From ‘back of the envelope’ - to high-tech policy tool
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From ‘back of the envelope’ - to high-tech policy tool. The model in use. Zambia: the first model. 1997 - 1998. Zambia: classic bureaucratic issues. Expenditure on pay crowded-out other necessary budget items Low pay Ad hoc (and inequitable) allowances High cost of separating staff - PowerPoint PPT Presentation
Transcript of From ‘back of the envelope’ - to high-tech policy tool
Zambia: classic bureaucratic issues
• Expenditure on pay crowded-out other necessary budget items
• Low pay• Ad hoc (and inequitable) allowances• High cost of separating staff• External funds available to help fund a ‘solution’
– but what solution?
The strategy was clear
• Reduce employee numbers to release funds for other budget lines
• Improve pay after separations have been made
• Consolidate allowances into basic pay
• But – no robust financial analysis to determine precise solution
Zambia: the first model
• Custom-built in Excel
• User un-friendly (nobody in GoZ could use it)
• Not transparent to even an experienced Excel user
• But it worked
• Ministry of Finance worked through a solution, and presented it to a CG
Zambia: Pay strategy
0
50
100
150
200
250
300
Year
Salaries
Allowances
Separation costs
Total pay costs
Zambia: model output – financial summary
Cumulative surplus/deficit
-80
-60
-40
-20
0
20
40
60
80
1 2 3 4 5 6
Year
Kw
ach
a (B
)
Background
• Asian financial crisis had exposed institutional weaknesses
• Governments needed new policy tools to conduct rigorous analysis
• Objective: promote government efficiency with the focus on pay & employment
• Two major models developed for Philippines and Thailand; plus a ‘generic’ model
Design criteria
• Comprehensive – address all aspects of pay & employment policy
• Transparent design• Easy to use – whilst maintaining rigorous
analysis• Counterparts to work on model development • Transfer to clients
Design elements
Three parts to model:
• Data entry: grade/ministry matrix (very easy to enter/re-enter)
• Calculations (inaccessible to user)
• Scenario development (very easy to use) with step-by-step guide
Philippines model
• No longer looks much like an Excel worksheet
• Easy to prepare – if you have the data
• Easy to construct scenarios
• Model workings are inaccessible
The model in use
• Typically we put a laptop on the Minister of Finance’s desk
• The Minister then plays with the scenarios he wants to see
• Live and interactive
• Policy decisions can be made on the spot
Generic model – available on web
Developed a ‘Wizard’ to:
• Control data entry
• Assist scenario-building
Used advanced modelling techniques to:
• Reduce model size
• Speed up processing
Individual country models
• Still required for detailed planning
• Needed to design in precise separation/pension rules
• Possibly integrate with pensions
