What about public sector wage bill cuts to finance coronavirus response?


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Governments all over the world are undertaking emergency financing measures to support their response to the COVID-19 pandemic. One question that has emerged in policy discussions is whether, and in what circumstances, reductions in the public sector wage bill, which accounts for roughly 8% of GDP and 30% of government expenditures globally, may be helpful to finance some of this emergency response. Is this a good idea, and when?

In many countries, public sector workers are a privileged group. They have employment protections, and on average are paid 20% more than their peers in the private sector. Therefore, it is tempting for policy-makers and the public to think that they need to make a sacrifice for the public good. While each country has its own circumstances that determine the appropriate policy response the following considerations may inform such decisions.

First, the public sector is a large employer, and protecting all jobs, public and private, is a priority right now.  Globally, the World Bank estimates that public sector employees represent around 15% of all workers and 30% of wage workers. Any cuts in employment or wages of such a large share of the global workforce may have a significant impact on livelihoods, depending on country contexts. The public sector wage premium is also skewed towards women and lower-skilled workers; hence across-the-board cuts in their wages will have a disproportionate impact on groups that need protection the most.

Second, public sector workers are providing a large proportion of essential crisis response services on the front lines.  For example, in 10 Latin American countries, according to preliminary World Bank data (expected to be published June 2020), roughly 30% of public sector workers are teachers and another 12% are medical staff. Almost half of the doctors in Latin America work in the public sector. If you factor in engineers, police, welfare officers, tax officials, utility workers, and agricultural extension workers, a strong case can be made for additional pay for these employees (instead of wage or allowance cuts) to ensure they continue to work overtime and deliver their desperately needed services. 

Third, as countries face critical shortages of essential personnel to respond to the crisis, some governments could redeploy current staff, cut red tape to enable home-based work, and reorganize tasks and responsibilities instead of imposing cutbacks and lay-offs.  Unfortunately, many governments lack the data and technology systems, the flexibility in HR rules, or the coordination to redeploy their human resources at short notice. This calls for a “do no harm” strategy in the short-term, with the objective of building institutional capacity to respond to such emergencies in the medium to long term. 

Finally, a reduced public-sector workforce during the crisis might impede the recovery process after the health crisis passes  (economically and across other social indicators). Many functions and services, notably education, will need to make up for lost time and will require greater support and management to do this effectively. In past fiscal crises that short-term measures like downsizing and wage cuts have created long-term distortions in public sector employment and wages. 

The COVID-19 crisis has highlighted the importance of effective public institutions to protect lives and livelihoods . It has also dramatically and tragically exposed vulnerabilities in state capacity, in high- and low-income countries alike. After COVID-19, the public sector is likely to need significant reforms in many countries to be better able to manage the next crisis.


Zahid Hasnain

Senior Public Sector Specialist

April 30, 2020

My halp funding i am ndia

April 30, 2020

It would indeed typically not be optimal to cut across the board (if needed). Spending on specific areas may need to be cut (following an inteligent review of spending objectives and priorities) and public wage bill within these areas may then be considered among other options.

IIHMR University
April 30, 2020

Corona virus disease 2019 is an infectious disease caused by severe acute respiratory syndrome corona virus 2 (SARS-CoV 2)

IIHMR University
April 30, 2020

Corona virus disease 2019 is an infectious disease caused by severe acute respiratory syndrome corona virus 2 (SARS-CoV 2)

Alestiar Mugumela
April 30, 2020

Its is a Good question,
But its not the right one,
As the world, globally especially African Countries
Are already poor and under developed, with very high Unemployment rates, I will give you example of Zimbábue, over 90 % are unemployed, So
If you ask should you cut wages of public workers
Form the case of Zimbábue its already Caos to be installed,
For the Case of My country Mozambique,
Majority of the employed citezns are in the public sector,
And in my opinion for Africa more than 500 or 1000 people loosing lives beacause of a disease it is already old news for us, !!

I have seen people sufering with Malaria,
Myself included, as ask the World Has peopel in Italy had Malaria, you see a Mosquito how small it is, But from experience I tell you Malaria is very very bad, fever, that will put you down, it can affect you brain, and live you braindamage for the rest of your life,
I tell the world about cólera In Italy , US , never experience such diseases and I tell you alot of people have died in Africa Because of this diseases, more than Have died in Italy, and we are all feeling bad and afraid because this countries are the First world countries,

But when is the third world countries suffering , we dont see in BBC, in Band News or in Tv globo,

Speaking on starvation, extreme hungrer and poverty,
I know and I have seen Many people ladies , children siting on the floor selling grossaries, to make a living
And some times they sit from morning to afternoon to make less thn 10 meticais of profit, and 1USD is to 67 meticais so

And thus War,
From My countries experience Mozambique,
Before our Independence More then 40 years,
After fighting against portuguese , as Mozamibique was portugal Colony, when FRELIMO wom Independence for Mozambique an internal war took place , and alot of Mozambicans died, it said it a 16 year war agains Renamo the oposition party which

So this ended at about 1991or 1992, and I was born on 1996,
And I can share that, at the center of Mozambique people are afraid to travel by road Because Renamo.has been intalled ther killing Mozambicans today 2020

If you Look to Angola, Congo, Nigéria countries which have oil reserves, and How is the living conditions ther Inequality, big gap between rich and poor, and also instability, Nigeria I have never been ther but I have seen on news Boko haram , Terrorists group kilig thousands of people,
Nowadays in the North of Mozambique we already have an Islamic Rougue group kiling people as well
its said 300 people have died just beacuse of this Group in Cabo delegado, and this not form today and you sum How many people have died in nigeria beacuse of Boko Haram, how many have died in Congo, how many People in Zimbábue are suffering beacuse of hunger, and taking africa as a whole how many people died of HIV, hunger, extreme poverty War, Malaria, Colera, the number will be huge, but The international Media is not interested in this, hey are advertising Covid19 as they want us to believe covid 19 is the worst,

My questions is as African governments will cut wages of poor workers, because the real government worker or public sector worker is poor,
And the same government fincances the covid19 response Who is benefiting from this? The country which will be providing with the response, I speak about the mask for face, the test, and so on,

Because what it seams now is that A need was created for Us, and the journalists world internetional midia is publiciting this everyday, While before Corona Nigeria had Boko haram

Sylvester Odhiambo Obong'o, PhD
April 30, 2020

The issue of public sector wage bill is a popular subject whenever governments face fiscal challenges. The challenges COVID-19 has put on put on governments can therefore be seen as one such challenge. It is however, interesting how whenever issues of austerity is considered - public sector wage bill is always among the first sectors to be be targeted. I have said targeted deliberately because, in some instances, I think such has been not well informed.

The public sector is first and a far most a service provider. It only employs because it is expected to deliver service. Inefficient and ineffective service delivery which may be experienced in some countries or sectors is therefore a secondary issue. The primary issue is that services need to be provided and therefore people are employed. However, when public service is viewed as an employer first before as a service provider- then wage bill takes center stage. In that case reducing of numbers or wage bill is often considered before considering the services to the detriment of poor citizens who often have no where to turn to. Because it follows that when people who provide the service are affected one way or the other the service will be affected.

It is a warped reasoning and irony of some sort that in the private sector- when services drop- the organization often invests more either in technology or human capital or incentives to ensure improvement, however in the public sector the solution that is often thought about first is diverting resources from that sector. The pubic sector should provide the glass ceiling for the private sector , its efficiency and effectiveness is not only important in ensuring economic development, but a strong public sector is important for ensuring protection of the venerable in the society. A effective, efficient and strong public service is important for ensuring protection of public interest. In terms of challenges, such as those posed by COVID-19-the move should be about fortifying and strengthening the public service and NOT about policies which would weaken it! NPM reforms stripped and exposed most of the public services in developing countries. They are not in a position to effectively regulate the private sector for growth- most are in a rebuilding phase and still in a transition- this may be a whole thesis!

Sylvester Odhiambo Obong'o PhD,
Director | Performance and Service Delivery Transformation,
Public Service Commission

April 30, 2020

It’s a very interesting conversation which presents the biggest challenges to countries that do not utilize data to make decisions. Decisions are normal based on political patrionage and disregards the realities and invariably lead to chaos which become the seeds of these states becoming “failed states. I often wonder what the World Bank needs to do to encourage especially African countries to make application of data central to decision making. Countries like Botswana are pursuing a destructive path of distributing handouts/incomes instead of promoting growth sharing mechanisms which would have alleviated poverty stricken communities who are undoubtedly the hardest hit during these difficult periods. Therefore I suggest the World Bank should following post corona period should engage these countries on the real meaning of development path that stimulate real tangible growth. It is tragedy for countries that have been independent for over 50 years still cannot produce the basics such as boxes of matches, paper etc ectc! Depending on South Africa is a serious liability and makes the so called shining example of democracy a mockery.

Peter S. Murray
April 30, 2020

A number of Caribbean governments' heads & decision-makers should read this article

Peter S. Murray
April 30, 2020

A number of Caribbean governments' heads & decision-makers should read this article

Glentis W Goodwin
April 30, 2020

Thanks for opportunity. I serve as HR member on one bank board subcommittee and HR Chair on a finance regulatory board in Antigua/Barbuda..

Glentis W Goodwin
April 30, 2020

Thanks for opportunity. I serve as HR member on one bank board subcommittee and HR Chair on a finance regulatory board in Antigua/Barbuda..

Walter.L. Maloney
May 19, 2020

Thanks for the article. Most importantly the responses from the readers especially the brothers/sisters from Africa. It is true that with any crisis the Public Service is the one that suffers. In small open economies as in the Caribbean where the dependency of one sector generates more than seventy 70% of your revenue a significant hit within that sector will cripple these economies. As have been seen and felt with this corona virus. Various approaches have been undertaken to help mitigate the impact of this virus on challenged societies.

However what is absent in many countries is a clear response from the Unions representing the Public/ Private sectors. The use of the Social Partnership to legitimize wage and job cuts all the while the discussion is not led by the unions but by the private sector engaging government as to the quantum of the cuts. Those unions who have already been compromised politically sit at meetings with eyes wide open shut unable to make cogent contributions and effective alternatives to the debate.
Lord help us all

Nadav Har-tuv
June 15, 2020

Thank you for the Informative article,
Is there an official statement of the world bank on this topic? I would be very interested to read it.
Thank you

Juan Menjivar
July 14, 2021

In my country Belize, a 10% wage cut has been made for all public workers. Do you think it's the right decision or no? Why?