GEO

Detailed regulations needed for public sector bonuses

30 June, 2014

Bonuses received by civil servants have been widely discussed and criticized by the civil society organizations on numerous occasions in recent years. Last developments once again attest to the urgency of improving the legislation and regulating the bonus system.

According to the information from last week, the officials of the Tbilisi Sakrebulo (city council), who should be soon replaced by the victorious candidates of the June 15 elections, prior to leaving the Sakrebulo will receive bonuses in the amount of 350 percent of their salaries, while in case of employees of the Sakrebulo's administration, the amount of a bonus will equal to 150 percent of a salary. The Tbilisi Sakrebulo has responded to this information, clarifying that the amount of a bonus for the Sakrebulo members is 300 percent of a salary, and for the administration employees - 200 percent.

Pursuant to the January 2013 decision of the Tbilisi Sakrebulo, the monthly salaries of the Sakrebulo officials are as follows:

Position

Salary

Chairman of the Sakrebulo

3540 GEL

First Deputy Chairman of the Sakrebulo

2950 GEL

Deputy Chairman of the Sakrebulo

2850 GEL

Chairman of the Permanent Sakrebulo Commission

2 600 GEL

Chairman of the Sakrebulo Faction

2 600 GEL

Should one follow the statement released by the Sakrebulo itself, it means that this time the Sakrebulo officials will receive a single bonus of 7 800 - 10 350 GEL. The bonus of each official will be as follows:

Position

Bonus

Chairman of the Sakrebulo

7800 GEL

First Deputy Chairman of the Sakrebulo

8850 GEL

Deputy Chairman of the Sakrebulo

8550 GEL

Chairman of the Permanent Sakrebulo Commission

7800 GEL

Chairman of the Sakrebulo Faction

7800 GEL

According to the article released by the NGO "Institute for the Development of Freedom of Information" last December, during the first 10 months of 2013 over 1,7 million GEL were issued as bonuses to the Tbilisi Sakrebulo members and the administration staff. Over this period, the Chairman of the Sakrebulo and his deputies have received bonuses of 18 000 - 19 000 GEL, i.e. 1 800 - 1 900 GEL on monthly average.

It is also worth mentioning here that, according to the media reports published in May, officials from the Corrections Department received one-time bonuses of 18,000-39,000 lari in December 2013. To the best of our knowledge, the government failed to respond appropriately to this information.

Problems in Law and Practice

Encouraging civil servants with bonuses in exceptional cases is a normal practice, but current legislation of Georgia fails to ensure that bonuses are given in exceptional cases indeed. Instead, bonuses in the public institutions of Georgia are in fact used to increase monthly salaries of civil servants. Further, current system renders the link between the volume/quality of performed work and the received bonus totally unclear.

Gaps in the budgetary planning system are another cause of the problem. Pursuant to the Decree of the President of Georgia (№36, 31 January 2004), budgetary institutions can issue bonuses as part of the assignments approved for labor remuneration. A labor remuneration fund of an agency is the only restriction. Under current legislation, if a labor remuneration is planned so that issuing bonuses or other supplements on top of the salaries is possible, then issuing a bonus as part of assignments for labor remuneration will be legitimate in respect of any amount. For instance, if a spending institution has claimed in its budgetary request 10 million GEL for labor remuneration, whereas, let's say it required only 7 million GEL for all types of tenured or untenured labor remuneration, it can issue the remaining 3 million GEL as bonuses in any amounts. When numerous gaps of a budgetary planning system (online budgetary application) allow a budgetary institution to plan labor remuneration without taking into account the number of staff, such an institution will not have to make any savings to issue bonuses or supplements, as long as it plans labor remuneration in excess.

Such a vague system and absence of clear regulations creates fecund grounds for abusing the official position and corruption in respect of bonuses. In addition, information on unusually large bonuses of officials diminishes public trust towards the authorities as citizens have all grounds to disbelieve these bonuses are issued for merit.

On 26 June, the Georgian Government passed a decree establishing rules for the allocation of bonuses in the executive branch’s agencies. The Government's readiness to take steps to solve existing problem is welcome. However, the rules for the allocation of bonuses should apply not only to the central government but to all public institutions, including local government bodies. The lack of a unified approach to the matter will result in the emergence of heterogenous practice of financial management and will render the current system of bonus allocation even more dysfunctional.

Transparency International Georgia has published multiple pieces of research about the bonuses of public officials indicating that, much like the central government, local government officials and civil servants receive bonuses without any explanation despite the fact that the majority of municipalities are not self-sufficient in terms of their budgets. For example, the local government bodies of the Samegrelo-Zemo Svaneti region paid some 2.5 million lari in bonuses in 2012 and over 3.1 million lari in 2013. There has been further increase in the first five months of 2014 as the nine self-governing entities of Samegrelo-Zemo Svaneti paid over 2.1 million lari between January and May.

Hence, the Government and Parliament of Georgia should undertake the reform of norms regulating bonuses in the civil service as soon as possible and set up a transparent system, which will reduce the number of public queries with respect to remuneration of officials.

Further, the State Audit Office must pay due attention to bonuses as well when auditing the public agencies.

Author: TI Georgia