Wealth disparity and public service incomes

The Jakarta Post , Jakarta | Wed, 08/15/2007 1:17 PM | Opinion

The Jakarta Post on Aug. 9 brought us news from the Asian Development Bank (ADB) that the differential between rich and poor is growing throughout Asia. On Aug. 6 the Post published an opinion article on how decentralization ups the incomes of civil servants.

Combine the two, and we may come to some interesting conclusions, with information from four very disparate places: Sumba Timur, perhaps the most arid region; Maluku province, a fertile but poor part of Indonesia recovering from years of strife; tiny Kota Sabang near Banda Aceh; and Jakarta.

The gross regional product (GRP) of Sumba Timur, according to their Web site, is lowest in my sample at Rp 2.7 million (US$ 290.32) per capita. Maluku data from the BPS indicates a GRP of Rp 3.5 million per capita. Sabang thrives by comparison; the World Bank reports it had a GRP over Rp 9 million per capita back in 2003. Jakarta as money capital has a GRP of Rp 48 million per capita, almost 18 times that of Sumba Timur.

I have compared the size of the economy with public service incomes, with data on civil servant expenses from the Finance Ministry Web site. For Sabang and Sumba Timur, we compare the economy with district government expenditure on personnel.

For Maluku, we can add district and provincial government expenditures. And for Jakarta, I have taken provincial expenditure (there is no separate district government in Jakarta) and added 90 percent of the national expenditure, which is just a guess based on the assumption that most national government personnel live and work in the capital.

The surprising result of this comparison is that, in all four locations, government expenditure on personnel represents over 20 percent of the local economy. Even though Sumba Timur and Sabang provide similar services, Sabang spends 40 percent more on salaries than the whole economy of Sumba Timur. The figure is even higher in Jakarta.

In each case, including poor Sumba Timur, public servants earn considerably more than the average citizen. The clear conclusion us that the so-called underpaid civil servants actually contribute to Indonesia's increasing Gene coefficient. But then again, my contribution as one person is pretty impressive too. We should not hastily conclude that public servants are paid too much (except those who get paid for doing nothing).

The concern is for the poor, who not only cannot compete with public service incomes, but who also must compete for goods and services in a higher cost economy created by the spending power of all those public servants.

OWEN PODGER
Surabaya

Comments (0) | Post comment

A | A | A |