Civil Service in Bhutan

Although there is no generally accepted definition for the “civil service”, it is recognized as the expanding corps of trained human resources in the service of the state in a given area (Meer, Raadschelders, & Toonen, 2015). Civil service is the main component of modern government and its influences have become important but civil service in the governmental system has grown more difficult (West, 2003). The external relationships of the civil service have been changing with its internal characteristics modification in the political systems generally. However, the total work force comprising the civil service has been growing in most countries (Organisation for Economic Co-operation and Development , 1999).

Civil servants in Bhutan also grew significantly from few hundreds to 26,669 in 2015. The 2014-2015 annual report on the state of the civil service (2015) shows that there were 26,669 civil servants as of June 2015, with 53% of the total civil servants under professional and management category. P & M category is followed by supervisory and support category with 38%, operational category-8%, executives and specialists representing only 1% and around 3-5% others (RCSC, 2015). The growth of the civil service is driven by the increasing obligation to provide goods and services. The ratio of the size of total workforce to the population in the country and also the percentage of the public spending to Gross Domestic product is on rise (RCSC, 2015). Thus, it’s essential to examine the size of civil service in relation to the government spending on the civil servants, to strengthen the effectiveness and efficiency of our civil service.

 Civil Service is essential for the functioning of government and it has long been regarded as the ‘steel frame’ of administration and civil service forms a quintessential part for good governance (Satish, 2004). Moreover, National public services throughout the world is moving through a disorienting period of change (Demmeke & Moilaen, 2007).The number of civil service in Britain recorded the highest number in 1942-1946 with approximately 1.2 million which decreased to 0.4 million in 2014 (Institute for Government, 2014). The proportion of the population employed in general government jobs is about 4.2% in Asia, compared to Europe (7.7%), the Western Hemisphere (5.3%) and the Middle East and Central Asia (4.6%) (World Bank, 2010).  The proportion of the population working in the public sector in Asian countries is 4.4%, compared to 10.5% in European countries. According to World Bank (2010) Countries such as Australia, New Zealand, and the United States, the proportion of civil servants to the total population is larger with 5.0%, 5.5%, and 6.9%, respectively. In some African countries, the role of the central government in non-agricultural employment is 42-46% in Benin, Tanzania and Zambia.  

Average Government employment in the Asia pacific region is 2.7% of population and the size of the civil service (excluding teachers) in Asian and Pacific countries is still small (Malhotra, 1997). The industrialized Asian countries (Japan, Korea, Singapore, and Taiwan) and developing countries in south-east Asia has smaller civil service systems with Japan (1.9%), Vietnam (1.48%), and Taiwan (1.3%) (World Bank , 2014).  Civil service size among evolving socialist nations such as China (2.95%) and Cambodia (0.52%) varies highly as compared to other nations in the region. Public sector employment as a percentage of total employment across OECD countries rose slightly between 2009 and 2013, from 21.1% to 21.3 % and OECD countries from the Asian and Latin American regions rely less on public sector employees.  (OECD, 2015).

Malaysia, and Thailand have ratios of civil servants to population at 2.95%, and 2.11%, respectively. However, some nations maintains relatively small civil service number with Singapore (0.9%), Indonesia (0.97%), the Philippines (1.08%), and Korea (1.2%). In India, there are total 6.4 million (as of 2010) government employees and 5.4 million retired civil servants which costs $15billion per year (0.65 % GDP) ( Moon & Hwang, 2013).

UNDP Global Centre for Public Service Excellence (2015) , stated that the size and quality of the civil service is key elements of the public service and creating a dynamic and professional civil service is associated with management of civil service number. The size of civil service can have direct impact to macroeconomic stabilization through restoration of budgetary stability and improving development performance through proper implementation of budgets (Organisation for Economic Co-operation and Development , 1999).

The size of the civil service in many Asia-Pacific countries is relatively small compared to those in Western countries but there is a need to look at the relations between the government wage bill and the size of the government service. In japan, 69% of the wage bill is paid to the government officials and almost 70% in Denmark, 58% in Netherlands and UK with 51% of the wage bill being paid to government service (Heller & Tait, 2000). In other countries such as Argentina and Costa Rica, the percentage of government wage bill paid to local government are still at large with 50% and 43% respectively. Average central government wages as a share of GDP largely extends between 4-8%, with a higher share in the developing countries (7.9%) than in OECD countries (5.2%) (Demmeke & Moilaen, 2007). Thus it’s essential to compare the relation of government service wage bill and the GDP to examine the direction of the civil service system.

Bhutan is geared towards building human and institutional capacities as the third commitment of BRUSSELS plan of actions (BPoA) and BPoA advocates remains as an important development priority for Bhutan (UN-OHRLLS, 2006). The Bhutanese civil service grew at fascinating rate in the recent years with 4% annual growth rate. The relative size of the civil servant is growing with the increasing demand for goods and services (World Bank, 2010). This is revealed in the ratio (1:28) of the size of the total civil servants employed to the total population (GNHC, 2008).

  

i. Employment

Government employment as a percentage of the population

Employment to population ratio is the proportion of a country's population that is employed. However, the ratio of civil servants to total population is quite alarming at 1:28 for an estimated population of 745,939. Malhotra (1997) calculated that average Government employment in the Asia pacific region is 2.7% of population and the size of the civil service (excluding teachers) in Asian and Pacific countries is still small. South East Asian countries such as Indonesia and Philippines has only 1.92% of their population as civil servants and civil servants in Thailand accounts for 2.8% of its total population. Developing countries in south-east Asia has smaller civil service systems with Japan (1.9%), Vietnam (1.48%), and Taiwan (1.3%) (World Bank , 2014).

Moreover in Bhutan, 3.57 of every 100 population is employed in civil service. India has only 1.2 per 100 population for and China, at 2.8 per 100 as civil servants. While comparing the size of the civil service with these two neighboring countries and in regards to the Schiavo-Campo report as cited in Demmeke and Moilaen (2007), the staff number and staffing trend in Bhutan is still large (4 per 100 population).

According to Campo, Tommaso, & Mukherjee (Campo, Tommaso, & Mukherjee), based on a larger data set, confirmed that population is by far the largest single influence on government employment levels, swamping the influence of any other variable. Increasing Government employment and the total employment has direct influence on sustainability of the financing of the civil service.

Growth of the civil servants

Growth rate in the civil service strength as on June, 2015 compared to the strength on 30 September 2003 was 77.40 %. The annual average growth rate of the civil servants in Bhutan is 4.14% and growth rate for the year 2015 was 1.68% as compared to 5.31% in 2014, 3.8% in 2013, 3.09% in 2012, 4.97% in 2011 and 5.99% in 2010. On an average civil service strength is rising at 1017.778 annually and the total civil servant rose to 26,699 by 2015.

While Bhutan’s population is growing at a rate of 1.3% annually and GDP is growing at 2% annually. Thus the civil service growth at present rate and the total number of civil service may hamper the sustainability of financing the civil service in the near future. According to Rajaraman & Saha (2008) , when government recruitment grows faster than GDP, revenue or population growth, it is clear that either financial stability (growing deficits) or future performance (through reduced wages or reduced non-wage expenditure) will be jeopardized.

ii. Wage level

Average wage bill of the civil servants in Bhutan increased from 3.1% in 2002-2003 to 5.7% of the total GDP in fiscal year 2013-2014. Similarly the average government wage as a share of GDP per capita was more than 165.58%. The average government wages as share of GDP per capita up surged from 154.97% in 2003 to 173.42% in 2008. However there was a decline in this trend and decreased to 165.58% in 2014. The real GDP of the country in 2014 was US $ 1.96 bn and the civil service wage bill accounted for more than US $ 0.117 bn.

Although it may seem too high for a developing country with still small GDP, but comparing to other developing nations, we are on a better track. In 32 countries in sub-Saharan Africa, the average nominal wage bill was reduced modestly, from 7 percent of GDP to just under 6 percent of GDP. The heaviest fiscal weight of the central government wage bill is in the Middle East and North Africa (9.8% of GDP), followed by Africa at 6.7% of GDP. However, our average wage bill as compared to the GDP of the country is slightly higher than the average results of the Asia, the OECD countries and Latin America (between 4.5% and 5% of GDP). Since we fall under the Asian continent, we need to be concerned of the increasing wage bill of the civil servants.

iii.              Compensation of employees

The average compensation of the civil servants as a percentage of the total GDP in the country was 5.7% during the fiscal year 2014-2015. This was relatively higher than the average compensation of the total GDP of the asia and pacific countries (5.1) and low income countries (5.2) and suggests that huge amount of the GDP is still being absorbed by the compensation of the civil service in the country.

Table 2: Compensation of civil servants as percentage of GDP, Government spending and government revenue

Country	Compensation of civil servants as
	% of GDP	% of government spending	% of government revenue
Africa	6.5	30.4	29.5
Asia and pacific	5.1	26.2	23.1
Europe	5.7	17.4	17.5
Low income countries	5.2	28.6	27.9
Middle income countries	7.3	27.6	26.0
*Bhutan	5.7	17.3	25.7

Source: Government Finance Statistics database (IMF), and IMF staff estimates

*Annual civil service statistics 2014-2015

On the contrary, the annual compensation of the government employees as a % of the GDP of Bhutan was equal to that of European countries and lower than the middle income countries (7.3) and African nation (6.5). However, this according to fiscal affairs department (2009) is due to the underestimation of nominal GDP in some low-income countries (reflecting weak real sector statistics) leading to an overstatement of compensation-to-GDP ratios.

The total compensation as % of total government spending is relatively lower (17.3%) as compared to the other nations. In African nations the compensation is as high as 30% of the government spending and Asia and pacific at 26.2. By the fact that Bhutan falls in the Asian continent, we are doing better in the terms of annual compensation to government revenue. However the better results could also be due to the high spending of the government on the developmental activities and relatively higher investment on the agriculture and hydropower sectors.

  

7. Conclusion

The core functions of government are the same regardless of population size of country and call for a minimum staff size, which does not then have to be ramped up proportionately as the population size of the country increases. However while comparing the country data with the world, Bhutan still has a larger civil service. The effect of population on civil service size was significant suggesting that we can expect an increase in civil servants annually.  

Average wage bill of the civil servants in Bhutan increased from 3.1% in 2002-2003 to 5.7% of the total GDP in fiscal year 2013-2014. Similarly the average government wage as a share of GDP per capita was more than 165.58%. Comparing to other developing nations, we are on a better track. However, average wage bill as compared to the GDP is slightly higher than the average results of the Asia, the OECD countries and Latin America and as we fall under the Asian continent, we still need to concentrate on wage bill of the civil servants.

The average compensation of the civil servants as a percentage of the total GDP in the country was 5.7% during the fiscal year 2014-2015. This was relatively higher than the average compensation of the total GDP of the Asia and pacific countries (5.1) and low income countries (5.2) and suggests that huge amount of the GDP is still being absorbed by the compensation of the civil service in the country.

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