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Friday, January 12, 2007

Salary Revision for Civil Servants Can be Good for Malaysia

It is a good time for the government to review the whole structure of the civil service especially since operating costs and also pension costs have been increasing as Malaysians now live longer.

Broadly speaking I would revise the entire structure based on the following guidelines:

• Pensions will be abolished for all new employees who will contribute to the EPF scheme.

• Remove all medical benefits for family after retirement but the government will provide a transferable medical insurance coverage for retirement years on a shared premium payment with the government paying 60% of the costs.

• A thorough review through work study and job analysis to remove all surplus government employees who have been made redundant with advances in ICT and simplified work practices.

• Remove the “job for life” concept by replacing 5% of the worst employees each year so that civil servants will know that performing well is necessary to remain in employment. This will also inject new blood annually.

Instead of the blanket salary demands by the unions of up to 40% for the lower grades, I would suggest we adjust salaries on the following basis:

• 20% is a basic adjustment for the lowest grades
• 10% is a special Cost of Living Allowance for expensive cities like KL and JB with other places getting 1% to 9% based on studies
• 5% is an extra given to the best 10% of all employees.

This other story seems to suggest that the civil service has become a mine-field for foreign investors and this could be a major cause for Malaysia’s loss of competitiveness.

On a political note the unions have timed their demands well. You will expect most of their demands will be met just before the next elections.

photo: Thanks to http://www.dw-world.de/image/0,,1669073_1,00.jpg

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