Civil servants to receive Rf150,000, scholarships, SME loans for voluntary redundancy

Cabinet yesterday launched a program to encourage civil servants to leave the government and enter the private sector or further their education.

Under the scheme, civil servants and government employees will be eligible for one of four retirement incentive packages: no assistance, a one time payment of Rf 150,000 (US$11,700), a payment of Rf 150,000 and priority in the small and medium enterprises loan scheme (for those 18-50 years of age), or a lump sum of Rf 200,000 (US$15,600) and priority in government training and scholarship programmes (for those 18-40 years of age).

In addition, government employees above the age of 55 who retire voluntarily will be given the same benefits as those released by the Civil Service Commission (CSC) at the mandatory retirement age of 65.

The deadline to apply for the program with the Ministry of Finance is May 31, 2011.

The move is likely to win the government further favour with the International Monetary Fund (IMF), following its managed float of the rufiya and passing of several tax bills through parliament, including the tourism goods and services tax (TGST) and business profit tax.

However international financial organisations such as the World bank and International Monetary Fund (IMF) have regarded the country’s bloated public wage bill as the key contributor to its 20-21 percent budget deficit, arguing that the country must reduce its expenditure as well as increase its revenue.

The deficit exploded on the back of a 400 percent increase in the government’s wage bill between 2004 and 2009, with tremendous growth between 2007 and 2009. On paper, the government increased average salaries from Rf3000 to Rf11,000 and boosted the size of the civil service from 24,000 to 32,000 people – 11 percent of the total population of the country – doubling government spending from 35 percent of GDP to 60 percent from 2004 to 2006.

Political maneuverings by the opposition last year forced the government to rescind pay cuts of 15 percent, leading the IMF to comment that “significant policy slippages” were threatening the country’s economic sustainability.

Several political skirmishes over pay cuts between the Finance Ministry and Civil Service Commission (CSC) ended in court last year, with permanent secretaries of Ministries at one stage submitting multiple wage forms in an effort to appease both sides.

Head of the CSC Mohamed Fahmy told Minivan News that the commission was “very positive” about the voluntary redundancy program.

“This is an opportunity particularly for young people to advance their studies and skills,” he suggested.

“We can’t yet say how people will react, but definitely the package for people 55 years and over is very good. I think this is positive encouragement – scholarships are hard to come by, and many parents are not in a position to fund their children’s education.”

The President’s Press Secretary Mohamed Zuhair claimed that the potential short term costs of the scheme “are not relatively high compared to the benefits in the long term.”

“We need to trim down the civil service to reduce state expenditure and have a healthier private sector,” he said. “Few other countries apart from North Korea employ such a high percentage of their population in government.”

Zuhair dismissed the possibility that such an incentive program would lead to a ministerial ‘brain drain’, as talented staff with prospects outside government rushed to leave the civil service.

“The civil service will continue to provide benefits such as long term security and upward mobility – I don’t think there will be a rush,” he predicted.

Political appointees would also be eligible for the program, he added, however following the replacement of government-appointed island councillors by elected representatives, “there are not more than about 170 appointees”.

In comparison, the Civil Service Commission (CSC) has 21,000 staff under its mandate, including 19,000 permanent staff and 2000 contractors.

The remaining public sector employers fall under an assortment of 100 percent government-owned corporations, particularly prevalent in the medical, education and media sectors, a loophole that allows the government to hire-and-fire staff without being subject to the jurisdiction of the CSC.

“Staff of the corporations are no longer civil servants but are still uniformed servants of the state,” Zuhair explained.

Yesterday’s move to incentivise the departure of civil servants is likely to draw further support from the IMF, which has finished its Article IV consultation and may be weighing up the provision of further support.


12 thoughts on “Civil servants to receive Rf150,000, scholarships, SME loans for voluntary redundancy”

  1. This is great news for the country.

    It should have been implemented 2 years ago.

    I think that the concern of Brain Drain is over-exaggerated. In fact, we WANT more of the talented people to go into the private sector and really start earning something productive rather than being a civil servant! If this provides them with a boost - all the better!

  2. @jamal and what jobs are available in privet sector in Maldives? The whole fact of the matter is that their is no suitable jobs for the highly educated that is returning in doves. And no sitting in chairs signing letter that what does not have any thing to do with the field they were trained in does not count.
    We should really be concerned about the brain drain the educated will leave the first opportunity they get and those that will be left would be the uneducated moron who vote uneducated morons into power who would drive the country further down the pooper.

  3. simple mathematics by anni aka 3rd nov aka sikka. when he saw the opportunity to sell newly gained GST 6 million per month to be sold to highest bidder, he could use some of those money to his growing expense as the result of temporal T-bills he issued to several banks. Now he know that still dollar crisis is far from over, now he came with another simple theory to redundant civil service staffs by promising 150K or 200K, but the reality is he have no intention of giving them this, it will be on papers and staff will have to run court to receive it after going out of job, also even if he willing to give if thousands of ppl apply, govt doesn't have enough on their coffers to give it. because it is around 2 to 3 years salary, meaning result will only be coming after 3 years as the expense will reduce after that. It would have been better method to invest this money on an industry where govt could earn money, instead of wasting time on how to cut expense. This guy is simply an idiot, those who take him seriously either donno him, or are ppl with psychological problems. Just wait and see Bank of Maldives will declare bankruptcy within course of this year, because it cannot run without cash flow, which will be blamed on thasmeen or some another person. but how about AAA company who have taken more money than thasmeen, or how about sun travel and others. but the biggest blame goes to govt, because it has taken lot, billions from BML by issuing T-bills which govt is not paying back still, as a result bank is almost bankrupt. both govt, AAA company, thasmeen want the BML to go bankruptcy or sell it to another party who will bring some temporal money to manage it, like ICCI bank. Maldives is definitely going down the abyss with this tyrant fool

  4. What private sector? Many areas may be private in Maldives but there is no private sector as such in the Maldives.
    Is there proper rules and regulations governing employment like, right of education, insurance etc.. Even grievances cannot be addressed.

    Bosses hire and fire the in the 'apprentice'. In fact what you termed as 'Maldives Private Sector' is a pool of local apprentices + Sri Lankan Accountants + Bangladesh workers.

    They may have money, but as a serious employer, its still a joke.

  5. @jamal - if private sector provides any sense of job security, no one would be in the Civil service.

    It would be a miracle, if staff in private companies know what they are expected to do. Everything is based on adhoc commands.

  6. Idiots should know the majority of people working in this country is in private sector and receive a much higher salary than evil civil service. Only problem will be they can't play during office hours like they did in civil service. Lazy crazy people will stay in civil service.

  7. Majority working are Bengladishi.. Professional jobs are done by Sri Lankans and europeans.

    Most maldiavins (60%) are into fishing or as an alternative, in the Civil Service.. Not in the private sectors.

  8. presently civil service is the most lucrative job offer . they will not leave .
    easy work hours
    better pay
    more job security
    less responsibility
    no targets
    good health care benefits
    why would anyone leave for mere USD 12,000 benefit
    maybe a few disgruntled and very unhappy employees will leave this will still help
    the saving on the monthly expense will accrue well
    worth a try i guess

  9. This is a wonderful idea. We will have some to leave. The government is encourage for people to leave by guiding them. Gayoom is an Egyptian moron who increased wages and number of civil servants to win an election. If he had been in power we would be spending all the money for his wife's medical bills in London.


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