The Civil Court has ruled in favour of the Civil Service Commission (CSC) yesterday on their case against the Ministry of Finance regarding civil servants’ salary cuts, but did not rule on whether the salaries have to be restored.
Civil servants’ salaries were officially reduced in October 2009 with salary cuts of up to 20 percent. This measure was taken when the government’s budget deficit forced several independent commissions and government offices to reduce salaries in order to alleviate expenditure.
The government had promised to restore salaries once the budget rose above Rf7 billion (US$544 million). The cut was expected to last only three months.
In December 2009 the CSC requested the government restore salaries as the proposed mid-term 2010 budget was anticipated to exceed Rf7 billion. But disputes over whether the budget included foreign aid or not complicated the issue further, as the Finance Ministry said, excluding foreign aid the budget was Rf6.8 billion.
After months of incertitude and awaiting a decision, the court ruled “the Finance Ministry does not have the legal authority to order amendments to salaries”, according to Press Secretary for the President’s Office, Mohamed Zuhair.
Zuhair said President Mohamed Nasheed had not yet said anything on the ruling, or whether the government would appeal the decision, but noted it was a possibility an appeal would be made on the ruling.
Member of the CSC Mohamed Fahmy Hassan said the court’s decision showed “the independence of the judiciary and non-interference [of the government] in affairs of the judiciary.”
He said the CSC is hopeful “the issue will be solved” and they are “confident the Finance Ministry will give the salaries as we requested.”
Fahmy said they hoped their salaries will be restored soon, and added they will be “flexible” when negotiating the back-log of payments. He estimates the total amount of money ‘owed’ to civil servants since the pay cuts started in October 2009 is approximately Rf120 million.
“We have always had the national interest as our concern,” he said, “and we will try to come to an amicable solution.”
He noted “preliminary discussions [with the ministry] went very positively,” and said “final decisions will be announced soon.”
Fahmy said the CSC took the court’s decision as an order for civil servant salaries to be restored. “We don’t see any other interpretation.”
He added “the government is very keen to resolve this issue to the satisfaction of everybody involved,” and noted the issue would probably be solved once President Mohamed Nasheed returns to the country after his visit to Bhutan.
Deputy Minister of Finance Ahmed Assad said his reading of the court’s ruling is that “it’s the CSC’s decision” on whether they want to have their salaries restored.
“Regarding the judgement, there are no negotiations,” he said, adding the ministry is “still talking” to the CSC about the issue.
“We’ve said this before,” Assad said, “it’s not because we want to [cut their pay] but because we don’t have a choice.”
He said as far as the economy is concerned, “we don’t see any economic event that has changed [the situation].”
Assad said “we want to give it some time” and they are now waiting for the CSC to make their decision.
After salaries were initially reduced in October 2009, the CSC and Finance Ministry have been disputing the legality and rationality of the pay cuts. The Maldives is still among the countries with the largest civil service as a percentage of its population. In 2008, civil service salaries amounted to 34 percent of total government expenditure.
Spokesperson for the Civil Servants’ Association, Abdulla Mohamed, told Minivan News in December last year, “we believe this damage was done to civil servants as a punishment and if there really were special economic circumstances, members of parliament and independent institutions too should have taken a pay cut.”
Pay cuts for independent institutions came into effect in December and several MPs volunteered for a pay cut.
On 30 December, the CSC issued an announcement stating civil servants’ salaries and allowances had been restored, as the 2010 budget was expected to exceed Rf7 billion.
But by mid-January 2010, the issue was still unresolved and salaries had not been restored.
At the time, the Ministry of Finance stated “employees will receive the salary that was reduced due to the economic circumstances,” and disputed the CSC’s statement claiming they had not discussed it with the ministry before publicising the announcement.
In January, the Ministry of Finance asked Parliament and the Maldives Monetary Authority (MMA) to arbitrate the dispute between them and the CSC.
Fahmy told Minivan News at the time that they would put the country’s interests above the interests of civil servants, but added, “it is difficult to justify that to 29,000 civil servants if the government is spending on all the other items in the budget.”
Shortly after Parliament and the MMA were asked to intervene, the CSC warned to take legal action against the ministry. The ministry threatened to also take legal action against the CSC.
By the end of January, the government announced salaries of staff at independent commissions, courts, parliament and the judicial services had been restored, and civil servant salaries would follow in April.
On 3 February 2010, the CSC announced they would take the issue to court and “claim for the amount reduced from the salaries of civil servants.”