## **Box 1: A Micro Analysis of Civil Service Earnings in Lao PDR**

<mark>One of the four key components of the Lao civil service study was a microanalysis of the compensation package, including monetary and in-kind payments and benefits for positions ranging from entry-level posts to senior staff. Lao PDR is an acutely “information scarce” environment where availability of data and documents is often limited; furthermore, the administration does not have a central, electronic payroll system. As a result, the general analytical approach was to cast the net wide by using a variety of methods, interviewing senior and midlevel managers in numerous bodies, and triangulating numerous sources in order to corroborate information</mark> and search for details that may have been missed previously.

<mark>The first step was to review available legislation. The overall compensation framework is established by a single decree that stipulates the general components of monetary compensation, and defines the wage grid that determines the size of a civil servant’s base salary. A separate decree defines the social security benefits for civil servants. The rules governing the actual details of individual components of compensation are generally contained in subsidiary regulations; yet officials at the central level were reluctant to (and ultimately did not)</mark> share these documents, reflecting a risk-averse organizational culture.

<mark>Interviews with line ministry officials were critically important to understanding the shape and</mark> _<mark>de facto</mark>_ <mark>dynamics of the compensation system, as well as for obtaining anonymized pay data for a sample of workers. Mid-level personnel managers described forms of compensation that were neither detailed in the framework decree nor recorded in pay data, namely a number of widespread in-kind allowances (including rights to use of government-owned motorcycles and other vehicles, and coupons for gasoline and mobile phone usage). Since the value of these allowances varies by job title, they introduce an important element of job-related compensation that is not addressed in base salary. They are also a non-trivial component of regular monthly</mark> compensation—failing to uncover them would have resulted in a distorted understanding of earnings.

<mark>Interviews also provided information about various non-regular payments, such as per diems for work travel, donor-funded “sitting allowances” for participating in events, and, notably in the health sector, for overtime, surgical operations, or bonuses from facility revenues. These, too, did not appear in payroll data and it was generally not possible to evaluate their incidence or value relative to regular earnings. Interviews with civil servants and managers helped to establish, at least anecdotally, an estimate of how much per diem payments could add to total compensation. Interviews also revealed a potentially very valuable perquisite offered to a</mark> small number of officials: the personal use or highly subsidized purchase of state-owned real estate.

<mark>These sources of information, together with sample earnings data from a number of ministries and other bodies, enabled a comprehensive quantitative analysis of typical earnings for civil servants in a range of posts. Job titles were not listed on individual pay records, so they were derived from the amounts received for certain position-based allowance or other supplementary information. Although the data assembled largely referred to positions located in or near the capital city, the standardized nature of pay rules (no geographic variation other than supplements for teachers in remote areas) meant that the analysis had countrywide relevance. By necessity, some of the payments mentioned above were omitted from calculations, and coverage did not extend to the lowest-ranking staff (who tend to be employed in the provinces, rather than in ministries). Nevertheless, it was possible to show—with a level of accuracy previously unmet—how much staff at different levels in the organizational hierarchy might earn, on average, from base salary, monetary allowances, and in-</mark> kind allowances, and the relative importance of these income streams in total earnings.

# **_Comparing Civil Service Earnings to Alternatives_**

The question of whether civil servants are underpaid relative to their counterparts in alternative domestic labor markets such as the private sector is a key concern in civil service assessments. It is not a simple question to answer, for a number of reasons. As noted above, reliable data on actual civil service earnings (including base salary as well as other monetary and in-kind remuneration) by type of position are often difficult to obtain. It is not always obvious which types of jobs in what spheres should serve as 11