How to make civil servants remuneration competitive and transparent?

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Good public administration and quality public services cannot be achieved without efficient and qualified employees. In order to attract such people to the civil service, it is necessary to have a clear and transparent system of remuneration in the public administration sector and a fair recruitment. The transparency and clarity of remuneration influences the quality of public services,  the reforms, as well as promoting the understanding of the general public of why they should pay taxes, since the proceeds from taxation goes to fund salaries of the officials.

Centre for Economic Strategy studied the problems of civil servants remuneration in 2017 in the paper “Civil servants remuneration reform”. This year we analysed the progress of the reform and proposed the following changes in the new paper “Civil servants remuneration reform: next steps”, which was written with the support of the EU4PAR project and the International Renaissance Foundation. In this short brief, we summarize our analysis of civil servants remuneration problems and recommendations on how to make it more effective.

Despite significant positive changes since 2016, the remuneration system of civil servants in Ukraine still lacks integrity and transparency, as well as stability and predictability of wages. The salaries of civil servants remain uncompetitive, especially those of top management. A considerable proportion of the total remuneration is made up of incentives and bonuses, which are, by definition, volatile and in Ukraine, depend more on the good grace of the higher-ups and the availability of financial resources than on the performance of the employee. It not only prevents the best people from the private sector where the pay is up to 100% of remuneration, from applying to positions in the public sector, but it also reduces the efficiency of the budgetary funds use on the remuneration.

In this brief, we suggest ways to overcome these problems that will not increase budget expenditures and enhance the transparency and competitiveness of civil servants remuneration. Our findings are based on the results of the analysis of data on the distribution of the civil servants remuneration in 2018 and the comparison of the remuneration levels in the public service and in the private sector.