size of the civil service
Indonesias civil service consists
of some 4.6 million people. Of this, about 500,000 are police
and military, leaving some 4 million civilian civil service.
At about 2 percent of the population, this is small compared
to Indonesias South East Asian Neighbors, although it
is about at par with other low or low-middle income countries
such as China and India. In addition, a large but unknown number
of civil service workers are not registered as such. These Tanang
Kerja Non-PNS (non-pegawai negeri, or non-civil service workers)
are either local government employees paid from local government
revenue sources, or government employees paid from the development
budget. They could add up to 20-30 percent to the numbers of
public sector workers, but no systematic data are available.
In addition to this, there are some 1.9 million retired civil
servants whose pensions are included in the government wage
bill, which is some 5 percent of GDP, or a quarter of Government
of the civil service
At first sight, Indonesias
civil service is highly centralized: of the 4 million civil
servants, some 3.5 million, or 88 percent are "central" civil
servants according to their identification number (Table 1).
This percentage has been very stable over the last decade and
a half: in 1992 and 1985 it was 87 percent. However, almost
half of the central civil servants1.7 millionare
seconded to regional governments, either at the provincial or
at the district level. Most of these seconded civil servants
are teachers (1.1 million primary school) and health workers
(300,000). These civil servants are usually well integrated
at the service delivery level, and are often perceived as "local"
than central workers.
Health and education
often distorts the degree of decentralization in a major way.
Excluding these sectors civil service with almost 29 percent
of the civil service administration at the subnational level,
looks more decentralized, more in line with that of other countries,
and more decentralized than the fiscal numbers suggest.
Taken as a
group, subnational civil servants (seconded and decentralized
civil servants) fall mainly
under the jurisdiction of the province (Table 2). Of the 2.1
million in that group, 1.6 million is at the provincial level,
the rest at the district/city levelagain mainly because
of health and education, which is predominantly the authority
of the province.
The concentration of workers at the provincial level implies
that many of these workers would also have to shift affiliation
from province to district, once decentralization occurs.
Of the 1.88 million
central civil servants that are not seconded, all but 140,000
work in the regional offices of central government, the Kanvils
and the Kandeps, the regional offices of central government.
Most deconcentrated civil servants are subordinate to the provincial-level
central representation, the Kanwil. Teachers, however, again
distort the picture: some 700,000 secondary school teachers
and other education personnel resorts at that level.
of the Civil Service
civil service system is captured in Laws 8/1974 and its revision
of Law 43/99. The civil service is managed by a civil service
board (Badan Kepegawai Negri), which keeps all records, and
has to give approval to all appointments above a certain rank.
All changes in the civil servants position have to be
confirmed by a change letter from BKN.
civil service has a dual system of positions. Every civil servant
has a rank (Golongan, ranging from 1a to 4d) and of position.
The positions can be structural (Eschalon IVb-Ia)mainly
managerial, although it includes some high-level advisors, or
functional, for instance lawyer, teacher. There is no formal
job classification in the civil service. Entry ranks are mainly
determined by education level, and increases in rank are largely
driven by senioritywith a maximum rank depending on the
entry level of the civil servant.
servants are paid according to rank, seniority, and position.
The pay scales according to rank include several elements: a
base wage, a family allowance, a childrens allowance,
a food allowance, and some other incidental allowances. Since
the crisis, pay increases have also been given in the form of
an allowance, not in the form of an increased base wage. In
addition to the base wage and allowances, many positions either
have a functional allowance, or a structural allowance. These
allowances can for some positions be significantly larger than
the other pay elements. For instance, a Rank IV, Eschelon Ia
receives Rp. 1,150,000 ($120) in base wage and allowances, but
Rp. 4,5 million ($500) in structural allowances per month.
has long been a general perception that Indonesias civil
service was underpaid. Studies undertaken by the World Bank
and others since the early 1980s often record the perception
of civil servants that they do not receive a "living wage."
In part this perception may have been fed by the convoluted
pay system as described, in part the problem of underpayment
seems to have been real at least for some periods in the past.
Currently, howeverand after heavy pay increases over the
last two yearsthe average civil servant no longer seems
to be underpaid compared to Indonesias private sector
All civil servants
are paid from the central budgeteither through the central
allocation for personnel (DIK), or through the Subsidi Daerah
Otonom or SDO grant to the regions. Both DIK funds and SDO funds
are first transferred to the regional treasury offices (KPKNs).
For central and deconcentrated units, representatives of these
units deliver a full list of civil servants working in their
unit to the KPKN each month, together with proof of any material
change that affects the wage bill (promotion, marriage, etc.).
The KPKNs check their correctnessalthough they have no
independent source of information, and upon approval, transfer
the appropriate amount of money to the (commercial) bank account
of the work unit. The Finance section in the work unit takes
care of payment. For higher-level staff this is increasingly
done by direct deposit of the payroll in an individual civil
servants account, but for most staff it is still done
The focus on development
and the accompanying expansion of the development budget during
the New Order combined with a "balanced budget" philosophy brought
on the one hand suppression of the wage bill, but on the other
opportunities for diverting money from the development budget
to supplement salaries. Some, in the form of honoraria and management
fees were generally considered as part of the system. Otherssuch
as abuse of procurementwere not, but became the cornerstone
of an elaborate patronage system.
1: Indonesian Civil Service Informal Patronage
many acknowledge to be a semi-formalized system, significant
discretionary allowances are distributed by top management
in individual agencies to their subordinates in exchange
for loyalty and, frequently, collusion in malfeasance.
Membership in such personal loyalty networks is reputed
to be pervasive, ensuring that officials can accept bribes
and kickbacks without fear of reprise, since their colleagues
are likely to be engaged in the same practice. The existence
of discretionary allowances locks staff into a loyalty
network that enables extra-budgetary transactions to be
conducted and shared under protected conditions.
appears to be enabled by the significant contribution
of the development (non-recurrent) budget to civil service
rewards. Requirements for its continued operation include
a continued commitment to project financing by donors
across a wide spectrum of agencies, and the current dysfunctional
split between the routine and development budgets, which
allows for inadequate project supervision.
This box is adapted from "Pay and Patronage in the Core
Civil Service in Indonesia," Mimeo, World Bank, March
2000, pp. 33-36.