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English\Part 2 Background Note Main Text Engclean.Doc 11/18/2008 4:01:00 PM Report No. 43261-TJ Republic of Tajikistan Report No. 43261-TJ Republic of Report No. 43261-TJ Republic of Tajikistan Public Sector Pay Reform Public Disclosure Authorized Policy Note on Medium-Term Pay Reform in Public Sector Civil Service, Education, Health, Social Protection, Science, Culture and Sport (In Two Volumes) Volume II: Background Note October 2008 Poverty Reduction and Economic Management Unit Europe and Central Asia Public Disclosure Authorized Public Sector Pay Reform Public Sector Pay Public Disclosure Authorized Vol. II Vol. Document of the World Bank Public Disclosure Authorized ACKNOWLEDGEMENTS This Policy Note is based on findings of several missions that visited Tajikistan between October 2007 and May 2008. The team that prepared the report wishes to thank the government of Tajikistan for the constructive discussions during and after the various missions. The team is particularly grateful for the inputs provided by Matlubkhon Davlatov, State Advisor to the President for economic policy (EOP); Safarali Najmiddinov, Minister of finance (Ministry of Finance); Jumakhon Davlatov, Head of the Civil Service Department (CSD); Nematjon Buriev, Senior Advisor to the President for economic policy (EOP) and Head of the Working Group for the Reform of Pay Policy in the Public Sector; Mahmadsho Ilolov, President of the Academy of Sciences; Shavkat Sohibov, Deputy Minister of Finance (Ministry of Finance); Emin Sanginov, Deputy Minister of Labor and Social protection (MLSP); Asror Latipov, Deputy Head of the CSD1; Narzullo Abibulloev, Head of the Budget Department in the Ministry of Finance (MOF); Rajabali Odinaev, Head of Division in the MOF; Matluba Nazirdjanova, Head of Division of the social sector budget in the MOF; Fathiddin Ismonov, Head of Department in the Ministry of Education (MOE). Utkirdjan Umarov and Tony Verheijen are the authors of the report. The Policy Note benefited from inputs provided by consultants Gerhard Ungersboeck, Aleksandra Rabrenovic, and Olga Lukashenko, and constructive comments from Juan Diego Alonso, Guenter Heidenhof, and Ana Bellver, peer reviewers. Policy options modeling exercise for all sectors and fiscal impact assessment was done by Utkirdjan Umarov. This report was prepared under the general guidance and advice of Annette Dixon, Mehrnaz Teymourian, Kazi Mahbub-Al Matin, and Chiara Bronchi. The report also benefited from valuable suggestions and inputs from Sudharshan Canagarajah, Svetlana Proskurovska, Jariya Hoffman, Pia Helene Schneider, Rekha Menon, Dina Abu-Ghaida, Saodat Bazarova, Vladimir Kolchin, Binusrat Sharipova, Gulshan Ashurbekova, Khursheda Nazirova, and Shuhrat Nurubloev. Processing assistance from Zakia Nekaien- Nowrouz and editing by Mellen Candage is gratefully acknowledged. Takhmina Jumaeva provided very helpful logistical support and formatted the final version of the report. The team is grateful to the Department for International Development (DfID), United Kingdom, for co- financing as well as for constructive discussions with Dylan Winder, Head of Office; Mirza Jahani, Governance Advisor; and Sobir Kurbanov, Economic Advisor, at various stages of the preparation of the Policy Note. 1 Since May 2008, head of organizational unit in the presidential administration iii CONTENTS Acknowledgements........................................................................................................................iii Contents ......................................................................................................................................... iv 1. EVALUATION OF THE FIRST PHASE OF WAGE REFORM, LESSONS LEARNED ...... 1 2. MACROECONOMIC AND FISCAL CONTEXT .................................................................... 6 2.1. Recent Economic Developments and Fiscal Space for........................................................ 6 Public Sector Pay Reform........................................................................................................... 6 2.2. Developments in Local Labor Market and Competitiveness of Public Service .................. 8 3. PUBLIC SECTOR PAY REFORM IN TAJIKISTAN: RECENT dEVELOPMENTS AND LINKAGES TO SECTOR FINANCING REFORMS ................................................................. 11 3.1. Legal and Policy Frameworks: potential options............................................................... 11 3.2 State of Play: Pay Policy in Civil Service, Education, and Health..................................... 12 3.3. Linking Public Sector Pay Reform in Tajikistan with Sector Financing Reform Agendas in Education, Health, Social Protection, and Other Public Services ........................................ 23 4. PUBLIC SECTOR PAY REFORM MEDIUM-TERM ROADMAP ...................................... 31 4.1. Overarching Principles: Transparency, Equity, and Sustainability ................................... 31 4.2. Options to Reform Pay Policy: General Approach............................................................ 32 4.3. Options to Reform Pay Policy: Core Civil Service ........................................................... 33 4.4. Reform Options: Education ............................................................................................... 47 4.6. Reform Options: Social Protection, Science, Culture, and Sport ...................................... 73 4.7. Reform Options: Administration in Social Sectors ........................................................... 78 4.8. Fiscal Sustainability of Public Sector Pay Reform............................................................ 80 4.9. Toward an Integrated Reform Agenda: Steps and Required Support................................ 83 5. CONCLUSIONS AND RECOMMENDATIONS ................................................................... 86 Annexes Annex 1: Matrix of Recommendations.............................................................................................90 Annex 2: Survey on the Perception of Pay Reform among Civil Servants, October 2007...............93 Annex 2.1: Questionnaire on Perception of Pay Reform.................................................................105 Annex 3: Medium-Term Fiscal Baseline Framework......................................................................107 Annex 4: Existing Legal Framework for Pay Reform.....................................................................108 Annex 4.1. Laws and Secondary Legislation Regulating the Pay Policy in Individual Sectors......108 Annex 4.2. Legal Documents on Pay Level Increase in Public Sector............................................129 Annex 4.3. Legal Documents that Affect the Pay Policy in Public Sector......................................146 Annex 4.4. Legal Documents Regulating the Pay Policy in Institutions Regardless the Form of Ownership........................................................................................................................................158 Annex 5: Change in Pay Structure in Civil Service: An Illustration at the Ministry Level............161 Annex 6: Institutional Hierarchy of Civil Service Institutions in Tajikistan...................................162 Annex 7: The Structure of Curriculum in General Education Institutions......................................164 Annex 8: Supplements to Teachers’ Salaries in Special, Boarding, Corresponding, Vocational, Musical, and Sport Schools..............................................................................................................166 Annex 9: Number of Teaching Hours per Stavka in Education.......................................................167 Annex 10: Scaling up of Per Capita Financing in General Education throughout 2010.................168 Annex 11: Proposed Classification of Civil Service Institutions (Institutional Hierarchy) for Spreading Posts across Steps in the Wage Grid...............................................................................169 Annex 12: Wage Grid for Political Appointees ..............................................................................170 Annex 13: Wage Grid for Positions of State Power ........................................................................171 iv Annex 14: Performance Appraisal Models in Various Countries...................................................172 Annex 15: Illustration of the Performance Appraisal Model at the Ministry Level .......................174 Annex 15.1: Staff Performance Evaluation Form............................................................................177 Annex 16: Proposed Subject Quantifiers in General Education (Benchmark 1 Group)..................178 Annex 17: Average School and Class Size by Groups of Rayons (Category).................................179 Annex 18. Categories of Healthcare Institutions ............................................................................180 Annex 19: Wage Grid for Administrative Positions in Education...................................................181 Annex 20: Technical Assistance Needs for Public Sector Pay Reform in Tajikistan......................184 Annex 21: Proposed Amendments to Legal Framework.................................................................188 Annex 21.1: Legal Documents Subject to Amendment...................................................................188 Annex 21.2: Normative and Legal Actions to be Developed and Approved TABLES Table 2.1: Real Wage Indices, 2001 – 07 ......................................................................................
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