Concerned over pace of growth in public pay

AFTER enduring seven years of austerity, Greece’s hard times aren’t over as yet. Belt-tightening measures are still ongoing to qualify for the remaining €26.9bil in funds before the current bailout ends in August 2018. Creditors continue to demand more reforms as they aren’t satisfied with the results achieved by the Greek government so far.

Two decades ago, we too were hit by an economic crisis as harsh as the one encountered by Greece. Although we had the ability to overcome the crisis without help from the International Monetary Fund, our economy suffered a big blow and many lives were thrown into turmoil. The share market collapsed along with many companies, big and small, causing thousands to lose their jobs.

The economic situation then was extremely chaotic and gloomy. When I travelled by bus from Ipoh to Alor Setar, I saw many abandoned housing projects along the way. Upon reaching Alor Setar, I saw business activities in town much subdued and shopping malls promoting clearance sales to attract customers.

Greece used to tolerate a bloated public sector before its economy collapsed in 2010. The harsh reforms that followed resulted in thousands of civil servants being laid off and the remaining workforce getting a big cut in their salaries.

Our Government has tolerated a bloated workforce of 1.6 million for long enough. For decades, our public sector was supported by attractive revenue from our crude oil. Unfortunately, the good old days of high crude oil prices are gone. But the heavy recurring payroll costs continue to eat into our coffers, to the extent that our national debts continue to surge. How long can the country continue to carry this burden before a national debt crisis erupts?

The estimated emolument costs to be incurred on the existing workforce come to a staggering RM77.4bil for 2017 while revenues to be collected for the year only amount to RM219.7bil. The current ratio between emolument costs and revenues is 35.2%, as compared to 23.3% 10 years ago. The pace at which emolument costs is growing is worrisome.

Over a period of 10 years until 2017, emolument costs surged 138% while revenue collection could only increase by 57%. This disparity indicates that there is an urgent need to narrow the gap, failing which our national debts may be pushed to a dangerous level not too long from now.

The manning of each government department may have to come down gradually, according to the resignation and retirement pace. In fact, Malaysia has all the digital capabilities and know-how to forge ahead as an efficient country. We need the political will to do what is right, and that is to trim the bloated public sector.

PATRICK TEH

Ipoh