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PAY RESEARCH BUREAU (under the aegis of the Prime Minister's Office)
PAY RESEARCH BUREAU>Introduction

Introduction


1. Introduction

1.1 The Pay Research Bureau (PRB) undertakes a general pay review for the Public Sector, as per current practice and Government policy, normally once every five years. The last PRB Report was published in 2003. This Report is the sixth overall review of the Pay and Grading Structures and Conditions of Service in the Public Sector (Civil Service, Parastatal and other Statutory Bodies, Local Authorities and the Private Secondary Schools) carried out by the Bureau. It also covers the Rodrigues Regional Assembly for the second time. Overall, the Report covers around 83,000 employees and 23,000 public service pensioners.
1.2 The first PRB Report published in 1982 was conceived in a quasi-economic recession background and had an unfortunate fate due to misunderstanding of the underlying philosophy pertinent to the then difficult situation. Employees came out as the losers and it was a lesson not to be repeated. No doubt, the subsequent Reports, undertaken under less compelling economic pressures, received much more positive response.
1.3 Now, 26 years after, the country’s economic situation is slowly recovering from another slump, which has required fundamental reforms with a view to, not only maintaining sustainability, but more importantly, enhancing growth in the face of globalisation, the ever-increasing price of petroleum products on the world market and the elimination of safety nets for our export products.
1.4 It is, indeed, with an approach and philosophy befitting this churning economic environment that the 2008 PRB Report has been designed, developed, drafted and delivered.
1.5 This Report is being formulated in a context of major structural reforms already underway in the country and marked by higher and higher expectations for a responsive, proactive and performing Public Service, both from the citizens and the Government. The dynamic environment is requiring bold decisions for public sector administrative reforms to enable improved delivery on all fronts for excellence and competitiveness.
Orientation of the Report
1.6 Understandably, a key objective of this review has been to harmonise/ rationalise/streamline and modernise the reward, recruitment, training and other correlated human resource strategies to induce the desired shift in mindset and behaviour for the Public Service to keep pace with the changing environment and respond to the different challenges while maintaining its core values, sense of self worth, identity and its ability to serve successive Governments.
1.7 In short, the review aims at transforming public sector organisations into modern, professional and citizen-friendly entities with competent, committed and performance oriented personnel dedicated to the service of the citizen.
Structure of the Report
1.8 The Report comprises two volumes. Volume I elaborates on the background and conditions of service. It also covers the Public Sector Management Reforms and the way forward; and highlights the organisation development and other human resource strategies to be implemented. Volume II, which is in four parts, analyses and reviews organisations and pay structures of (i) the Civil Service, (ii) Parastatal and other Statutory Bodies together with the Private Secondary Schools, (iii) the Local Authorities, and (iv) the Rodrigues Regional Assembly.
Background
1.9 The 2003 PRB Report was approved by Cabinet for implementation as from 1 July 2003. Every employee concerned was invited to exercise an option signifying his acceptance or otherwise of the revised emoluments and terms and conditions of employment. Except for a few, the large majority of employees opted for the revised salaries and conditions of employment.
1.10 Subsequently, parties concerned (i.e. the official side, management, unions and employees) were invited to submit representations regarding any errors and omissions identified within three months from the date of approval of the Report. After in-depth analysis of the representations received, the Bureau published in May 2004 its findings and recommendations on the Errors, Omissions and Clarifications of the 2003 PRB Report.
1.11 Moreover, the High Powered Committee, by virtue of a provision of the 2003 PRB Report, made or approved such modifications or additional recommendations, as it deemed necessary, to facilitate the implementation process. Wherever necessary, new recommendations of a fundamental nature have also been made to enable organisations to fulfil their mandate efficiently and effectively.
1.12 Concurrently, the Bureau assisted and advised the Ministry of Civil Service and Administrative Reforms (MCSAR) in the implementation of its recommendations.
Approach and Methodology
1.13 In the production of this Report, the Bureau has adopted a still more consultative and transparent approach. All parties were invited to submit their representations and to expatiate thereon during meetings. Representatives of Staff Associations were also invited to attend part of the deliberations during meetings held with Management in presence of representatives of the (MCSAR) when matters relating to structural changes were discussed. They were apprised of the representations and options that could be considered and others that could not be entertained. The approach and methodology used, which again have been appreciated, are described lengthily in Chapter 3.
Review of Organisation Structures
1.14 A meaningful pay review requires revisiting the organisations’ structures to ensure that they continue to be aligned and responsive to the organisation’s mission, values and strategic objectives.
1.15 In the 2003 PRB Report, the Bureau advocated flatter structures for improved performance and effectiveness. However, the extent to which this could be done was limited by both cost constraints and employee resistance. The situation has slightly worsened since the last review with instances where under the cover of restructuring, additional levels have been created resulting in major overlapping of responsibilities and accountabilities, thus affecting service delivery.
1.16 We have, therefore, re-examined all hierarchies thoroughly to do away, as far as possible, with overlapping functions, reduced the number of levels, provided for polyvalent grades, eliminated silos to the extent acceptable, clarified role/responsibility and come up with fit-for-purpose structures. This exercise has the advantage of trading off multilayers for longer salary scales so that absence of career prospects is compensated through improvement of career earnings. We have thus gone a long way in this direction particularly where parties have expressed their understanding and agreement. We consider that this is the way for the future and we have strongly recommended, accordingly.
Review of Pay Structures
External Relativity
1.17 A survey on remuneration in the private sector, carried out by the Bureau in collaboration with the Central Statistics Office, revealed that, at the upper echelon and near the top, the pay of employees in the private sector leads pay of corresponding or comparable positions in the public sector manifold. There are also wide gaps in the benefits and other perks that are provided. At the middle management levels, though graduates and professionals in the private sector, at the initial stage of their career, draw lower salaries than their counterparts in the public sector, after a few years of experience their absolute levels of pay generally catch up with and exceed pay levels in the public sector.
1.18 At the lower levels, however, the public sector has generally a pay lead over the private sector. The lead is more pronounced when comparison is made with minimum wages set by the National Remuneration Board (NRB) as these are determined on an industry-by-industry and occupation-by-occupation basis and in principle benchmarked on the survival of the least economic firm. The lead, however, narrows when comparison is made with pay in the inter-quartile range of the private sector.
1.19 While from the economic perspective it makes sense to partly bridge the gap at and near the top with the private sector and allowing the private sector to further catch up at levels where Public Sector pay exceeds market rates, it is also strongly argued in certain quarters that a small lead of Public Sector pay at the lower level is advisable on grounds of social policy.
Internal Relativity
1.20 As regards internal relativity, though the pay structures put in place in 2003 were ‘felt fair’ based on job evaluation, in a few areas the narrow differentials between the grades in the hierarchies have had an adverse effect on the motivation of employees for promotional positions. Further, the policy of tapering increases for cost of living compensation adopted over the years has caused a serious compression of pay differentials and this is being addressed.
Pay Policy
1.21 Against the foregoing, the pay policy underpinning this Report aims, among other objectives, to achieve equity implying fair relativities commensurate with responsibilities as well as protection of purchasing power to the extent possible; competitiveness implying considerations of market realities; efficiency by linking pay to productivity and performance and macro-economic stability with pay as a percentage of GDP kept within acceptable limits for sustainability.
Pay Structures
1.22 In developing the new pay structures, the Bureau has, therefore, paid particular attention to national affordability and social acceptability and also to the following:
(i) the need to set salary levels and adopt Human Resource (HR) strategies that would enable public sector organisations to attract, recruit, motivate and retain talents of the right calibre in required numbers;
(ii) the need to induce our elite back home from abroad;
(iii) the need to re-establish relativities and differentials in reward commensurate with responsibilities and whenever desirable reflect market realities;
(iv) the loss of purchasing power since July 2003;
(v) the need for upgrading of posts requiring skills and competencies in high demand and in short supply;
(vi) the need to relate increased remuneration to increased productivity;
(vii) pay as an instrument of economic management and a requirement of human resource management; and
(viii) the principles and practice of good industrial relations.
Public Sector Management Reforms
1.23 The challenges facing the Civil Service concern Organisational Development; Process and Systems Application; Human Resource Strategies; Pay Reforms; Customer Responsiveness; and E-Government Services. Evidently, service delivery, value for public money and performance on the frontiers of excellence are the common links which underpin the needs for continuous reforms in these areas.
1.24 Appropriate strategies have been crafted to respond to these main challenges which, among others, are to:
(i) move from a multi-layered structure to flatter structures to improve accountability and facilitate decision taking while maintaining a balance between career prospects and career earnings;
(ii) align HR practices – recruitment , selection, rewards, training and development – with performance;
(iii) ensure that organisations are manned by the most suitable persons of the right competency so that the Public Sector is staffed with the right people in the right place through proper recruitment and selection criteria and opening up at appropriate levels;
(iv) provide for training and development to equip employees with the right competencies and attitudes at different levels; and
(v) introduce a reward mechanism and institutional framework to link pay to results and to motivate organisations to embrace and implement change.
Performance Management
1.25 In this Report, we have again laid emphasis on the need to improve performance and productivity at all levels, and highlighted the importance and expediency of introducing Performance Management in all public sector organisations.
1.26 We have also recommended that Performance Management System needs to be mainstreamed together with Programme Based Budgeting so that both reinforce and support each other with their common focus on improving performance, transparency, accountability and the efficient achievement of planned results.

Recruitment, Training and Development
1.27 For the Public Service to be responsive, employees need to be competent and have the required attitude and mindset to serve courteously and effectively in a timely manner. It is, therefore, essential to recruit candidates of the right profile, provide them with the appropriate training and reward them adequately. In this context, we have recommended that schemes of service be revisited to incorporate technical and behavioural competencies as well as the desirable mindset and attitude. Recruiting agencies would need to be equipped with the required tools and expertise for selecting the appropriate candidates. Appropriate recommendations have been made in this regard.
1.28 We have laid emphasis on the strategic importance of training in organisational efforts to build the required skills and competencies for employees to excel within their roles in meeting the set objectives and in quality service delivery. To this end, we have recommended an increase (a) in the number of hours of training to be dispensed per employee from 40 to up to 60 hours annually and (b) of the budget for training from around 0.25% of salary bill to 1% over the coming three to four years.
Leadership Capability Profile
1.29 Leadership being one of the most important drivers of excellence, it is essential that selection to management or technical management positions be made judiciously. In this context, we have come up, based on foreign experience, with a Leadership Capability Profile outlining the requirements for potential leaders i.e. they are expected to have the required mindset, attitude and soft skills; have acquired relevant experience through varied pathways; must possess leadership and management skills; and have the capability to deliver outcomes. The Leadership Capability Profile is expected to serve as a guideline for potential leaders, for training of future leaders and for recruiting agencies of the public service in the selection of a diverse pool of talents.
Performance Based Pay
1.30 The present pay system does not allow discrimination between low performing and high performing organisations, teams and individuals. To induce desired behaviour and attitude for improved performance, we have introduced a reward mechanism and an institutional framework to link pay to results and to motivate organisations to embrace and implement change. We have specifically made recommendations for the payment of various performance related bonuses. Among others, we have recommended the payment of a bonus equivalent to one week salary for every 1% fall in the share of Public Sector pay to GDP which has been set at around 7.5%. Details of other recommendations are given at Chapter 14.

Impartial Character of the Public Service
1.31 To preserve and protect the impartial character of the Public Service and its ability to serve successive Governments with integrity, we have recommended on the advisability for the enactment of a Public Service Bill that would, inter alia, aim at clarifying and securing the boundaries within the Executive and enhance and entrench the fundamental values of the Public Service.
Parastatal Bodies
1.32 As regards Parastatal Bodies, we have come up with appropriate recommendations on organisation structures and certain specific conditions of employment to enable them to fulfil their mandate successfully. We have thus streamlined and harmonised certain structures and have recommended, where essential, the creation of a number of additional levels and new posts to be filled on needs basis. However, we have refrained from reviewing organisation structures of certain institutions, which are presently subject to re-engineering under Government policy.
Local Authorities
1.33 We have further pursued the process, started in the 2003 PRB Report, of harmonising and streamlining the organisation structures of all the Local Authorities, both Municipal Councils and District Councils.
Rodrigues Regional Assembly
1.34 In order to establish clear line of accountability, we have strengthened the structures of the Rodrigues Regional Assembly with a new grade of Officer-in-Charge to be accountable to the Executive Head of the different Commissions for the delivery of services in certain departments/units e.g. Tourism, Civil Status, Transport, Consumer Protection, Education (Primary) and Library Services.
Conditions of Service
1.35 Conditions of Service in the Public Sector have been revisited, rationalised and updated to induce desired employee behaviour and attitude for improved performance. Appropriate benefits have been maintained or reviewed and new ones introduced. We have, moreover, maintained more or less similar basic benefits for all staff with a few major changes as highlighted below. However, a hierarchy of benefits above a base has also been maintained and/or recommended according to job grades to ensure fair differentials in the total compensation package commensurate with responsibilities.
Major Changes in Conditions of Service
Pension Reforms
1.36 In line with Government’s policy as announced in the 2006-2007 Budget for the introduction of a single modified Defined Benefit (DB) Pension Scheme applicable to all employees in the Public Sector as from 1 July 2008, a new contributory pension scheme has been designed. Employees are being required to contribute 6% of their pensionable emoluments towards their pensions. Transitional measures to secure acquired rights have also been worked out taking into account the relevant provisions of the Constitution. We deal with the whole issue of pensions and retirement benefits more elaborately at Chapter 19.
1.37 The present retiring age i.e. 60 years would be increased by one month every two months starting August 2008 to reach 65 years in 2018. Employees in post are being given the choice to retire at 60 or earlier as per current provisions or to proceed beyond 60 years in accordance with the new provisions. Further, the new scheme is being totally de-linked from the Basic Retirement Pension (BRP) Scheme. Decisions as regards the latter scheme do not fall to be considered by the Bureau.
Discounted Salaries for Officers not opting for Pension Reforms
1.38 For officers, if any, who would wish not to opt for the pension reforms but instead would continue to be governed by the pension regulations in force prior to the coming into effect of this Report, the new salary structures recommended would be implemented at a discounted rate of 92%.
Duty-Free Car Scheme
1.39 The duty deferred facilities on cars, which form an important component of the total reward package for professionals, senior officers and field officers using their cars in the performance of the duties, have been reviewed. Eligible officers have been given additional options to induce them to defer the renewal of their car. With this measure, it is expected that the number of duty deferred cars would reduce over time, as officers opt to postpone their purchases as long as their cars are still in good running condition. This may contribute to diminish the rate of increase in the fleet of vehicles.
Official Car Scheme
1.40 Officers eligible for chauffeur driven/official cars are also being given an option to choose between an official car and a privately owned duty-free car together with a cash allowance. The renewal period, for those who opt for the official car, has been rationalised to five years. This measure is expected to reduce the cost to the exchequer and the administrative hassle in connection with the acquisition and maintenance of official cars. The erosion of benefit has been taken into account in determining the remuneration package of beneficiaries.
Part-Time Employment
1.41 In keeping with the trend worldwide, appropriate recommendations have been made to favour part-time employment which is currently almost inexistent in the Civil Service. Chief Executives have been empowered, subject to the approval of the relevant authorities, to resort to part-time employment where the work does not demand employment on a full-time basis. Provisions have also been made to facilitate public officers aged 50 or more holding substantive appointment to opt for part-time employment in order to balance their professional activities and family responsibilities. Such working arrangement is expected to have a positive impact on the development of a sound and healthy society.
Homeworking
1.42 We are introducing the concept of homeworking i.e. an arrangement involving people undertaking work primarily from their homes. This arrangement can have a positive impact on productivity as it involves a shift from a controlling to a facilitating management style and more worker self management. Chief Executives of Ministries/Departments/Organisations are being empowered, for assignments that are project-based with verifiable performance indicators, to allow certain categories of officers to work from home on certain assignments where demand exists and resources permit.
Safety, Health and Welfare
1.43 We are recommending appropriate measures for the safety and well-being of employees at work. We have recommended that all Ministries/Departments operate in conformity with Safety and Health Regulations and carry out a Risk Assessment exercise to identify adverse working environment and place the employees who are exposed to unfavourable conditions under Health Surveillance. Further, where risks are inherent in the job, we have recommended the provision of appropriate protective devices. Additionally, we are providing for flexibility in the grant of leaves to cater for a range of personal and family commitments and welfare.
General Conditions of Service
1.44 A comprehensive set of the general conditions of service is given in the appropriate sections of this Volume. The Conditions of Service in relation to Rodrigues and the Outer Islands are at Chapter 22. Other specific Conditions of Service are dealt with in other Chapters concerning the relevant organisations in the appropriate Volumes of this Report.
Implementation and Interpretation
1.45 As it is essential that appropriate mechanism be provided for successful implementation and correct interpretations, the Ministry of Civil Service and Administrative Reforms should continue to ensure that conditions of service are accurately implemented. The Ministry should also continue to report to the Bureau cases requiring amendments, alterations or clarifications.
Master Salary Scale and Conversion Table
1.46 A new Master Salary Scale has been designed absorbing the quanta of cost of living allowances paid since July 2004 and also taking into consideration the relevant criteria mentioned at paragraph 1.22.
1.47 Relevant segments of the Master Salary Scale have been identified and selected to form the respective pay scales. An appropriate conversion table has been worked out and is given at Chapter 23 dealing with the implementation of the recommendations in this Report.
Effective Date
1.48 The effective date for the implementation of the recommendations contained in the Report is normally the 1 July 2008 except where otherwise stated
(vide Chapter 23).
1.49 However, in view of the significant budgetary implications of this exercise, the salary recommendations are being phased over two financial years. Payment would, therefore, be staged as follows: From 1 July 2008 to 30 June 2009, the salary increases would be effected at the discounted rate of 75% and thereafter with effect from 1 July 2009, payment would be effected in full. Moreover, to ensure a minimum acceptable increase at the lower levels, all increases up to Rs 1250 a month, net of pension contribution, have not been discounted but are being paid in full this year itself i.e. 2008-2009. A minimum increase of Rs 1000, net of pension contribution, is being ensured at the lowest level. Details of conversion are provided at Annex I of this Report.
Implementation Costs and Measures to Step up Savings
1.50 The implementation costs at one go of the recommendations made in this Report inclusive of Cost of Living Allowance (COLA), annual increment and employee’s pension contributions integrated in salary would have cost
Rs 5.2 billion for the financial year 2008-2009. With the phasing of the Report, the implementation costs for the financial year 2008-2009 are estimated at
Rs 3.9 billion (75% of salary increase in first year) inclusive of Cost of Living Allowance (COLA), annual increment and employee’s pension contributions. It would, therefore, be desirable that appropriate saving schemes be evolved to mop up excess liquidity in the economy.
The Way Forward
1.51 We have set the appropriate pay and organisation structures and conditions of employment that befits the present environment and the directions to deal with the challenges facing the Civil Service.
1.52 We are confident that the new remuneration package and revised conditions of service will yield desired results in boosting employee morale and commitment for improved performance and, at the same time, help maintain good industrial relations. It is expected that the mix of recommendations would create the desired motivation for a performance culture to emerge and for the civil service to move to a higher performance mode. The new corporate culture and eventual change in mindset that should emerge together with the reform process to gradually eliminate bureaucratic impediments for clearer accountability should bring major improvement for services to be provided effectively with competency, commitment, courtesy, speed and integrity.
1.53 We would like to underline the fact that this Report is a holistic document and has to be treated as an organic whole since all the major recommendations contained therein are inextricably inter-twined. The Authorities, therefore, would be well advised to consider implementing all the major recommendations contained in the Report as a package.
Acknowledgement
1.54 We wish to convey our thanks and gratitude to all representatives of Ministries/
Departments, Parastatal Bodies, Local Authorities, Rodrigues Regional Assembly and the Private Secondary Schools as well as all the Federations of Staff Associations including other Staff Unions for their collaboration and valuable contributions.
1.55 We are equally appreciative of several professional bodies as well as the Management of Institutions, both public and private, although not falling under the purview of the Bureau, for having unhesitatingly volunteered to supply us with precious data/information essential in the formulation of our recommendations.
1.56 We are also placing on record our appreciation for the contributions of a number of officials and other professionals, who have, in one way or the other, assisted us in the preparation of this report. We are indebted to so many persons that a complete acknowledgement would be encyclopaedic. For fear of omission, we are not mentioning any person by name. We know we can count on their indulgence.