State wage bill sent back to Majlis for the third time

President Abdulla Yameen has returned ‎the state wage policy bill back to the People’s Majlis for reconsideration after expressing concern over the inclusion of some public companies and parliamentary oversight.

President’s Office Spokesperson Ibrahim Muaz said that the inclusion of public companies with more than fifty percent shares would create difficulties as these are separate legal entities which would subsequently have an outside authority setting wages.

The other key issue related Article 18 of the bill which states that all decisions of the pay commission regarding the setting of wages and formulating wage policies must be approved by parliament.

“The president does not believe the commission would be an implementation authority if the People’s Majlis is to approve its decisions,” said Muaz, noting that it would create difficulties in implementing the Pay Commission’s decisions.

Majlis economic committee member, Kelaa MP Dr Abdulla Mausoom, told Minivan News the bill was being delayed mainly due to a conflict between the two branches of the government, arguing that the Majlis ought to have final say on pay awards as representatives of the people.

The bill which was passed on April 27 had been returned twice by the previous President Dr Mohamed Waheed.

It aims to resolve public sector pay discrepancies through the creation of a National Pay Commission and was first proposed by Kulhudhufushi South MP Mohamed Nasheed in March 2011, and was passed by the Majlis in December 2012 and again in April 2013.

In a letter sent to the speaker of the majlis, President Yameen has requested that points noted by the government be considered.

According to Muaz, further issues emerging from the bill are that it essentially hands over the authority to decide salaries of all institutions, including president’s staff and security forces, which are currently under the executive according to the constitution and laws.

He described the parliament’s deciding upon all changes to salaries and benefits of state employees as “People’s Majlis infringing on the executive’s responsibilities”.

The constitution is clear on the parliament’s roles in allocating salaries independent institutions, continued Muaz, and the parliament’s role when it comes to the wages of other state employees – not specifically stated in the constitution – should be limited to formulating policies on the matter and holding other relevant stakeholders accountable.

President Waheed had previously told the Majlis that the requirement for parliament approval of commission decisions “dissolves the separated boundaries of, and would present difficulties in carrying out the functions of, the state – particularly in carrying out the duties of the executive”.

In response, the economic committee of the Majlis which reviewed the bill said “the best way to maintain checks and balances” is keeping the bill as it is, instead of leaving the power of determining the wages under the total control of the executive.

“People’s Majlis has the largest number of people’s representatives and should be viewed as the people. [In the bill] all the decisions are made by the [Pay] commission and it is only sent to the parliament to see if the people approve of it,” said Dr Mausoom.

When asked if the issue could take another turn with the newly elected parliament, Dr Mausoom said that he believed the new members of the parliament would make a responsible decision.

The ruling Progressive Coalition currently maintains a parliamentary majority and has won a ‘super-majority’ of two-thirds in the newly elected parliament.

The government is currently under pressure from workers over pay discrepancies and minimum wage, with both civil servants and teachers considering strike action in recent weeks.

Meanwhile President Yameen yesterday ratified five bills passed along with State wage bill at the eighth sitting of Majlis’ ‎first Session, on 27 April ‎‎2014.

The five bills which were ratified are the sole proprietorship ‎bill, business registration bill, the fourth amendment to the ‎‎Maldives Land Act,  the sexual harassment bill, and the sexual offences bill.


Expenditure on political appointees two percent of state wage bill, says Finance Ministry

Expenditure on 244 political appointees in the executive branch is two percent of the state’s wage bill or Rf99 million (US$6.4 million) a year, according to official figures released by the Ministry of Finance and Treasury.

The Rf1.6 billion (US$103 million) of annual spending on 20,476 civil servants meanwhile accounts for 39 percent of total state expenditure on salaries and allowances, followed by 24 percent for uniformed bodies (5,949 police and army officers), 17 percent for local councils (1,091 elected councillors), 10 percent for independent institutions (1,904 employees) and five percent for the judiciary (1,461 employees).

Annual expenditure on parliament (211 employees) accounts for two percent while administrative staff at the President’s Office (186 employees) represent one percent of the total wage bill.

A press statement issued by the ministry today notes that the figures were made public because “misleading statements” were being made about government spending.

“The economy has been adversely affected as a result of the state budget deficit in past years,” it reads. “One thing to be noted is the significant increase of recurrent expenditure compared to revenue. Recurrent expenditure is 12 percent above the government income forecast for 2011. Moreover, 49 percent of the state’s recurrent expenditure is spent on salaries and allowances for state employees.”

“Tip of the iceberg”

Speaking to Minivan News today, MP Dr Abdulla Mausoom of the opposition Dhivehi Rayyithunge Party (DRP) said that expenditure on political appointees in the executive was “just the tip of the iceberg.”

“The whole country was corporatised,” he explained. “There’s a roads corporation and all sorts of corporations. The people appointed to the boards of these corporations are all purely political appointees. They were appointed directly by the President to promote a political agenda.”

He added that the corporations were created “to give political posts to [ruling Maldivian Democratic Party] MDP activists.”

Moreover, said Mausoom, the corporations have “taken millions of dollars in loans to give salaries to these MDP activists.”

“Some of these people are not qualified at all,” he claimed. “There are people who have been made Managing Directors who cannot even read an MoU [Memorandum of Understanding] written in English.”

Dr Mausoom argued that the majority of senior officials in the corporations were filling “useless posts.”

The Public Accounts Committee (PAC) of parliament had requested information about expenditure on corporations, he continued, but the figures had not been provided.

“Most of them don’t even show up at the office,” he said. “Every day between sunrise and sunset, a new post is created in these corporations.”


Finance Minister Ahmed Inaz however dismissed Dr Mausoom’s contention as “an attempt to distort” the information made public today.

Inaz insisted that senior officials of corporatised entities were not paid salaries or allowances out of the government’s wage bill.

The Finance Minister explained that state-owned enterprises such as the State Trading Organisation (STO) were managed as businesses and paid their employees from income raised through their operations.

“Other corporations such as Dhiraagu pay dividends to the government,” he said.

While subsidies were granted to the State Electricity Company (STELCO), Inaz said that the government’s policy was to switch to targeted subsidies for the poor.

“What would happen if we suddenly brought a speeding motorcycle to a halt?” he asked, referring to public companies. “It will slide off the road and crash.”

On the cost of political appointees, the Finance Minister argued that two percent of the wage bill was “a negligible amount.”

“Say for example that we eliminated all political posts and only President Nasheed is left in the executive,” he said. “Reducing or eliminating two or three percent would not have a significant impact on state expenditure.”

Austerity battles

In August 2009, the government’s decision to introduce a raft of austerity measures – including unpopular pay cuts of up to 15 percent for civil servants to reign in the ballooning budget deficit – was met with fierce resistance from opposition parties.

The pay cuts sparked a protracted legal dispute between the Finance Ministry and the Civil Service Commission (CSC), which won a court case against the ministry in April 2010 to restore salaries to previous levels.

Meanwhile an internal World Bank report produced for the donor conference in May 2010 noted that increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, which was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“Even before government revenues fell and when government revenues were at an all time high in 2008, the ratio of the wage bill to revenues at 46.5 percent was also at an all-time high (46.5 percent compared to an average of 38.1 percent between 2000 and 2007). When revenues plummeted in 2009, the share of the wage bill to revenues rose an astronomical 89 percent,” the report explains.

In April this year, the government launched a programme to incentive voluntary redundancy in the civil service.

Finance Minister Inaz told Minivan News in May that the programme “has to this date enrolled 800 people and already some of them have already been paid and moved out of the civil service. We hope over the next few weeks we will achieve our target of 1300.”

Inaz observed at the time that slimming down the civil service would not be easy: “The country’s employment has been totally dependent on the government. It is a very big change, and we have said we want the government to be a policy maker, a regulator, but not doing business, so jobs are created in the private sector.”

State wage expenditure Annual expenditure on salaries and allowances Percentage of total wage bill or expenditure on employees
Civil servants or employees under the executive (excluding political appointees and councillors) Rf1,596,029,007 39 %
Uniformed bodies Rf1,001,489,486 24 %
Political appointees in the executive branch Rf99,178,980 2 %
Administrative staff at the President’s Office Rf27,326,730 1 %
Councils Rf717,250,030 17 %
Judiciary Rf210,282,463 5 %
People’s Majlis or legislative branch Rf79,210,718 2 %
Institutions dependent on state budgets Rf393,620,943 10 %