NOVEMBER 2017 GOVERNANCE NOTES No.4 FEBRUARY 2019 No.12 OVERCOMING SHORTAGES OF SKILLED CIVIL SERVANTS IN REMOTE AND HARDSHIP AREAS Prepared by Zubair K Bhatti and Lachlan McDonald, Governance Global Practice The maldistribution of skilled civil servants is an intractable because they supplement wages, which tend to be set centrally policy challenge faced by many large and sparsely populated for the civil service, but their success has been mixed (see countries. Skilled teachers and health care providers tend to example, Box 1). Predominantly, this trend relates to the concentrate in urban areas where working and living conditions inadequacy of the inducement (Mulkeen et al. 2007). Targeting are most favorable. The inability to attract and retain capable can also be poor. A lack of roads, electricity and water, adequate staff in remote areas constrains the provision of quality housing, and restricted access to health and education services services and leaves those in most need—poor, rural, and imposes considerable costs on individuals. marginalized individuals and groups—generally underserved. Further, relocation entails high opportunity costs. Skilled In developing countries, these challenges are particularly medical personnel—doctors in particular—can earn high rents acute in remote areas because conditions tend to be much from private practice in urban areas. Studies from sub-Saharan worse and the relative need greater. Limited capacity for Africa and Asia show that relocation allowances need to be monitoring means that even when people are posted to considerable to meet a doctor’s reservation wage (Lemiere et al. remote areas, pervasive absenteeism impairs service delivery 2011; Chomitz et al. 1998). (Chaudhury et al. 2006). In pluralist and conflict-affected countries, such as Myanmar, remoteness is not the only service Box 1. Myanmar’s Hardship Allowance delivery challenge. Staff also need specific language and cultural understanding to meet the needs of local populations. Myanmar is a large and sparsely populated country with The reasons for the spatial maldistribution of skilled civil a sizable civil service and a rapidly growing wage bill. The servants are multifaceted and complex. Yet deployment remote and mountainous areas near its borders are well policies, such as Myanmar’s hardship allowance, tend to removed from the urban centers and are poorer than the address only a single or partial number of factors with limited rest of the country. These areas are also home to ethnic success (Lehmann, Dieleman, and Martineau 2008). Drawing groups distinct from the majority Bamar ethnic group and on examples from Myanmar and elsewhere, this note proposes have been severely impacted by enduring civil conflict. a multidimensional policy approach. It combines a short-term In 2012, the government of Myanmar introduced an focus on targeting financial and nonfinancial incentives to incentive payment to encourage the deployment of civil cost-effectively attract and retain people who possess the servants to 110 “socially difficult” townships split across most valuable skills with a longer-term focus on building three hardship classifications—fairly hard, hard, and a sustainable pipeline of locally available work force with hardest. In 2016–17, allowances were provided to 8 percent technical skills. of civil servants and cost $45 million—around 3 percent of the total basic civilian staff salary bill. OVERCOMING SKILL SHORTAGES IN THE SHORT TERM The allowance hasn’t yet overcome the maldistribution of Governments take two broad approaches to overcome the skills. Three shortcomings stand out: maldistribution of skilled civil servants. Each is widely used and • The allowance is not well targeted. One-third of all has its strengths and weaknesses. The first is intervening directly townships are classified as “socially difficult.” Civil to increase supply by compelling workers to relocate. At least servants receive allowances regardless of their skill level, 70 countries practice some form of compulsory service program home town, or position significance. Of the civil servants for health workers, sometimes known as “bonding.” Compliance- receiving the allowance in 2016–17, 81 percent were at the enforcement measures include withholding full registration clerical or helper level. until obligations are completed, withholding degree and salary, • The focus is entirely on financial incentives. In contrast, prohibiting private practice, or imposing large fines (Frehywot et a survey of civil servants found that allowances are al. 2010). While administratively straightforward, these programs insufficient to compensate for the difficulties associated tend to have little impact on long-term retention of workers and with housing, transportation, conflict, and language are difficult to enforce. barriers. The second approach is to offer workers a financial • No long-term government-wide approach sustainably inducement, such as a hardship allowance, to offset the social addresses skill shortages. and economic costs of living in isolated, and potentially conflict- affected, areas (Lewin 2000). Allowances are advantageous Source: Government of Myanmar and World Bank 2018. 1 GOVERNANCE NOTES FEBRUARY 2019 No.12 In fiscally constrained developing countries, such as Myanmar, and Pakistan, annual return airfares are provided to some fully offsetting the costs of relocation with an allowance is not employees working remotely, including their families. likely to be feasible given the considerable costs involved. With Direct provision of in-kind support can also be valuable if improved targeting of allowances, however, scarce resources private markets can’t meet specific needs, such as housing. Many may be reallocated to where they are most effective. Myanmar countries provide a housing allowance (World Bank 2006), but is spending large sums to incentivize some categories of civil in remote communities, accommodations available through the servants—helpers and clerks, for example—where no incentive private market might not meet minimum quality expectations. may be needed. The government may be able to devise ways to overcome a key Improved targeting can occur across three dimensions: barrier. • Regularly review the definition of hardship. Safety and security Benefits can also be strategically bundled. For example, public of government staff should be the most important criteria in housing can be built in clusters in regional centers, thus giving determining hardship. Further, travel time is a bigger issue than skilled civil servants and their families better access to essential distance. A new road or bridge, for example, could substantially services and infrastructure than would be the case if they lived in change travel time. Techniques are available to inexpensively remote communities. In parallel, workers could also be provided and regularly create fine-grained maps from satellite imagery with motorcycles to assist with their commute, similar to a to capture changes in infrastructure, land use patterns, and practice in Pakistan (Davidson, Ahmad, and Ali 2001). Costs could economic activity. be contained by purchasing motorcycles in bulk from the private • Focus only on the scarcest workers. Allowances for lower skilled sector, offering voluntary program participation, and deducting positions should be frozen or removed and replaced with a payments from workers’ salaries. focus on local hiring to facilitate greater local participation and improve retention. For example, in parts of Pakistan, if a Table 2. Targeted Nonfinancial Incentives vacancy for a primary school teacher or lower-level health staff Mechanism Example Pro Con arises, only candidates who belong to that cluster of villages, or Accelerated Indonesia Additional recognition May result in greater are married into that cluster, may be hired (Bari et al. 2013). career given to graduates who mobility of staff, which • Review the magnitude of allowances. Better targeting can allow opportunities have worked in remote could be ameliorated more generous incentives to be directed toward attracting the areas. by stipulating a scarcest and most valuable skills. Younger, though qualified, minimum number professionals tend to have lower opportunity costs. of years of remote experience to qualify for preferential A BROAD SUITE OF WELL-TARGETED INCENTIVES treatment. Even with improved targeting of hardship allowances, other Specialist Australia Additional leave days Attendance at courses mechanisms will still likely be needed to attract the most skilled training provided to attend can be costly and may workers. This can be achieved through a combination of targeted specialist training require absence from nonwage financial benefits (Table 1) and nonfinancial incentives courses. duty stations. Distance (Table 2) that are well matched to worker’s intrinsic needs and learning or e-learning motivations. could help address this problem. Table 1. Nonwage Financial Benefits Temporary Pakistan To move to conflict Applies only to career promotion areas, management civil servants. Mechanism Pro Con staff are offered a Specific cash Increase quality of life for Costs; potential of creating posting one step up allowances workers and their families. a dual economy for housing. from their usual grade. Public Provide quality housing in Cost of construction and Additional Australia Additional personal Absence from duty housing areas where a private housing maintenance. Paying cash leave and professional stations is required, market may not exist. may be preferable. entitlements development leave and replacements are days are provided. not always available. Other in-kind Reduce the hardship of Costs. Can be ameliorated support (e.g., commuting. through private ownership, Increased South Retain skilled personnel Increased costs, motorcycles) bulk purchasing, and salary retirement Africa by offering exemptions unless staff who delay deductions. age from mandatory retirement are no retirement. longer eligible for a hardship allowance. Financial support can be provided in the form of cash payments for particular goods and services. While on-budget, such Spousal Reduce the impact of Cost of employing an employment lost spousal income. additional civil servant allowances can be useful for targeting specific hardships. In Assist women’s and circumventing Zambia, for instance, health workers are given a package that mobility. ordinary recruitment includes renovating accommodations, contributing to school fees, protocols. providing vehicle or housing loans, and offering support for further education (Lehmann, Dieleman, and Martineau 2008). In Australia Sources: Lehmann, Dieleman, and Martineau 2008; Australian Government 2011, 2013. 2 GOVERNANCE NOTES FEBRUARY 2019 No.12 In isolation, financial incentives are insufficient to offset the Telemedicine Bringing services to where people Skilled staff aren’t challenges of attracting and retaining skilled civil servants to live reduces the distance between locally available. remote areas. Other, intrinsic and nonpecuniary concerns are patients and doctors. also important. Younger workers look for longer-term career Fly-in, fly-out Highly skilled staff and technical Not a sustainable prospects, professional development opportunities, and job workers equipment are brought in to provide model of care security (Araújo and Maeda 2013; Lehmann, Dieleman, and occasional specialized services to and prohibitively Martineau 2008). Older professionals are more likely to prioritize remote areas. expensive. working conditions and lifestyle, while professional women tend to focus on family life (Lemiere et al. 2011; Lehmann, Dieleman, A SUSTAINABLE PIPELINE OF SKILLS FROM THE LOCAL AREA and Martineau 2008). Targeting these motivations can have A longer-term view must focus on increasing the number of locally large payoffs. They are of high value to workers but at a relatively available people with professional and technical skills (Table 4). low cost to government. In Indonesia, for instance, deployment Rural origin is among the most important factors in incentivizing programs harness the “altruistic capital” of graduates. They skilled civil servants to remain in rural areas, given their familial attract their own prestige, which is then linked to promotion and connections (Couper 2007). Teachers from the local area also tend employment opportunities within the civil service. to be less absent on the job (Chaudhury et al. 2006). In ethnically diverse countries, such as Myanmar, local cultural connections OTHER COST-EFFECTIVE, SUPPLY-SIDE INTERVENTIONS are essential to both community cohesion and service delivery The supply of skilled workers can be increased while avoiding the outcomes. challenge of relocation (Table 3). In health care, straightforward Financial incentives, in the form of scholarships or lower fees, technical tasks can be reallocated to already available lower- or should be targeted to students from remote areas to help build a mid-level health workers. With adequate training, monitoring, and local pipeline of skilled workers. Bridging courses or extra tuition support, task shifting can be successful, although it remains an could be supplied to candidates from remote areas to ensure incomplete mechanism for overcoming skill shortages (Lemiere et they come up to speed with the requirements of their respective al. 2011). A key barrier is lowering professional standards to allow university curriculum. For nontertiary educated positions, such as workers to perform specialized tasks. nursing, local students could be targeted through relaxed entry Technology can also be used to overcome vast distances requirements for vocational training programs. to link professionals to each other and to beneficiaries. While these local pipelines are being built, more effective use Virtual networks of professionals can help overcome isolation of data can further support deployment programs. Detailed and facilitate upskilling (Dussault and Franceschini 2006). analysis of recruitment and retention data along with spatial data Telemedicine, for example, can link urban specialists with remote can help monitor and calibrate various financial and nonfinancial patients. It can also allow female doctors to remain in the incentives. workforce after they get married (AFP 2018). Technology can help create virtual classrooms and connect skilled teachers with Table 4. Building the Longer-Term Pipeline remote students, which is becoming popular in India. Smartphone technology is also facilitating the implementation of direct Mechanism Pro Con monitoring and incentive programs to help overcome problems Subsidized Promote opportunities and Can be costly. associated with absenteeism, which are magnified among officials professional lower economic barriers to development willing entrants. in remote areas (Bolton 2016). The shortage of skilled workers is a persistent problem that Targeted Reduce remoteness and Skill shortages are among a calls for creative solutions, particularly because people who are investments hardship. range of concerns about the allocative efficiency of capital trained tend to migrate to big cities. Outsourcing to the private expenditure. or nonprofit sector should be explored. The relative ease of monitoring through information and communication technology allows new kinds of output-based contracting to be created and CONCLUSION managed, obviating the need for direct hiring of civil servants. Overcoming skill shortages in remote areas is likely to present an ongoing policy challenge in developing countries. Indeed, it is Table 3. Supply-Side Interventions the natural corollary of the trend toward urbanization. To ensure that this is achieved at minimum cost, a multidimensional policy Mechanism Pro Con response is required. Task shifting Widening the resources available to Potentially reduced In the short term, financial and nonfinancial incentives carry out key health interventions. quality of care. Can serve as a key motivator Limited by local should be bundled and targeted at the deployment of people by giving lower- level workers health policy and with specific technical and management skills that are scarce in more responsibility and scope for regulations. the local context. By calibrating incentives to each profession, professional development. profile, and circumstance, rather than treating skilled workers as a homogenous block, cost savings may also be found. Targeting early career medical professionals, for instance, may place less pressure on the budget than older professionals, given their lower 3 GOVERNANCE NOTES FEBRUARY 2019 No.12 opportunity costs and larger preference for nonfinancial career While there would be a budgetary impact of such schemes, the development opportunities. The judicious use of technology, benefits should outweigh the costs. 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Washington, DC: World Bank. GOVERNANCE GLOBAL PRACTICE Guiding Results through Public Institutions Governance Notes captures knowledge derived from World Bank engagements and technical and financial assistance requests. The views expressed are those of the authors and do not necessarily reflect the views of the World Bank. For more information, contact: askgov@worldbank.org 4