Ministry unveils incentive stopgap

The Phnom Penh Post
James O'Toole
Monday, 25 January 2010

THE government has put forth a plan to ease the transition period following the surprise cancellation of salary supplement programmes for civil servants announced last month, though members of the development community said the precise nature of both the transition phase and the government’s long-term goals remains unclear.

In a letter dated Thursday and sent to the UN, the World Bank, the Asian Development Bank (ADB) and the British and Australian ambassadors, Minister of Economy and Finance Keat Chhon said the move represented “decisive action ... taken to consider both the short- and long-term challenges of motivation and performance in the public sector”.

Under various kinds of salary supplement programmes, donors had been assisting the government in bolstering the often-paltry salaries of civil servants. In recent weeks, some members of the development community have expressed alarm at the proposed revocation of supplements, which they say are essential for maintaining a functioning civil service sector.

Though two supplement schemes – Priority Mission Groups (PMGs) and Merit-Based Performance Incentives (MBPIs) – will remain defunct, Keat Chhon said, straightforward salary supplements will be allowed to continue throughout an interim period during which the government will formulate a new compensation scheme. This interim period is expected to last six months, he added.

Keat Chhon’s most recent letter marked a moderation of the policy he announced in a December 4 letter to World Bank country director Annette Dixon, in which he stated that “in addition to the MBPI and PMG, the termination also applies to the salary supplement and all other such incentives/schemes”. This termination, which was to go into effect January 1, was ordered to maintain fairness in government compensation and spur broader public administrative reform, Keat Chhon told Dixon.

MBPIs and PMGs were implemented in recent years through cooperation between the government and development partners in order to target key projects and promote a culture of meritocracy among civil servants. Under these initiatives, workers received incentives based on their participation in specially designated projects and their attainment of performance goals. These more stringent conditions were not attached to traditional salary supplements, which were distributed as bonuses and in a less targeted manner.

With MBPIs, the government hoped to “retain and attract well-trained staff members” and “facilitate the transfer of technology and expertise from international advisers”, said Hang Chuon Naron, secretary general at the Ministry of Economy and Finance, in a presentation at a 2007 conference hosted by the World Bank.

In Thursday’s letter, however, Keat Chhon said the government hoped to establish a replacement payment system based on a principle he termed “daily operational cost”, though he provided few details on how this new system would work.

“This will replace existing salary supplementations and allowances, and will take account of issues such as equity, motivation, performance and accountability,” Keat Chhon wrote. Money earmarked for MBPIs and PMGs may be distributed in the form of traditional salary supplements during the transitional period, he added.

UN resident coordinator Douglas Broderick had little to say in response to the letter, explaining that his organisation is awaiting further discussion with the government and development partners.

“No one’s had time to analyse this yet,” he said.

ADB spokesman Chantha Kim said the ADB and other development partners are “seeking clarification” on the implications of the letter.

Chan Theary, executive director of the Reproductive and Child Health Alliance, was cautiously optimistic about the decision, calling it preferable to an abrupt termination of all supplements. She cautioned, however, that it remains for the government to take public administration reform beyond the issue of compensation.

“If they said something like that, I hope they will really take a real action,” she said.

Sin Somuny, director of the local health group Medicam, said earlier this month that many civil servants, particularly in rural areas, are likely unaware of the compensation reforms, even as they draw most of their monthly income from various salary supplements.

According to Hang Chuon Naron’s 2007 presentation, MBPIs at the Ministry of Economy and Finance ranged from $50 per month for administrative staff up to $679 per month at the secretary general level.