‘Boakai-led Gov’t To Inherit Huge Wage Bill’ -Human Resource Expert Predicts

By Jonah Soe Kotee, LLM Employ, Master SHRM, GTML. BA | jkotee@gurushrconsultancy.com |+231886540460 |

The incoming UP-Government will face the overawing task of managing a substantial wage bill. Post-December 2023, the Boakia-Koung Administration in Liberia may find it necessary to implement measures such as rightsizing, downsizing, harmonizing, retiring older employees, or redesigning work processes for increased productivity.

Civil servants’ wage bill, satisfaction, motivation, and welfare have consistently been central to government politics. Decisions that impact civil servants are often made by politicians who gain power primarily through elections and political rhetoric. These politicians often lack a critical understanding of human resource matters or expertise in HR issues, leaving civil servants at the mercy of politicians when it comes to decisions like budget cuts, harmonization, downsizing, rightsizing, upskilling, or reskilling.

Whenever there’s a budget cut or constraint, the government’s first instinct is often to reduce the wage bill. This is instead of implementing measures to minimize or eliminate wastage, corruption, ghost names, utilizing cost-effective HR technology, or reducing financial allocation to less relevant areas that drain the budget.

It is worth noting that after the 2005 elections, the UP-led government under Liberia’s first female President, Ellen Johnson Sirleaf, implemented rightsizing, downsizing, upskilling, and downskilling initiatives. These were intended to reduce the wage bill while simultaneously increasing productivity in the public sector. Despite the systematic approach, the move was criticized by those affected, including politicians and the Civil Servant Association of Liberia, who argued that the exercise should have been carried out by its statutory institution, not by cabinet ministers and spending entities.

While the UP Government attempted to address the wage issue, the pay structure disparity only widened. The government introduced an HR approach termed “Right Size and Downsize,” leading to many civil servants being “downsized” or “right sized” from their jobs. Although they received severance pay and many found jobs in other sectors, the problem was not permanently resolved.

The CDC government, upon assuming power, sought to curry favor with civil servants through its Pro-Poor Agenda for Prosperity and Development. They attempted to hastily address the downsizing and rightsizing issues inherited from the previous regime through their salary harmonization policy. However, this approach only led to more complications for both the current and future administrations.

The salary harmonization policy aimed to resolve wage bill issues without considering critical HR aspects such as job evaluation, competency mapping, performance management systems, measurable standards, or grading systems. The policy was not limited to civil servants but was also extended to autonomous corporations or State-Owned Enterprises (SOEs) that fell under the Decent Work Act (2015), rather than the Civil Service Standing Order.

The salary harmonization policy was highly politicized, adding certain groups to the payroll under the guise of employment, while other qualified civil servants were left to unfairly benefit, impacting their livelihoods, and reducing them to a state of insignificance.

With the CDC government set to step down in January 2024, they have inflated the payroll through the unsuccessful salary harmonization policy and continue to do so during the transition period. For instance, from January to October 2023, there were a total of 99 spending entities with a headcount of approximately 65,000, with an average monthly wage bill of $US22,001,958.63 and a total sum of US$220,019,586.27, excluding consultancy payroll. During the same period, the overall percentage change in salaries over the 10 months is 7.30%. This means that there was an overall increase of approximately 7.30% in salaries from January to October.

On the other hand, the average employment across the 99 Spending Entities is 64,152. The overall percentage change is 3.96%. This means that there was an overall increase of approximately 3.96% in the number of employees from January to October, excluding other SOEs.

At present, additional employment is being carried out across all spending entities during the transition period, bypassing the due HR process. This action contradicts the Civil Service Standing Order and best HR practices. If these Personnel Action Notices are approved and added to the payroll, the monthly wage bill is projected to be 45-50 million United States Dollars, unless stringent measures are implemented. This situation will pose a significant challenge for the Boakia-Koung Administration to meet the expectations of civil servants at the initial stage of their new government due to the enormous wage bill.

Inheriting a substantial wage bill can present the following challenges for a new government:

1. Crowding Out Other Investments: A large portion of the budget allocated to salaries may restrict funds available for essential public investments, such as infrastructure, education, and healthcare.
2. Inefficiency and Bureaucracy: An inflated public sector can lead to inefficiencies and bureaucratic red tape, hindering the government’s ability to respond swiftly to evolving needs and challenges.
3. Inequality: If the public sector wage bill is disproportionately allocated to certain sectors or groups, it can intensify income inequality within the public workforce.
4. Pressure on Taxes: To sustain a large wage bill, the government may need to raise taxes, potentially burdening the private sector and citizens, which can negatively impact economic growth.
5. Inflationary Pressures: If the government relies on borrowing or printing money to cover the wage bill, it can contribute to inflationary pressures in the economy.

Recommendation.

Some recommended solutions for the new government in dealing with the huge wage would be to implement the following:

• Salary Rationalization and Review: Conduct a comprehensive review of existing salary structures to identify inconsistencies and redundancies. Consider bench-marking public sector salaries against private sector equivalents to ensure competitiveness without excessive generosity.
• Performance-Based Pay: Introduce performance-based pay systems to link compensation to employee performance and productivity. Implement clear and measurable key performance indicators (KPIs) for each role.
• Attrition and Hiring Freeze: Implement attrition policies to reduce the workforce through natural turnover. Consider a temporary hiring freeze to control the growth of the wage bill.
• Early Retirement Programs: Offer voluntary early retirement programs to senior employees to reduce the number of higher-paid positions. Carefully assess the financial implications and potential impact on institutional knowledge.
• Automation and Technology: Invest in technology and automation to streamline processes and reduce the need for excessive manpower. Evaluate opportunities to digitize routine tasks, allowing human resources to focus on more strategic functions.
• Skill Development and Training: Invest in training programs to enhance the skills of existing employees, making them more versatile and potentially justifying higher pay. Create a culture of continuous learning to keep skills relevant and up to date.
• Public-Private Partnerships (PPPs): Explore public-private partnerships to outsource certain functions, reducing the number of direct government employees. Ensure that partnerships are carefully managed to protect public interests.
• Transparent Job Evaluation: Establish transparent criteria for job evaluations and classifications to ensure fairness and equity in compensation. Regularly review and update these criteria to adapt to changing circumstances.
• Fiscal Discipline and Budget Management: Implement strict fiscal discipline to control overall government spending. Adopt effective budget management practices to ensure that wage bills are sustainable over the long term.
• Public Sector Reforms: Undertake broader public sector reforms to improve efficiency and effectiveness. Consider organizational restructuring to eliminate redundancies and improve service delivery.
• Public Awareness and Communication: Communicate the need for wage bill reforms transparently to the public. Foster understanding of the challenges and the necessity for responsible fiscal management.
• Consultancy payroll: Have clear consultancy guidelines and hire consultant only based on need. Centralize all consultancy with the Civil Service Agency
• Right size: “right size employee” to have an optimal number of employees with the necessary skills and qualifications to meet the objective of their ministries and government agenda. It involves ensuring that the civil servant workforce is neither too large nor too small but is well-aligned with the Governments needs and goals.
• Downsize: Downsizing employees is a significant decision that should be approached with careful consideration and sensitivity. Before taking any steps, it’s important for the government to thoroughly evaluate the reasons behind the downsizing and explore alternative solutions if possible.
• Skills-Gap Analysis: This approach should be taken by the new government to explore the skills gap across the government and provide training and capacity development to mitigate them.

To conclude, implementing these solutions may require careful planning by HR technocrats, stakeholders, and a phased approach to mitigate potential adverse impacts on civil servants and public services. Finally, the impact of a substantial public sector wage bill depends on various factors, including the overall economic situation, the efficiency of public sector management, and the sustainability of government finances. Achieving a balance between attracting skilled professionals and maintaining fiscal responsibility is crucial for the long-term stability and prosperity of a country.