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Government’s Over bloated Wage Bill: An Economic Quagmire and Political Dilemma

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The Government of Liberia’s current wage bill stands at an approximately whooping US$327 million, over 57% of the country’s US$570 million budget for FY2018/19. This figure represents an increase of US$31 million from FY2017/18 (Source: World Bank). It is obvious that the sudden increase came with the turnover of national leadership. This action can be defined as political patronage.

By Aloysius Juwee Morris and Johnny Baryougar White (MA, International Relations)

Political patronage has found its way into our public service thus ‘partisanizing’ the sector, an embarrassing reality. When Ellen came to power in January 2006, she promised a small and effective government. On that premise, the administration effected the infamous rightsizing and downsizing policy. The policy was precipitated by the fact that the public service has been overstocked in comparison to the nation’s revenue envelope. Obviously, political patronage resulting from years of civil upheaval, interim arrangements, and bad governance was the culprit.

Upon its implementation, the measure drastically cleared government payroll of employees with duplicate and sometimes triplicate functions and other ghost names. Following the arguably successful implementation of the measure, civil servants begin to witness gradual increment in their wages in addition to its timely arrival as oppose to the past. However, the size of the public service began to grow again. Without any doubt, Madam Sirleaf had to pay her quota of political patronage. By the close of 2017, the government’s wage bill had increased by more than 700% to a whooping 296 Million compared to 2006 from around 39.375 Million (Source: IMF country report; 2007)  when the rightsizing and downsizing measure began. Ghosts reappeared on government payroll and functions became duplicated. Nevertheless, she managed to keep the gradual increment going and the timely arrival of salaries.

After the inauguration of President Weah’s Administration, the government began to pay in due, its quota of political patronage. Several persons were employed, apparently, as a payback for their services during the campaign or in fulfillment of the promise that they would be absorbed into the civil service. Given the mass employment of partisans and well-wishers into the civil service, the wage bill ballooned. Unfortunately, the country’s resource envelope is shrinking as opposed to the Sirleaf’s era. In actuality, the shrinking of the resource envelop began in the last three years of the Sirleaf’s regime. The over bloated wage bill and the shrinking resource envelope has thus posed an economic quagmire and a political dilemma for the government and people.

 The government is gradually backpedaling into the abyss of salary delay while the economic situation gets tougher. Worst of all, under-performance is at its peak and productivity is responding to the Law of Diminishing Marginal Productivity of Labor. The Law of Diminishing Marginal Productivity of Labor is an economic principle, which postulates that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached when the same input would yield progressively smaller output, which further leads to inefficiency and less productivity. It is no argument that government offices have been occupied by young people who supported and campaigned for the president to be elected as a payback for their contribution to his election; a phenomenon that is not only peculiar to the Weah Administration. Because of these mass employments, we now have an underwhelming workforce due to the duplication of functions and the effect of the law of diminishing returns of productivity. Offices that once could take five employees and perform effectively now have ten with practically no work to do.

The government needs to move and find a panacea for this economic imbroglio. The people are clamoring for a solution and the government is obligated to providing one. Howbeit, the government is torn between continuing to pay its political patronage quota and allow the economy to slide into further shambles or disavow the payment of said quota and possibly loose political allegiance and support but ensure increased productivity and viable economic growth.

 Compared to most countries in Africa, Liberia’s civil service is the largest employer and it is no doubt that our governance system’s absorption of the many more persons into the already densely populated civil service is an attempt to further burden the already constrained government wage bill. The recorded upsurge of US$31 Million to the wage bill of FY 2018/19 leaves us in a space of uncertainty as to what we should expect in the FY2019/2020 budget.

In lieu thereof, the government must move to manage the public service and build human resource capacity. It has been proven empirically by numerous development practitioners and experts that one of the fundamental factors that spur growth and development in any nation is an enhanced human resource development; so it is no doubt that a government’s investment in human resource development would spur growth towards the right trajectory in terms of the development of a country.

Managing public service will lead us to determine whether the current number of employees in the public sector is needed. The effort will ensure that we have answers as to what are the requisite input needed for productive output. With those answers in mind, the hard decision must be made to redundant those excess posts. The occupants of those positions must be enrolled in capacity-building programs. As indicated by Michael P. Todaro in his book “Economic Development 11th Edition”, Health and Education are fundamental to any nation’s development and that increased income cannot be regarded as a sufficient condition for development. Many development experts also share Todaro’s assertion of education spurring the development of a country. Thus the effort of building human resource capacity is important.

Some of the redundant employees should be trained in other countries at the expense of the government and bilateral partners through a competitive and transparent recruitment process. Others should be placed in localized professional programs (i.e., TVET Programs: MVTC, LOIC, and BWI) to build their capacity.

These measures would afford the government the ability to run effectively and efficiently as well as build the necessary human resource capacity required for national growth. During the time of this process, the efficient government will have created additional opportunities that will require the expertise of the newly trained. Some of those trained will also be able to find a path in the private sector that can serve as an effective cushion for the government. It is high time the government realizes that, employing the youth into government to get income is only sufficient for the short run as it doesn’t guarantee sustainability as many of the young people are not fully prepared for the job market or are not prepared at all. Liberia needs these people more than a regime needs them.

Aloysius Morris

Additionally, the government must move to build and support an active private sector that in turn supports the government. The over bloating of the wage bill will be inevitable until we see a vibrant private sector. A private sector that is controlled by Liberians can rise to the height necessary for creating a strong and vibrant private sector that is capacitated enough to support the government’s programs and policies. The government needs to listen to the plights of the private sector, support and subsidize them. Nevertheless, the private sector must be held with the highest standard of accountability. It is only with such accountability that they will strive to grow and become vibrant.

A vibrant private sector, a productive and efficient public sector, a cost effective wage bill are the brainchild of an educated, healthy and professional citizenry, no doubt.

About the authors:

Aloysius Juwee Morris is an emerging Economist; a candidate for MSc in Applied Economics at one of China’s C9 Universities: Xi’an Jiaotong University Xi’an, China. Johnny Baryougar White (MA, International Relations), is a former President of the University of Liberia Student Union (ULSU), a Human Rights Practitioner and a Fellow with the United Nations Office of the High Commissioner for Human Rights in Geneva, Switzerland.

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