The Impact of Wage Bill Policies on the Health Workforce

The Impact of Wage Bill Policies on the Health Workforce GHWA Forum Kampala, March 2008 Marko Vujicic The World Bank

Wage Bill Policies There is a strong economic rationale to control how much government spending goes to wages





Important for governments to balance investment and recurrent costs Ceilings usually put in place when management of the payroll has eroded or in times of budgetary restraint

But the empirical evidence on what is ‘too high’ is weak. In practice 10% of GDP tends to be an upper bound Wage bill ceilings are never sector specific and in fact usually exempt the health and education sectors

Wage Bill Policies Key questions  What Determines the Size of the Budget for the Health

Wage Bill in the Public Sector?


Role of wage bill ceilings

 How Efficiently are Budgeted Resources Spent?



Are posts actually filled? Does incentive structure in the public sector to promote good performance

Part of a larger workstream on HRH supported by NORAD and the Bill and Melinda Gates Foundation

Zambia Public Sector Wage Bill as Share of GDP 9%

8.0%

8%

7.8%

7.6%

7.5%

2004

2005

2006

7.9%

7.8%

2007

2008

6.8%

7% 6%

8.4%

5.3%

5% 4% 3% 2% 1% 0% 2000

2001

2002

2003

Kenya Public Sector Wage Bill as Share of GDP 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

9.2% 8.1%

2000

9.2%

8.5%

2001

8.7% 7.9%

2002

2003

2004

2005

7.5%

7.2%

2006*

2007*

Source: WDI

Policies toward the Health Sector Zambia


In 2002, the Government of Zambia implemented a hiring freeze as part of its program with the IMF, but explicitly excluded doctors and nurses. (Source: Goldsborough and Cheelo (2007) IMF Programs and Health Spending: Case Study of Zambia)

Kenya


“Wage policy measures will include … flexibility to allow for recruitment of medical personnel in order to aim at reaching the optimum level of personnel for the health sector and to move toward achieving the MDGs.” (Source: MoF (2007) The Medium Term Budget Strategy paper 2007/08-2009/10)

Zam bia Health Wage Bill as Share of Public Sector Wage Bill 18.2%

20%

16.3% 11.5% 12.3%

11.8% 10.8%

15%

14.1%

10% 5% 0% 2000

2001 2002

2003

2004 2005

2006

2007 2008

Kenya Health Wage Bill as Share of Public Sector Wage Bill

10.7% 10.9%

12% 10%

7.7%

8.5%

8.9%

8.6%

2001

2002

2003

9.4%

8% 6% 4% 2% 0% 2000

2004

2005

2006*

2007*

2009

Zambia Health Wage Bill as Share of Public Sector Wage Bill 18.2%

20%

16.3% 11.8% 10.8%

15%

11.5% 12.3%

14.1%

10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Kenya Health Wage Bill as Share of Public Sector Wage Bill

10.7% 10.9%

12% 10%

7.7%

8.5%

8.9%

8.6%

2001

2002

2003

9.4%

8% 6% 4% 2% 0% 2000

2004

2005 2006* 2007*

What happened to recruitment?

Zambia Number of Ministry of Health Staff Appointed 5000 3862

4000 3000 2000

2121

2129

1940 1397

1335

1905

1201 729

1000 0 1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: Zambia December 2006 Payroll

Total Number of Staff

Kenya M O H

S t a ff R e c r u ite d a n d L o s s e d

35 00 30 00 25 00 20 00 15 00 10 00 5 00 0

S t a ff R e c ru it e d S t a ff L Lost os s ed

2 001

2 002

2003

200 4

200 5

20 06

Ye a r Source: MoH (2006a) Public Expenditure Review and MoH (2006b) Human Resources for Health Strategic Plan (2006/7 – 209/10) [First Draft]

Conclusion The policy of prioritizing the health sector does not always translate into budgets for the wage bill



Budgeting process is not always transparent Perceptions within Cabinet that there are large inefficiencies in wage bill spending in the health sector  “We keep giving them more and more for salaries, what do we get?”  Need for costed HRH strategies with clear scenarios and results expected

Even when the health sector is prioritized in budgets


In some countries can not spend the budgeted money  Can’t find health workers to hire – labor shortages  Inefficient recruiting process – unemployment + vacant posts.




Where all the money is spent, still not enough to scale up

There are lots of solutions, some easy, some difficult


Size of the wage bill  MOHs need to be better prepared for budget negotiations  Donor funds can be used to hire health workers  Health might need to be taken out of the civil service




Efficiency of spending  Incentive structure, performance based payment, better monitoring and managing,

wage increases – require civil service reforms