Salary bonuses for civil servants could be attractive bait to lure the big fish from the private business sector

International and Ukrainian organizations will establish the funds that will be financed by donor aid and charity contributions of individuals and legal entities

Photo: wikipedia.org

The Presidential Administration (PA) under Petro Poroshenko found a way to attract specialists from business to work for the public service without increasing the burden on the national budget. “We should considerably raise wages from those that are currently envisaged in the law (on the civil service – Capital). There is an idea to create a special fund that could offer additional pay to representatives of business, who will hold managerial positions in the government institutions” Deputy Head of the Presidential Administration Dmytro Shymkiv said at a briefing on Tuesday.

In search of the chosen

Pursuant to the bill, the PA proposed the creation of special authorized funds that will select candidates for vacancies of mid-level managers in state bodies and pay hired employees an additional wage to that set by the state. When any state body opens a vacancy for such position, the funds will select the appropriate candidates and the state body will choose the suitable one from this list. After a selected employee quits the old job, the fund and the state body will sign a tri-lateral contract with that employee. The job tasks of the employee, key indicators of effectiveness on the job and the additional amount that the fund agree to pay the employee over and above the set wage will be stipulated in the contract.

In this way, the funds will select the heads of departments of the majority of bodies, with the exception of specific bodies such as the Prosecutor General’s Office, the Ministry of Internal Affairs, judges and tax and customs bodies, Shymkiv specified.

A bonus system

Such a mechanism will help attract employees to the civil service for wages that the state cannot afford to pay. According to the National Civil Service Agency, today the official salary of a head of a department of the central body of executive power is UAH 1,712. Taking into account that the salary is only 30% of the pay and the remaining 70% is guaranteed by different allowances, in the end such a manager is paid UAH 5,706.

This sum should increase after reform of the civil service is conducted, the bill that, as the PA hopes, the Verkhovna Rada will adopt by the end of this year. But even after the reforms the salary will be only the equivalent of seven minimum wages or UAH 8,799, based on the current minimum wage. Moreover, according to the reform project bonuses of 30% of this sum will be tacked on. In other words, the head of a department in central body of executive power will be paid not more than UAH 11,439 per month.

However, the current wages of managers of departments and the maximum wages possible after reform of the civil service are well below earnings in the private sector. The current wage of a department manager in the civil service is comparable to the average wage of a rank-and-file specialist, but not that of department manager in the private sector, according to October data of the personnel portal HeadHunter Ukraine. For this reason, the PA is proposing that the aforementioned funds make up the difference between the set wages of civil servants and the market wage for the same position in a private company. According to the proposed bill, the level of wages could reach 75 minimum wages or UAH 94,000 per month.

“This is a certain ‘air bag’ for civil service while the entire system of public administration is being reloaded,” Shymkiv explained. Director of PwC Ukraine Andriy Pronchenko, who was one of the authors of the bill on temporary involvement of specialists from business circles in the civil service, said such a mechanism is calculated for two years, meaning that an employee that moved to the state sector will only receive additional pay for no more than two years.

Ideally, the funds should work in parallel with the launch of reforms of the civil service. This means that the parliament should approve the bill and the reform of the civil service by the end of this month. “However, if lawmakers decide to adopt the bill earlier than the reforms, this is not critical,” Pronchenko presumes. International and Ukrainian organizations will establish the funds that will be financed by donor aid and charity contributions of individuals and legal entities. “It is important that a donor does not have the power to influence the spending of the money by the funds, meaning that it will not be able to promote its own people through these funds,” Pronchenko pointed out.

In truth, the question of what will be the case two years from now when the mechanism of payment of bonuses stops working remains open. “The task of the law on bonuses is to close the gap in the payment for labor to emigres from the business sector now and over the next two years. After that the law on the civil service could change,” says Pronchenko. In addition to that, he said up until then not only wages, but other valuable factors such as career prospects, may become a priority for those individuals that made the transition to the civil service.