Personnel Expenditure


Share of the government’s total expenditures allocated to personnel expenditures (%), 2010

This indicator is concerned with the share of the budget used for paying personnel (public servants and honorarium workers) engaged by Sub-national governments to provide public services: it includes the salaries, allowances and honorariums of all personnel (that is, direct and indirect costs). The presentation of this indicator reflects a concern that the bureaucracies of many subnational governments are themselves grossly over-sized.

Local Governments in Indonesia have responsibilities for providing a wide range of basic services to their people. These include the provision of general and specialised health services, primary and secondary school education, roads, public transport services and other public good infrastructures as well as a range of planning and administrative services. Of course public servants working in different areas of specialisation, as well as teachers, nurses and doctors are needed to organise and provide these services. The issue of how much is paid in personnel expenditures is a major concern because in some areas the share of the budget is so high that only a small share of the budget remains for the provision of many much needed basic services such as the provision of community infrastructure (roads, clean water supply systems) and the provision of buildings, equipment and materials to support the work of education and health care providers.

While some areas with high levels of personnel expenditures may be providing effective services it is generally considered that those spending more than half (i.e. more than 50%) of their budgets could do much to improve their efficiency and reduce their personnel expenditures.

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What is the average share of expenditures used for personnel?

In 2010, among all Kabupaten and Kota, the average share of the budget devoted to personnel expenditures was 52%. Kota spent more of their budget on personnel on average than Kabupaten, but the difference was not large (56% and 51% respectively). Some local governments spent more than 70% of their budget on personnel expenditure.

Personnel Expenditures, 2010, Local Government Area Averages

% of total expenditures

All areas 10 areas with lowest per capita revenue 10 areas with highest per capita revenue
Local Governments
Kabupaten

5,15

17,2

76,2

Kota

55,7

35,9

70,3

Total

52,3

17,2

76,4

What about your area of interest?

So, how does the subnational government of interest to you stand relative to others? Does it spend a low or high share of its budget on personnel compared to others?

Frequently asked questions

Why have both direct and indirect costs been included in this indicator?

Direct and indirect costs
Direct costs: these are personnel related costs for services deemed to be of direct benefit to the people. They only involve honorariums (these are fee for service payments – salaries for some) paid to:

  • honorarium workers: these are non-government workers including teachers and nurses who are engaged to provide public services, and
  • public servants, including teachers and nurses employed as government workers (these payments are for approved activities such as organising a public discussion or workshop or administering a special program and are in addition to normal salaries).

Indirect costs: salaries and allowances for public servants (including teachers, nurses and others employed as government workers) doing their normal duties.

Seknas Fitra’s Views

This indicator describes all personnel related payments that are funded from the governments’ budgets. It is distinct from their remaining expenditures which includes spending on capital items, operating costs, and those provided as direct support services to households.

We believe that governments that spend a high percentage of their expenditures on personnel costs are a real cause for concern in terms of wasting public monies. So we see this indicator as being a warning indicator. It indicates which areas might have over-sized and inefficient bureaucracies. At the other extreme it can help to indicate which bureaucracies may be too small.

Of course having a high percentage of expenditure on personnel does not always by itself imply that there is wasteful spending. Naturally teachers are needed to teach, medical practitioners are needed to treat people with ailments, and staffs are needed to organise and administer the provision of all the services that governments aim to provide: and all these people need to be paid for their work. Nonetheless, there are widely held views that many local governments have overly large and inefficient public services that do not provide the level of service that might be expected. It is in view of these perceptions that this indicator, when on the high side, usefully helps to alert governments and community members to consider whether personnel expenditures are providing value for money or not. This should lead them to the analysis of related indicators such as the number of public servants per head of population and within sectors the numbers of public servants to service recipients (for example, in education: the number of public servants in the education department per child attending school).

It is in view of this that we recommend that community members and subnational governments alike use this indicator to see how their area is placed. And, if the indicator is very high (or very low) to give a great deal of attention to investigating the issues further and looking to reforming their work as a matter of priority.

Data: Sources and notes

The data for each area used for this indicator comes from two sources. The total revenue data for each area is sourced from the Ministry of Finance budget information website (see http://www.djpk.depkeu.go.id/datadjpk/131/). These data can be accessed by reference to the webpage “Data Series”, and to the link “Dana Perimbangan”, Realised Budget 2010, and then Sheet 1 , Permentdagri 13. The population data was sourced from Indonesia’s 2010 population census (see http://sp2010.bps.go.id/.)

Missing data: there is 1 Kabupaten (namely: Kab. Nduga in Papua) for which budget data was not available.

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