity in the sustainability of our public sector? It is suggested that the issue lies in the attractive remuneration and pensions offered for civil servants, citing an example of the Education Ministry that recorded a full-time staff count of 551,693 and an estimated RM35.9 billion in remuneration costs for 2017.
Based on calculations by The Borneo Post, the average annual remuneration including cash bonuses and allowances for each member employed by the Education Ministry is around RM65,000.
This is followed by an average of RM60,000 annually from the Ministry of Higher Education, RM55,000 from the Ministry of Health; RM55,000 from the Ministry of Finance; and RM48,000 from the Prime Minister’s Department.
These figures are further supplemented with an additional RM170 million worth of contract staff costs from the Prime Minister’s department and RM410.53 million from the Ministry of Rural and Regional Development.
Even without factoring in civil servant pension schemes which have traditionally existed to keep civil service jobs attractive to the general public compared to its private sector counterparts, it seems that the wages alone seem to be outperforming wages found in the private sector.