Tag: csc

CSC to take finance ministry to court over salary dispute

The Civil Service Commission (CSC) has announced it will take the finance to court to resolve the on-going civil servant salary dispute.

“We will go to the judicial courts and claim for the amount reduced from the salaries of civil servants,” the CSC said today in a statement.

The CSC said that receiving “full payment for their work” was a right for all civil servants, and advised them to be patient and continue working.

Press secretary for the president’s office Mohamed Zuhair said he preferred the dispute be resolved through discussions.

”I advise the CSC not to take the matter to court as first option,” he said, claiming that “some people are trying to use this situation as a political weapon.”

Zuhair said the government would defend itself if the CSC filed a lawsuit against it.

A senior staff member at the attorney general’s office today said staff would continue striking until their salaries were restored, even though the CSC has said it would not support strikes.

He gave the government three options: “restore the salary, agree to give us the money we have lost after the government’s economic condition stabilises, or reduce working hours,” he said.

He claimed the government had no legal action standing in court over the matter.

”We are planning to go to the courts, or to wait until the dispute between the CSC and the finance ministry ends,” he added, noting that only a few staff at the AG’s office presented for work today.

The finance ministry had not responded to Minivan News at time of press.

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‘Strikes lawful but we won’t support them’, says CSC

President of Civil Service Commission (CSC) Mohamed Latheef has said that the commission does not support strikes on principle “as civil servants are working for the benefit of the people, and [striking] is harmful for the people.”

However he said that those civil servants who were striking over the salary issue were using a right accorded them under the law.

He also said civil servants had a right to their full salary this month, and that it was “unfair” of the government to restore only some salaries (at the independent commissions).

Latheef said that all government employees, including independent commissions, “must face the difficulties due to the country’s economic condition.”

“The CSC believes that this is a national issue and it can be solved by speaking. Going to the court is not our first option, we wish this to be solved by talks,” he said.

Press secretary for the president’s office Mohamed Zuhair said it was not the government who decided the salaries of independent commissions, and that “rather it was decided by the parliament and the government does not have any power over it.”

Civil servants salaries accounted for 70 per cent of government’s expenditure, he said, while the independent commissions accounted for only five per cent.

He added that while the CSC might not believe that legal action could be taken against the striking civil servants, “that is not how the government feels about this.”

He said the government would restore the salaries of civil servants when its income reaches Rf7 billion, and the fact that parliament approved a budget of Rf7 billion “does not mean that we have it on our hands now,” he explained.

Spokesman for the Finance Ministry Ismail Shafeeq said that the government would provide civil servants “what we can.”

“Everyone knows the country’s economic condition,” he said.

Shafeeq said that he believes everyone, including civil servants and independent commissions, “must endure the special economic conditions of the country.”

“The finance ministry will be deciding whether or not to change their decision,” he added.

MDP MP Ahmed Easa said he believed civil servants and the independent commissions should both be receiving the lowered salary.

“When salaries are increased the country’s inflation rate gets high,” he said, “and when the inflation rate rises prices rise as well.’

Easa said “the best solution” was for the government to keep the 15 per cent salary money “and cut the import duty for food.”

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IMF warns restoring salaries will “jeopardise” international financing

The International Monetary Fund (IMF) has warned that international funding to the Maldives would be threatened if civil servant salaries are restored to former levels.

“One of the primary drivers of the large fiscal deficit has been government spending on public wages, which has more than doubled between 2007 and 2009, and is now one of the highest in the world relative to the size of the economy,” said Rodrigo Cubero, IMF mission chief for the Maldives.

“Measures that would substantially raise the budget deficit, such as a reversal of previously announced wage adjustments, would also put the program off track, jeopardising prospects for multilateral and bilateral international financing,” he warned.

State minister for finance Ahmed Assad confirmed that international funding might be at risk if the salaries were restored in the manner demanded by the Civil Servants Commission (CSC).

“The IMF have been saying that for a while,” Assad said, reiterating that the government was not capable of increasing civil servants salaries this month.

Permanent secretaries of various ministries had been submitting two salary sheets, he said, “so we know the difference.”

Spokesperson of the CSC Mohamed Fahmy Hassan said according to Maldivian law, the finance ministry had to pay the increased salary this month.

”For instance, if give you  work to do and say I will pay you 100rf when the work is done, after you complete the work is it fair for me to say, ‘Oh, I cant give you Rf100, I only have Rf50′,” he asked.

In response Assad said the IMF only gave economic advice, and was indifferent to a country’s law.

During talks between the CSC and finance ministry yesterday no agreements were made beyond a decision to continue negotiations.

In its statement, the IMF warned that “the Maldivian economy continues to face serious challenges. In particular, addressing the very large fiscal deficit is of paramount importance to secure a stable economy, equitable growth, and lasting poverty reduction.’

“A larger fiscal deficit would drive up interest rates, deprive the private sector of the credit it needs, and threaten growth and employment. It may also stoke inflation and erode the purchasing power of all Maldivians, including civil servants. It is to avoid such undesirable outcomes that the fiscal deficit needs to be reduced.”

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CSC and finance ministry hold talks to resolve salary dispute

After months of trading blows in the media, the Civil Service Commission (CSC) and the finance ministry met this morning to discuss the restoration of civil servants’ salaries.

However neither party would reveal what was discussed in the meeting, saying only that the issue remained undecided and another meeting would be held.

”We do not want to comment on this yet,” said Mohamed Fahmy Hassan, a CSC member who has advocated discussions between the CSC and the ministry.

State Minister for Finance Ahmed Assad also refused to reveal what was raised in the meeting, but said was expecting the discussions to lead to a solution.

Both Assad and the finance controller from the finance ministry were present at the meeting.

In response to the silence, spokesman for the Maldivian Civil Servants Association (MCSA) Abdulla Waheed said he was convinced the discussions would not lead to a “beneficial” solution and that the finance ministry was simply seeking to extend the period of reduced salaries.

”The CSC might agree to keep the salary lowered till the parliament re-opens,” Waheed predicted, threatening a law suit against the CSC if the outcome of the discussions was deemed “an injustice”.

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Parliament called to arbitrate civil servant pay dispute

The ministry of finance has asked parliament and the Maldives Monetary Authority (MMA) to arbitrate a dispute between the ministry and the Civil Service Commission (CSC) over the restoration of civil servants’ salaries.

Parliament has been asked to act as a mediator as the ministry “does not believe a satisfactory solution can be found through discussions with the commission”.

Until the dispute is resolved, “employees will receive the salary that was reduced due to the economic circumstances,” the finance ministry’s statement said.

The CSC meanwhile criticised the ministry for a lack of communication and unwillingness to meet for discussions.

“They could ask us to sit down and discuss this tomorrow morning and we would be there,” said CSC member Mohamed Fahmy Hassan.

“We’ve sent many letters and made many requests for them to submit information but they have not submitted it to us,” he said.

The CSC was not opposed to the involvement of third parties such as the MMA, he said, but having another government institution like the MMA acting as a go-between “sounds a bit odd.”

“We can discuss the issue with MMA or the People’s Majlis, but there’s going to be no decision made without the involvement of the finance ministry.”

Parliament broke for recess in December and will begin its first session of the year in March.

Waiting game

On 30 December, the CSC issued a circular announcing that civil servants’ salaries and allowances had been restored to their former levels.

Since it was agreed that the pay cuts will be rescinded once government revenue exceeds Rf7 billion, the CSC argued, the salaries would have been “automatically reversed” when parliament approved this year’s budget with a revenue of over Rf7 billion.

However the finance ministry’s statement criticised the commission for the announcement as it came after the ministry had declared that the economic circumstances had not changed.

“And while it did not consult with the ministry, the fact that the Civil Service Commission did not seek the advice and counsel of the Maldives Monetary Authority, the most appropriate independent institution to approach before making such a decision, is regrettable,” it said.

No deal

The pay cuts of up to 20 per cent for civil servants were made necessary due to a fall in government income and an increase in expenditure, the ministry claimed.

In August, the government introduced a raft of austerity measures – including cutting back on travel, controlling capital items purchases, halting renovation and repairs unless necessary and pay cuts of 20 per cent for political appointees ranked higher than deputy minister to alleviate the inherited budget deficit.

Recurrent expenditure on salaries and allowances for government employees was 34 per cent of total expenditure in 2008, a 62 per cent increase from the previous year.

The International Monetary Fund [IMF] has noted that this puts the Maldives in first place among small island nations for the highest expenditure on government employees as a percentage of GDP.

Pay cuts for civil servants were enforced in October following protracted negotiations with the CSC.

The commission exercised clause 43[c] of its Act, which authorise it to alter salaries based on “special economic circumstances” subject to a review in three months.

“The measure proposed by this ministry to determine the special circumstances was the state’s income and expenditure,” the ministry’s statement read. “It was therefore agreed that the economic circumstances would be considered to have passed once the state’s annual income exceeds Rf7 billion, while it was also agreed that the state’s total income does not include foreign aid once-off revenue.”

It further added that the pay cuts were not made for a three-month period, but would be subject to a review to determine if the economic circumstances had changed.

The inclusion of foreign aid in the government’s budget is a particular point of contention, as it pushes the total revenue over Rf7 billion. Actual government revenue excluding foreign aid and once-off revenue was projected to be Rf6.8 billion in the budget.

“We understood it was the total revenue of the government. The ministry’s press release on 25 September said they were not going to exclude anything. This issue needs to be resolved,” said Fahmy.

Special circumstances would be considered to have improved when the state’s “recurring income” reaches Rf7 billion, the ministry said, and “not when it is estimated that Rf7 billion will be received in income.”

Scaring off donors

The opposition-dominated committee selected to review the budget made a recommendation to inject Rf617 million to restore civil servants’ salaries as the proposed budget had Rf7.05 billion in revenue.

While the original budget submitted to parliament had a deficit of 14.8 per cent and was acceptable to the IMF, the alternations made by parliament increased it to 18.8 per cent.

The ministry now estimates the deficit by the end of the year will exceed 18.8 per cent as the government will lose Rf150 million in revenue due to parliament’s failure to pass taxation legislation.

Increasing expenditure at the beginning of the year based on projected revenue was “not sensible at all”, the ministry insisted.

There were four ways the government could plug the deficit – printing money, financial assistance from international monetary organizations, obtaining commercial loans and devaluing the rufiyaa – all of which would have adverse effects of the economy.

Printing money would lead to inflation and a dollar shortage, taking commercial loans would make it harder for the private sector to secure loans and devaluing the currency would increase inflation and the price of imports.

Instead, the ministry reached agreements with the IMF, World Bank and the Asian Development Bank to obtain loans to plug the deficit.

However hiking salaries for government employees without increasing the revenue base was not “a sustainable fiscal or monetary policy”, and these international organisations have since informed the government that they are reconsidering the loans, the ministry’s statement said.

If the Maldives does not have an economic framework that is acceptable to the IMF, it continues, it would not be possible to obtain assistance or loans from other financial institutions.

Apart from potentially losing Rf755 million in assistance from the World Bank and ADB, the donor forum organised by the World Bank and scheduled for March could be canceled.

“Therefore, the ministry believes reducing expenditure is the wisest and most economically sensible way,” it said, adding that expenditure on wages had to be kept low until the economy rebounds.

Fahmy said the CSC was willing to negotiate and wished to meet the finance ministry “to hear their views on the economic circumstances.”

“We have always said that if there is a national crisis we will put the national interest above the interest of civil servants,” he said.

“But it is difficult to justify that to 29,000 civil servants if the government is spending on all the other items in the budget.”

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CSC refutes media reports of condition attached to IMF aid

The Civil Service Commission (CSC) has denied media reports the International Monetary Fund (IMF) approved financial assistance of US$92.5 million on the condition that salaries and allowances for civil servants are reduced.

A press release issued by the CSC yesterday states that the commission did not believe the IMF imposed the condition that salaries are reduced solely for civil servants.

It quotes from a statement issued by the IMF on Friday, which states the government was taking action to reduce expenditure, “including unwinding part of the recent large wage increases” and had “taken steps to reform the civil service”.

The commission points out that the IMF statement does not exclude or single out a particular area for salary reductions.

“Since it does not define the outcome of the reform when it refers to the civil service reform, we believe the opportunity would remain for employees’ salaries to be increased,” it reads.

Last week, the CSC sent letters to both President Mohamed Nasheed and parliament requesting civil servants’ salaries be restored to their former levels.

In August, the government introduced a raft of austerity measures, such as pay cuts for political appointees up to 20 per cent, to alleviate the budget deficit.

Following negotiations between the finance ministry and the CSC, the commission agreed to reduce salaries of civil servants up to 20 per cent subject to a review in three months.

When the pay cuts were enforced in October, it was agreed that the salaries would be restored to former levels once government revenue exceeds Rf7 billion (US$544 million).

The mid-term budget for 2010 was proposed to parliament with projected revenues of Rf7.3 billion (US$568 million).

The commission’s press release states that as section 43 of the CSC regulations empower the commission to alter salaries, other government authorities could not sign agreements stipulating reductions for civil servants’ salaries.

Presenting the budget to parliament, Finance Minister Ali Hashim said the IMF, World Bank and Asian Development Bank had recommended reductions to the civil service.

Mohamed Zuhair, president’s office press secretary, told Minivan News last week that salaries would only be restored once the revenue “physically” reached Rf7 billion.

The civil service pay cuts sparked outrage from the opposition, which accused the government of unfairly targeting civil servants as they were sympathetic to the former government.

The opposition further denied that the economic circumstances warranted the pay cuts and criticised the government for “economic mismanagement”.

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