groups and in-depth interviews using a local consultant firm with experienced focus group moderators, under the direction of an international consultant with training and experience in social science qualitative methods.

In each country, the overall analytical approach was one of outreach and triangulation. The most useful information did not always come from the seemingly obvious sources (such as ministries of finance or core civil service agencies) but rather from technocrats in individual ministries or agencies. Overlapping lines of enquiry helped to verify emerging findings as well as areas that needed more probing. A comprehensive and nuanced civil service pay analysis comprises an understanding of wage bill issues, compensation for individual jobs and civil servants, the adequacy of compensation relative to the private sector or other alternatives, and the broader incentives and dynamics that underlie individuals’ behavior. This section suggests methodological approaches for tackling each of these issues. Although it may not always be possible to replicate these types of analysis at full scale, many of analytical components described below—such as the micro earnings analysis and the statistical worker approach to pay comparison—require surprisingly modest resources and can be usefully conducted even in more limited undertakings, such as a Public Expenditure Review chapter.

# **_Wage Bill Analysis and Modeling_**

A comprehensive picture of the government establishment (or number of civil servants) and wage bill is a necessary component of a public sector pay analysis. Evaluating the sustainability and soundness of the wage bill entails calculating its size as a percentage of budgetary revenues, total and recurrent expenditures, and GDP, and tracing its evolution over time. These analyses are invariably complicated by country-by-country differences in budget structures and accounting practices, as well as varying definitions of which government cadres comprise the public sector and are included in the government wage bill. The analytical tools we propose here were developed in the context of relatively simple, undifferentiated pay scales but their utility is not limited to any particular type of compensation system.

An essential first step in understanding the contours of the government establishment and wage bill is clearly defining what actually constitutes the civil service—that is, which segments of the public sector writ large are being included in the analysis—and which line items in the budget are, in practice, being used to compensate this workforce.<sup>10</sup> Civil service status in Lao PDR, for example, encompasses several professional cadres that usually form separate public sector labor regimes in other countries—including ‘white collar’ office workers and service delivery personnel in health and education—and excludes the military, the police, and employees of state-owned enterprises.

The second crucial step is understanding which lines of the government budget are used to compensate civil servants. Of the two main wage bill-related line items in the Lao budget—“Salaries” and “Compensation and Allowances”—the latter includes a number of payments (such as living allowances to village chiefs) that should not be incorporated into the aggregate wage bill for the civil service. On the other hand, some wage-related expenditures are blended into expenditure lines that are not wage billrelated, further complicating estimates of the true size of spending. Contract government workers, for example, are financed by non-wage recurrent expenditures, typically the “Operations” line—hence aggregated reported wage bill figures likely under-report the true cost of the civil service establishment.

10 For a useful guide to answering this question, as well as a basic list of other core analytical tasks that we ourselves have relied upon, see Mike Stevens, “Preparing for Civil Service Pay and Employment Reform: A Primer,” in Lindauer and Nunberg, eds., _Rehabilitating Government_ , pp. 10315.

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