Government urged to trim civil service to reduce budget deficit

KUALA LUMPUR: The government should trim the civil service if it wants to reduce the budget deficit, said Tan Sri Mohd Sheriff Mohd Kassim, immediate past president of the Malaysian Economic Association (MEA).
Speaking at the Economic Governance: Public Sector Governance Forum, Sheriff said “expenditures on salaries and pensions are increasing all the time, whereas revenue is subject to the ups and downs of the economy and sometimes revenue growth may be stagnant”.
“In modern times, I think there is less need for this corresponding increase in the staff for the administration and support functions,” he added.
Civil servants make up almost 11% or 1.6 million of the country’s total labour force of 14.79 million as at December 2016, with RM76 billion expected to be spent on salaries and allowances. The cost, however, does not include pension payments for retirees which will cost the government a further RM21 billion.
Citing the ratio of civil servants to the population, of which Malaysia stands as one of the highest, Sheriff said the salaries and pensions of civil servants take up a huge component of government expenditure.
Downsizing could be effective with rationalisation, deployment and retrenchment with attractive incentives such as voluntary retirement schemes, to reduce the number of redundant staffs and increase productivity with the use of technology.
“It is good to retrench when the government can still afford it than to do it when there is a financial crisis, like in Greece,” he said, citing MalaysiaAirlines Bhd’s restructuring programme which saw some 6,000 job cuts and former staff being well compensated by the national carrier.
“It is kinder to retrench with incentives than to cut their salaries, “ added Sheriff.
Echoing similar sentiments, Tan Sri Dr Sulaiman Mahbob said the administrative sector is one of the major sectors that requires downsizing, and can better managed with greater efficiency, technology and electronic government.
Sulaiman said while some sectors require downsizing, there are sectors that need more staff.
According to Sulaiman, who also suggested a redeployment exercise which involves shuffling civil servants to a different sector in the public service, the burden of creating jobs has fallen on the government’s shoulders,which in turn should be distributed to the private sector through privatisation, government-and-private partnership and self-employment.
“The government’s role is to create an environment of economic growth and job creation but it does not have to create 100% of the jobs,” he said.