Lately, there have been numerous discussions in different venues about level of salaries in reformed courts, newly established anti-corruption bodies and state-owned companies in Ukraine. Two controversial points of view predominate the discussion: (i) high salaries in public sectors are necessary to prevent corruption, and (ii) public servants bring little benefit to society, so their income cannot be high.
The truth, I believe, is somewhere in between. I encourage you to read a recent article of my friend Roman Bondar in Novoe Vremya for the insights on fair salaries for officers of state companies – to have a broader understanding of integrity issue in public sector from another angle. In my post, I will focus on a remuneration of government officials and its impact on corruption prevention in Ukraine.
Although I strongly support decent incomes for all Ukrainian citizens and well-being of Ukrainian society, let us be sincere with ourselves. It might be challenging to ensure high salaries at one shot, if we opt for a sustainable development and not for another wave of inflation and/or devaluation. This is even truer when cheap labor force is declared to be of Ukraine’s key competitive advantages on a global market.
Moreover, since we are talking about government officials who should serve the society, their salaries should be linked to incomes of Ukrainian people. In other words, they should contribute to promotion of social equality in the country. The question is not about high or low salaries, but rather about fair salaries that will foster long-term development of Ukraine. Here are my suggestions in this respect.
First, in my opinion, a unified approach should apply to all salaries in public sector. Like in big international companies, all positions in the state might be graded from 1 to 100 (I mean salary grades, not categories of state servants established by the Law of Ukraine ”On State Service”), with the President or Prime-minister on the top and respective calibration of the rest officials, and remuneration is defined according to the grade.
It is important that package includes absolutely all monetary and non-monetary benefits (i.e., salary, bonuses, financial aid, health and life insurances, cars with drivers, early retirement, transportation or vacations allowances, and all other perks and ), so that to avoid situations when officials are awarding themselves with enormous bonuses without reasonable grounds. Salaries and other incomes of government officials should be transparent and available online. Unified State Register of Declarations, showing information on incomes and property of government officials and their family members, is a good platform to start with.
Second, remuneration in public sectors must be correlated with salaries in private sector, since both are competing for talent on the same labor market. Such competition will bring along a number of benefits for society, I would name just a few most obvious ones:
(i) improvement of state services and administration, since comparable salaries will boost competition for talents between public and private sectors that will end up in drastic improvement for the governance.
(ii) boosting dialog between government and business, as exchange of talent contributes to knowledge and experience sharing and helps in understanding of parties’ needs and concerns.
(iii) reduction of social inequality, since people working in private and public sectors will receive comparable remuneration packages.
(iv) stimulation of economy growth, because public servants will be motivated to help businesses making more profits that will contribute to their bonuses and further salary increases.
Third, digitalization and computerization must be widely used to simplify and fasten processes. Implication for the public sector will be decreasing the number of state servants that, along with other questions (Should we treat higher salaries in public sector as payment for higher risks? What about ethics and morality? What is a fair correlation between remuneration in a public and a private sector? Who is more valuable for society: doctor, teacher, clerk, librarian, or secretary?), should be decided though candid and permanent dialog within Ukrainian society.
I do understand that competitive salary is not enough to ensure integrity of a public servant. It should be supported by appropriate enforcement, so that potential violators understand that punishment for wrongdoing is inevitable, so it is not worth even trying.
At the same time, I do believe that increasing salaries in public sector is an integral component in the fight against corruption in Ukraine. Such increase, however, should be gradual, linked to salaries in private sector and to reduction of number of government officials, transparent and fair, so that society accepts it. Money may come from foreign donors, deregulation and automation. Still, many questions to be addressed on the long way ahead, but, as Lao Tzu once said “the journey of a thousand miles begins with one step”.