**Part II—Putting the Pieces Together: The Lao PDR Case Study**<sup>*****</sup>

Tailoring civil service pay analysis and advice to context in developing countries invariably requires cobbling together a series of innovative, sometimes even opportunistic, approaches in order to draw a picture both comprehensive and yet nuanced. The methodologies we have suggested in this paper constitute an analytical toolkit for undertaking such work. But the bare bones of these approaches must be fleshed out in terms of the actual empirical puzzle at hand and adapted to the information available, not to mention resourcing constraints. In this section, we illustrate how this can be done in practice, using our experience of conducting the _Lao PDR Civil Service Pay and Compensation Review_ .

The goal of this analysis was to help address the Lao government’s concerns about civil service management and support its attempts to modernize the civil service and enhance its performance subject to fiscal constraints. It did so by providing the analytical foundations to enable the government to make rigorous and evidence-based policy decisions regarding the civil service compensation system, along with a menu of tailored reform recommendations for its potential improvement in the context of the broader human resource management and strategic challenges facing the Lao public sector as it evolves to meet the country’s developmental goals.

In order to present as comprehensive a picture as possible of the Lao civil service pay and compensation system, and its strengths and challenges, the report comprised four analytical sections, summarized here. Overall, the report utilized each of the analytical approaches presented above—and here we focus on presenting the findings. First, we identify the analytical puzzle and characterize the Lao civil service in perspective, with an emphasis on the establishment and wage bill. We then examine how civil servants are compensated and assess whether they are compensated adequately. We summarize civil servants’ own characterizations of their incentives in both compensation- and non-compensation-related terms. Finally, a brief conclusion points to a set of principles for civil service reform and outlines three sequenced steps toward achieving a more rational civil service pay and grading system.

# **_The Analytical Puzzle_**

Lao PDR is at a point on its development trajectory where strategic attention to administrative performance is crucial. An efficient and high-performing civil service, with the compensation and human resource management systems to attract and motivate qualified personnel, will be central to the country’s development efforts. The ministerial-level Public Administration and Civil Service Authority (PACSA) is currently spearheading the implementation of a comprehensive new Civil Service Management Strategy over the period 2010-2020. Key objectives include improvements in human resource policies and planning, salary reform, and enhanced performance management.

* This section summarizes the analysis conducted by the authors for a World Bank policy note, prepared with the collaboration of the Government of Lao PDR and based on a number of detailed background papers.  See _Lao PDR: Civil Service Pay and Compensation Review—Attracting and Motivating Civil Servants_ , Report 58018-LA, East Asia and Pacific Region Poverty Reduction and Economic Management Unit (Washington DC: The World Bank, June 2010).  We are particularly grateful to Helle Alvesson (Karolinska Institute) and Saysanith Vongviengkham (World Bank Office, Vientiane) for their invaluable contributions to this analytical work, and we also thank our GOL counterparts and World Bank colleagues in both Vientiane and Washington for their collaboration and suggestions.

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