ANALYSIS OF A SALARY SURVEY OF CIVIL SERVICE, PRIVATE ...

ANALYSIS OF A SALARY SURVEY OF CIVIL SERVICE, PRIVATE SECTOR AND DONOR-FUNDED POSTS1 I.1 Employees survey The employees‘ database comprises the results collected from a survey of 968 observations out of which only one is invalid (it provides answers for only a few of the questions asked). The gender distribution of the interviewed is 495 male and 473 female. Only seven of the interviewees were in the job for less than three months. Out of the total number of interviewees, 958 are full time employed and 10 are part-time employed. The distribution of the interviewees according to the sector and position is summarized in tables 1.1dhe 1.2 Table 1.1 The distribution of the interviewees according to the sector in which they are employed

Sector Frequency Percentage Pubic administration 577 59.6

Public Enterprise 97 10.0 Private Albanian-owned 83 8.6 Private, Foreign- owned 66 6.8

Albanian NGO working directly on donor-funded projects 22 2.3

Donor project Implementation Unit (PIU/PMU) 8 .8 International Development Organizations 30 3.1

Banking sector, Albanian 21 2.2 Banking sector, foreign-owned 64 6.6

Total 968 100.0

1 The Report is prepared by the Institute of Contemporary Studies (ICS) & Institute for Public and Legal Studies (IPLS), using the data-base provided by DoPA which consists on the results of three surveyes organized by the Albanian Center for Economic Research (ACER) and the Institute for Fiscal Education (IFE) in the year 2001. The three surveyes were respectively addressed to the employees in the Public Administration, public sector enterprices, Albanian private firms, foreign private firms, Albanian NGO working with foreign donors, PMU and PIU, Albanian banks and forign banks; the employers of these sectors and the selfemployed: chartered accountants, auditors and loyers.

Table 1.2 The distribution of the employees according to the position they hold with their employment

Position Frequency PercentageDepartment Head 31 3.2

Director of General Directorate

10 1.0

Director of Directorate 46 4.8 Chief of Sector 147 15.2 Chief of Office 103 10.6

Specialist 528 54.5 Other 103 10.6 Total 968 100.0

Table 1.1 demonstrates that the highest percentage of the interviewees belongs to the public administration (59.6%), whereas, the lowest percentage belongs to the PMU/PIU (only 8 of the interviewees, or 0.8%). With reference to the held position, table 1.2 shows that the majority of the interviewees (54.5%) are specialists. There is no interviewee in the database, which holds the position of “secretary general”; the other category with a low frequency percentage is “general director”, only 10 of the interviewees (about 1%).

Table 1.6 summarizes the reported interest for other organizations as alternative employment. Table 1.6 Preferred organizations as employment alternatives Preferred Organizations Profession

Public Administ

Public Enterprise

Albanian owned private sector

Foreign owned private sector

NGO PIUPMU

Development International Organization

Albanian Owned Banking Sector

Foreign Owned Banking Sector

Family Business

Retirement

Lawyer 3 1 2 2 2 - 1 - 1 2 1Accountant 3 1 4 5 - - - - - 2 2Auditor 1 2 5 4 - - - 1 2 2 -Total figure 7 4 11 11 2 - 1 1 3 6 3Total percentage

14.3 8.2 22.4 22.4 4.1 - 2 2 6.1 12.2 6.1

SECOND PART: Analysis of salary dimensions II.1 SALARY CONSOLIDATION Table 2.1: Inclusion of elements in the base salary

According to the employees According to the employers Number of elements included

Percentage Cumulativepercentage

Percentage Cumulativepercentage

0 48.9 48.9 57.9 57.91 19.2 68.1 7.9 65.82 27.3 95.4 17.1 82.93 4.1 99.5 11.8 94.74 .4 99.9 2.6 97.45 .1 100.0 2.6 100.0

Total 100.0 100.0

Table 2.3 Consolidation level of the employees compensation by sector

Sector Pubic administration

Public Enterprise

Private Albanian-owned

Private, Foreign- owned

Albanian NGO working directly on donor-funded projects

Donor project Implementation Unit (PIU/PMU)

International Development Organizations

Banking sector, Albanian

Banking sector, foreign-owned

Regular salary 19159 25142 33409 26068 29650 54068 110163 37990 71676

Total income 27167 37059 55124 37016 33919 67963 143872 70053 91673

% of the regular salary against the total income

70.5

67,8

60.6

70,4

87.4

79.5

76.5

54.2

78.1

The table shows that a higher consolidation level2 for the remuneration of employees is found in NGO-s (87,4%), PIU/PMU (79.5%), the foreign-owned banking sector and the international organizations. The lowest indicator for the consolidation level is found in the Albanian-owned banking sector (54.2%). The public administration ranks somewhere in the middle (70.5%). 2 Calculated as a ratio of the regular salary against the total income.

Table 2.4 The weight of some elements of salary and other monetary rewards against the salary

Position Dept Head

Director of

General Director

ate

Director of

Directorate

Chief of sector

Chief Of

Office

Specialist

Other

Weight of some salary elements3

14.5%

18.7%

14.3%

19.9%

14% 18.8%

10.6%

Weight of other monetary rewards4

17.2%

17.5%

11.6%

9.9% 8.7% 10% 16.6%

The table shows that the biggest weight of such elements as difficulty, qualifications, specific capabilities, seniority and work clothing is for the positions of department head, specialist and director of the general directorate, whereas the smallest weight is found for the position of office heads. The other monetary rewards range from 8.7% (office head) to 17.5% (director of general directorate) II.2 Salary comparison according to the sectors Table 2.5 shows the ratio of the average salary in the public administration against the average salary of each sector, based on the employees’ survey. 3 Elements such as difficulty level, qualifications, specific capabilities, responsibility, seniority, work clothing are counted. 4 Under rewards classify the New Year’s bonus, performance reward, over time, board membership, per-diems, and honoraria

Table B1 Sector Public

Administration Public Enterprises

Albanian Owned Private Firms

Foreign Owned Private Firms

NGO-s PIU PMU

International Organizations

Albanian Owned Banking Sector

Foreign Owned Banking Sector

WA/WS (the ratio of the average salary in the public administration against the average salary in the respective sector)

1.0 0.8 0.6 0.7 0.6 0.4 0.2 0.5 0.3

As noticed in the table B1, the average salary in the public administration is lower than the average salary in any other sector. The average salary in the public administration constitutes only 60% of the average salary in the private sector, compared to 70%, which is the average percentage of this indicator in the countries of Europe and Central Asia5. (Based on the results from the Living Standards Measurement Survey, October 19986, the average salary both in the public administration and the enterprises of the public sector was 80,7% of the average salary in the private sector). The average salary in the public administration goes up to only 20% of the average salary in the international organizations and accounts for only 30% of the average salary in the foreign-owned banking sector. Table A2.5 ANNEX A summarizes the average salaries of the employees (according to the employers survey), in lekë, by sectors and positions. The table shows that the structure of positions was not complete for all markets. Thus for the positions of department head, director of the general directorate and director of directorate, there were no interviewees in such markets as the Albanian-owned private firms, foreign-owned private firms, NGO-s, international organizations, PIU\PMU and the banking sector. This might lead to an overturn of the logical schemes of the salary pyramid within the

5 An International statistical Survey of Government Employment and Wages, By Salvatore Schavio- Campo, Giulio de Tomaso and Amitabha Mukherjee, World Bank Bublication, 1997. 6 INSTAT, The results of the Welfare Level Survey, October 1998, p. 28

same market, as it happened with international organizations or the foreign-owned banking sector (the director of directorate position). Figures in brackets in the table represent corrected values after exclusion of the extreme value. Chart 2.2 ANNEX A displays the salary structures according to the positions including and not including international organizations (in the latter case, one observation in the foreign-owned banking sector in the position of the director of directorate has also been excluded). The chart shows that, in the case when the interviewees from international organizations as well as one observation from the foreign-owned banking sector are excluded, the salary pyramid demonstrates the importance of employment positions. Table 2.6 summarizes the ratio of salaries in each sector for each position against the respective salary in the public administration.

Table 2.6 Salaries according to sectors and positions against the respective salary in public administration

Position Sectors Dept Head

Director of General

Directorate

Director of Directorate

Chief of

sector

Chief Of

Office

Specialist Other

Public administration

1 1 1 1 1 1 1

Public Enterprise 1.45 1.24 0.95 1.35 1.12 1.34 1.05Private Albanian-

owned 1.61 0.72 0.00 2.55 1.39 1.74 1.36


1.33 0.00 1.13 1.79 2.12 1.45 1.29

Albanian NGO working directly on

donor-funded projects

1.88 1.65 0.00 1.24 0.00 1.20 1.52


2.47 0.00 1.61 1.13 0.00 3.10 3.07


0.00 0.00 1.16 4.84 4.85 8.02 5.76


0.00 0.00 0.00 3.34 2.26 2.08 4.11


2.49 0.00 1.68 3.79 3.91 2.72 4.32

The table shows that except for the position of the director of general directorate, in the Albanian-owned private firms (ratio 0.72) and the position of the director of directorate in public enterprises (ratio 0.95), the salaries of the public administration are the lowest against all the other combinations labor market - position. The lowest ratios in general are extracted during the comparison with the salaries of the public enterprises, whereas, the highest ratios are achieved during the comparison with the salaries of the international organizations as well as the foreign-owned private sector. From the position point of view, the greatest changes occur for the specialists’ position.

II.3 Salary comparison within the same labor market Table 2.7 displays the ratios of the salaries for each position in each labor market (sector) against the lowest salary in that market. Table 2.7 The ratios of salaries according to sectors against the lowest salary in the sector

Position Labor market Dept Head

Director of General

Directorate


Chief of sector

Chief Of

Office

Specialist Other


1.92 2.87 2.30 1.15 1.23 1.07 1.00

Public Enterprise 2.84 3.62 2.23 1.58 1.40 1.36 1.00Private Albanian-

owned 2.42 1.63 ---- 2.31 1.35 1.37 1.00


2.11 ---- 2.16 1.70 2.16 1.20 1.00



3.02 3.96 ---- 1.20 ---- 1.00 1.19


3.64 ---- 2.84 1.00 ---- 2.38 2.21


---- ---- 1.00 2.09 2.23 3.01 2.03


---- ---- ---- 1.85 1.33 1.00 1.85


1.76 ---- 1.42 1.60 1.76 1.00 1.49

The greatest fluctuations are noticed in the NGO-s (maximal ratio 3.96), PIU (3.64) and international organizations (3.01). The lowest fluctuations are encountered in the foreign-owned banking sector (excluding an extreme value, the maximal ratio is 1.76), foreign-owned private sector (2.16) and public administration (2.3). Table 2.8 The ratios of salaries according to sectors against the specialist salary in the sector

Position Sector Dept Head

Director of General

Directorate


Chief of sector

Chief Of

Office

Specialist Other


1,92 2,87 2,30 1,15 1,23 1,00 0,94

Public Enterprise 2,08 2,66 1,64 1,16 1,02 1,00 0,73Private Albanian-

owned 1,77 1,19 ---- 1,68 0,98 1,00 0,73


1,75 ---- 1,79 1,41 1,79 1,00 0,83



3,02 3,96 ---- 1,01 ---- 1,00 1,19


1,53 ---- 1,19 0,42 ---- 1,00 0,93


---- ---- 0,33 0,69 0,74 1,00 0,67


---- ---- ---- 1,85 1,33 1,00 1,85


1,76 ---- ---- 1,60 1,76 1,00 1,48

On average 2,16 2,02 1,59 1,22 1,11 1,00 1,01

From the table we see that the wage discrepancy for the public administration compared with the wage corresponding to the position “specialist” (2,87:1,00), is higher than the average wage discrepancy (2,16:1,00) considering all the sectors altogether. It is similar to the wage discrepancy in the public enterprises (2,66:1,00), but it is much higher compared to the wage discrepancy in the Albanian private sector (1,77:1,00) and the foreign private sector (1,79:1,00). It is also higher compared to the Albanian banking sector (1,85:1,00) and foreign banking sector (1,76:1,00). Nevertheless we should keep in mind that the above results might have been influenced by factors related to the way the survey was conducted. Specifically, for some sectors there is no interviewee for a number of positions or the number of the interviewees was too small. In other cases the conversion of several positions according to the classification in the public administration might have been difficult. For the private sector a kind of restraint for declaring the true wage might also have influenced the results. For the banking sector the big weight of monetary and non-monetary rewards other than wage in the total employees compensation should also be considered. II.4 The rewards transparency Table 2.9 Assessments of the existence of regulations for salaries According to the assessment of

employees According to the assessment of employers

Labor market No regulations

Exist Don’tknow

No regulations Exist Don’t know

1.00 1.0% 93.1% 5.9% 2.6% 97.4% 2.00 7.2% 83.5% 9.3% 85.7% 14.3%3.00 12.0% 57.8% 30.1% 41.7% 58.3% 4.00 13.6% 60.6% 25.8% 33.3% 66.7%5.00 36.4% 50.0% 13.6% 50.0% 50.0%6.00 100.0% 16.7% 83.3%7.00 6.9% 58.6% 34.5% 33.3% 66.7%8.00 71.4% 28.6% 100.0% 9.00 14.1% 70.3% 15.6% 100.0%Total 5.3% 82.9% 11.8% 13.2% 85.5% 1.3%

1. The above table shows that the public administration is the most regular in the determining salary policies. NGO-s, Albanian-owned private firms and foreign-owned private firms appear to have less written regulation as regards salary policies.

2. Again, as shown in the table D2, the most transparent market with reference to the distribution of other monetary rewards is the public administration

3. According to the survey on the working and wage conditions for the public officials7, 94% of the interviewees give a positive answer for the existence of formal/written rules about salaries. Meanwhile 75% of the later answer that the rules are full respected, whereas 17% answer that the rules are only partially observed.

Table 2.13: Ratio of each position reservation wage to the specialist reservation wage

Sector

Public Administration International Develop. Organizations

Position Reservation

wage Ratio

position/specialist Reservation wage Ratio

position/specialist Sect. General 37959 2.164756 100000 1.42857143Dir. of Department 32213 1.622249 125000 1.78571429Dir. of gener. Direct. 35876 2.248574 80000 1.14285714Director of director. 32049 1.617085 90000 1.28571429Sect. Chief 18639 1.06296 70000 0.84564553Specialist 17535 1 70000 1Lawyer 19857 1.132421 70000 1Accountant 15955 0.803495 70000 1IT expert 19819 1.242181 70000 1Average 25544 1.288864 82777 1.18252857

7 Public Official Survey 2000, World Bank and Government of Albania.

The ratios shown in table 2.13 for the public administration (1:2.24) are somehow comparable with the current salary ratios and the ratios proposed in the workshop of July 2001 (ANNEX C). It reinforce the idea expresed in the note no 68, that the current salary discrepansy scale in the public administration might be accetable for the new salary structure. PART THREE: Conclusions and suggestions III.1 Conclusions and suggestions related to the civil servants wages III.1A: Main findings of the analyses The survey shows that the average salary in public administration is much lower compared to the other sectors

average wage. The ratio between average salary in public administration and other sectors average wages goes from 80% in case of public enterprises down to 30% in case of foreign owned banking sector and 20% in case international development organizations. It is 60% in case of Albanian owned private sector, compared to 70%, which is the indicator for the countries of Europe and Central Asia.

The ratios of current salaries of each position against the specialist’s salary in the public administration are

comparable with those being computed based on reservation wages and also those proposed in the workshop of July 20018. For the public administration the ratio between the highest wage and the wage of specialists, based on the employees survey, is 2.87:1, which is higher then the average ratio (2,16:1, considering all the sectors altogether), and much higher compared to the wage discrepancy in the Albanian owned private sector (1,77:1,00) and the foreign owned private sector (1,79:1,00). It is also higher compared to the Albanian owned banking sector (1,85:1,00) and foreign owned banking sector (1,76:1,00). Nevertheless one should keep in mind that the above results might have been influenced by factors related to the way the survey was conducted. Specifically, for some sectors there were no answers to the respective questions for a number of positions or the number of answers was too small. In other cases the conversion of several positions according to the classification in the public administration might have been difficult.

8 The ratio between the highest reservation wage with the specialist’s wage in the public administration sector, according to the employers survey, is 2.24:1 and the same indicator according to the July workshop is 2.78:1.

For the private sector a kind of restraint for declaring the true wage might also have influenced the results. For the banking sector the big weight of monetary and non-monetary rewards other than wage in the total employees compensation should also be considered.

The “competitiveness ratios” (public administration reservation wage as percentage of other sectors’ reservation

wages, computed for each position) are relatively higher for public enterprises, Albanian owned private enterprises and foreign owned private enterprises (on average respectively 86%, 76% and 69%) but much lower for such labor markets as foreign owned banking sector and International development organization (respectively 20% and 31%). Regarding positions, the competitiveness of public administration sector seems to be lower for such high positions as Director of Department (39% on average, considering all other sectors) and Secretary General (40%). For specialists the indicator is 42%.

It’s rather difficult to judge for the contribution of such elements in the regular salary such as difficult working

conditions, special qualifications, high level of responsibility, seniority, clothing allowance, etc., because of lack of responses for several sectors and positions, especially in the case of employers’ survey. In any case, the percentage of the interviewees who give a positive answer is quite small, reaching the highest level in case of seniority for the public administration sector (79.7%), referring to the employee’s survey. For those who respond positively, the average weight of seniority in the net regular salary is 12.8%, ranking the second after public enterprises. The lowest level belongs to the foreign owned private firms (4.9%). Responsibility counts for 15.1% of the regular salary in the public administration, reaching to 63.5% of the regular salary in the international organizations. Only 5.2% of the interviewees from the public administration respond positively for the influence of qualification, counting for 8.6% of their net salary. Only around 28% of the interviewees from the public administration respond positively for the influence of difficult working conditions, counting for 15% of their net salary. The indicator tend to be lower for other sectors.

The survey shows that the higher consolidation level for the remuneration of employees is found in NGO-s (87.4%),

PIU/PMU (79.5%), foreign owned banking sector (78.1%), and international organizations (76.5%). The lowest indicator is found for the Albanian owned banking sector (54.2%). The public administration ranks somewhere in the middle (70.5%). The relative weight of non-monetary compensations is much higher than the relative weight of supplementary monetary compensations (e.g.: for public administration respectively 14,2% and 27.6%; for international organizations 8.7% and 21%; for the Albanian owned banking sector 29.4% and 55%).

The indicator for the average working hours in the main job, according to the employees survey, is 38.6 for the public administration, being among the smallest ones (37.1 for the public enterprises and 38.3 for the NGO-s). The highest indicator belong to the Albanian owned private firms and foreign owned private firms, respectively 47.1 and 46. For all the other sectors the indicator is higher then 40.

Out of the total number of the interviewees (employees’ survey), 12.5% declare to have had an additional paid job over

the past twelve months. The highest percentages are found for the PIU/PMU and NGO-s and the lowest ones for foreign owned private firms (6.1%), followed by the foreign owned banking system (9.4%) and the Albanian owned banking sector (9.5%). For the public administration the indicator is higher than the average, reaching to 13,3%.

Regarding the reward transparency, the public administration takes a quite good position, being well above the

average. As far as the base salary is concerned, the percentage of those answered positively for the existence of formal/written rules from the public administration is 93,1% whereas for the total of the interviewees is 82.9%. For the implementation of rules, the figures are respectively 97.4% and 85.5% of those who answered positively. The degree of transparency decreases when it goes for the existence and implementation of formal/written rules related to other monetary payments and it goes furthermore downwards in case of non-monetary benefits. Nevertheless in both cases the figures for the public administration are well above those related to the total interviewees. Anyway, the percentage of the interviewees who declare that the awarding of each type of monetary payments and non-monetary benefits is fully or almost fully based on judgment is relatively high even for the public administration. Based on the employee’s survey, the figure reaches to 15.1% for the monetary payments and 19% for non-monetary benefits. (For the total number of the interviewees the figures are respectively 28.6% and 29.9%).

According to the survey of employees, such factors like position, education and seniority are more important for the

public administration then for other sectors on average in receiving monetary payment. Other factors like skills and performance on the job are less important for the public administration. Regarding the non-monetary benefits the percentage of the interviewees from the public administration who declare as important or very important each of the above mentioned factors is lower then the figure for the total number of interviewees.

Table A2.5 Average wages according to sectors and positions

Position Sector Dept Head

Director of

General Directora

te

Director of Directorat

e

Chief of sector

Chief Of

Office

Specialist Other


32368 48500 38891 19432 20710 16883 15823 19159

Public Enterprise 47000 60000 37000 26198 23137 22579 16573 25142 Private Albanian-

owned 52000 35000 49465 28880 29416 21449 33409


43000 44000 34741 44000 24558 20392 26068



61000 80000 24150 20181 24000 29650


80000 62500 22000 52300 48546 54068


45000 94000 100500 135433 91200 110163


65000 46800 35152 65000 37990


80750 299000(65300)

73630 81000 45910 68333 71676

AVERAGE OFPOSITION

53244 49919 61000(32267)

30076 27281 24652 24836 28679

Chart A2.2 Salary structure according to the positions with and without international organizations

0

10000

20000

30000

40000

50000

60000

70000

2 3 4 5 6 7 8

Exclud. Int. Org.

Include. Int. Org.

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