Mozambique - Public sector pay and employment review

Report No. 9815-MOZ Mozambique Public Sector Pay and Employment Review December 3, 1991 Africa Region MICROFICHE COPY Southern Africa Department Country Operations Division Report No. 9815-MOZ Type: (SEC) FOR OFFICIAL USE ONLY FALLON, P / X34420 / J11027/ AF6CO 'Docitatet of the World Bank Thi~document has a restricted distribution and may be used by recipients only in the performance of their official duties. its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENT Currency Unit Metical Metical (plural meticais) US$1 1975 = 22.5 1985 = 43.2 1980 = 32.4 1986 = 40.4 1981 = 35.4 1987 = 289.4 1982 = 37.8 1988 = 528.6 1983 = 40.2 1989 = 747.1 1984 = 42.4 1990 = 929.1 GLOSSARY OF ABBREVIATIONS EGFE - Estatuto Geral dos Functionarios do Estado ERP - Economic Rehabilitation Program SIDA - Swedish International Development Agency UEM - University Eduardo Mondlane UNDP - United Nations Development Program  lb*'N b FOR OFFICIAL USE ONLY PREFACE Tbis review is based on a World Bank mission to Mozambique of October 1990. The report was written by Peter Fallon and Luiz Pereira da Silva (Southern Africa Country Operations Division) with contributions from Arnaldo Pessoa and Cecil Rajana (consultants). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MOZAMBIOUE PUBtIC SECTOR PAY ANSD EMPLOYMEN?TR TABLE OF CONTENTS Paae N2. EXECUTIVESUMMARY ............... i-iu I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . 1 A. Background . . . . . . . . . . . . . . . . . . . . . . . . . 1 B. The Labor Market. 1 1. The Structure of the Labor Force . . . . . . . . . . . . 1 2. Skilled Labor Supply .. 3 3. Demand for Skilled Labor .. 5 4. The System of Remuneration . . . . . . . . . . . . . . . 6 C. The Fiscal Constraints .. 6 II. PUBLIC SECTOR PAY AND EMPLOYMENT ISSUES . . . . . . . . . . . . 9 A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . 9 B. The Organization and Regulation of the Civil Service . . . . 11 1. General Principles of the EGFE . . . . . . . . . . . . . 11 2. Career Provisions for Higher-level Civil Servants . . . 12 C. The Size and Composition of the Civil Service . . . . . . . 12 1. Size of the Civil Service - International Comparison . .12 2. Sectoral Composition of the Civil Service . . . . . . . 14 3. Qualifications in the Civil Service . . . . . . . . . . 16 D. Civil Service Pay Levels and Structure . . . . . . . . . . . 18 1. International Comparison: Pay Level in the Civil Service . . . . . . . . . . . 18 2. Pay Regimes in the Mozambican Civil Service . . . . . . 18 3. Pay Levels in the Mozambican Civil Service . . . . . . .21 E. The Civil Service Personnel System . . . . . . . . . . . . . 24 1. Organization ..24 2. Legislation .. .................... 26 F. Job Classification in the Civil Service . . . . . . . . . . 27 1. Recruitment.. . . . . . 28 2. Information Systems ..28 III. PAY ISSUES IN THE PRIVATE SECTOR AND THE DONOR AGENCIES . . . . 30 A. The Private Sector and the Parastatal . . . . . . . . . 30 1. Pay Structure in the Private Sector and the Parastatals 30 2. Salaries in the Private and Parastatal Sectors . . . . 31 B. Donor Agencies . . ... . . 33 1. Interpretation and Coverage . . . . . . . . . 33 2. Bilateral/Multilateral Organizations' Pay Structure . . 33 3. Donors' Practice: Conditions of Service . . . . . . . . 34 4. Summary.. . .. 37  -2- TABLE OF CONTENTS (Cont'd) IV. POLICfCONC.LU IQU.. . . . . .......39 A. Main AnalytLcal Ftnding . . . . ... . . . . . . .39 1. Pay Differentials Across Sectors . . . . . . . . . . . . 39 2. The Supply Gap in Skilled Manpower . . . . . . . . . . . 40 3. Non-Cooperative Behavior Among Donors: Demand Pressure . . . . . . . . . f . . . . . . . . . 40 4. The Short-Term Solutions: the Two Special Funds and the New Salary Scale . . . . . . . . . . . . . . . 41 5. The Budgetary Cost of the Implement3tion of a New Salary Scale . . . . . . . . . . . . . . . . . 42 B. Policy Recommendations . . . . . . . . . . . . . . * . . 44 1. Civil Service Wage and Remuneration Policy . . . . . . 44 2. Civil Service Employment . . . . . . . . . . . . . . . . 47 3. Personnel Issues.. .... . . . . . 48 4. The Supply of Skilled Manpower . . . . . . . . . . . . . 49 C. Wage Issues in Other Parts of the Economy . . . . . . . . . 49 D. Managing Civil Service Wage Increases . . . . . . . . . . . 50 E. Concluding Comments . . . . . . . . . . . . . . . . . . . . 52 ANEX s Mozambique Public Pay and Employment t a diagramatic presentation of some controversial issues . . . . . . . . 53 AINNEX 2: Current initiatives in personnel and training . . . . . . 60 INDEX OF TABLES I Introdugtion 1.1 MOZAMBIQUE: Structure of the Labor Force . . . . . . . . . 3 1.2 MOZAMBIQUE: Tentative indicators of the Demand for Skilled Labor . . . . . . . . . . . . . . . . . 5 1.3 MOZAMBIQUEs Structure of Government Expenditures . . . . . 7 II Public Sector Pay and Emplovment Issues 11.1 INTERNATIONAL COMPARISONs Number of Public Employee . . 13 11.2 MOZAMBIQUE: Breakdown of the Civil Service by Ministry . .14 11.3 MOZAMBIQUE: Breakdown of the Civil Service by Sector and Province . . . . . . . . . . . . . . . . . . . . . . 15 11.4 MOZAMBIQUE: Level of Education of Higher Level Staff . . 17 11.5 INTERNATIONAL COMPARISONS: Pay Levels in the Civil Service . . . . . . . . . . . . . . . . . . . . . . 18 11.6 MOZAMBIQUE: Nominal Wage Developments . . . . , . . . . . 20 11.7 MOZAMBIQUEt Pay Structure in the Civil Service. . . . . . 24 III PAY ISSUES IN THE PRIVATE SECTOR AND THE DONOR AGENCIES 111.1(A) MOZAMBIQUEs Salary Structure in the Parastatals . . . 31 111.1(B) MOZAMBIQUE: Salary Structure in the Private Sector. . 31 III.2 MOZAMBIQUE: Pay Structure for Support Staff Employed by Bilateral/Multilateral Organizations . .33 IV IV.1 MOZAMBIQUE: Pay Structure across Sectors . . . . . . . . .39 IV.2 MOZAMBIQUE: Tentative Estimate of the Budgetary Cost of the Now Salary Scale. . . . . . . . . . . . . . . . . .43 IV.3 MOZAMBIQUE: Estimates of the Impact of the New Salary Scale on the Government's Wage Bill. . . . . . . . . . . .44  i EXECUTIVE SUMMARY i.. This report: (i) revie;s the pay and employment situation in Mozambique's civil service and compares it with that in other sectors of the economy ,the productive sectors and the expatriate agencies operating in Mozambiquo); (ii) assesses the suitability of the current civil aervice pay structure iii the light of b-th the cou.ntry'7 stabilization and aijuotment program and the ptevailing market imperfections in specific segments of the labor market for skisled manpower; and viii) makes recommendations to improve the present situation. ii. Adjustment