Breaking private sector taboo
Chancellor Hall at UBD: Is it wise for the government to set up a fund to help the private sector increase salaries of graduates? Picture: BT file
Monday, April 21, 2008
The high salaries and security of the public sector has made most
Bruneians turn to the government for jobs and to generally shun the
private sector. However, unlike the public sector, salaries and wages in
the private sector are determined by performance and productivity.
Businsesses are underpinned by profitability and financial risk bedevils
all of them. However, instead of being business-friendly, it is the
bureaucratic red tape of the civil servants that is responsible for
increasing the business profile risk. PEHIN DATO RAHMAN KARIM
in this first of a four-part series explores this public/private sector
dichotomy and argues against imposing a high wage policy on the
private sector to entice the voluntarily unemployed.
I AM referring to articles reported recently in The Brunei Times that refer to matters that would adversely affect the long-term economic survival of Brunei Darussalam I would like to would like to address them. The articles include:
"Private sector needs to offer better pay" (March 2, 2008)
"Call to hike bonus of civil servants" (March 7, 2008)
"Government still employer of choice in Brunei" (March 7,2008)
"Link civil servants bonus to performance" (March 8,2008)
"Soul-searching time for private sector" (Editorial: March 11,2008)
However, amid these foreboding clouds there was a silver lining from the Ministry of Finance breaking in: "Tax rebate move aimed at boosting SMEs" (The Brunei Times 7, 2008).
The issues can not be discussed in isolation detached from the socio-economic-financial-religious situation of Brunei Darussalam. Thus they are complex, delicate and intertwined.
The need for brevity may not offer clarity in our postulations; hopefully they may elicit a serious national debate on these issues.
Financial risk is the inherent factor that bedevils any business. Profitability is the needed combination of the right fertiliser and water for lush growth and multiplication. Competition may kill, but it is also the spur for creativity, innovation, strategising of price, quality improvement, efficient service and marketing, and honing the management skills and agility of the employees and the leadership. So profitability is the lifeblood of a business. Actual productive performance that counts.
What is meant by "to offer better pay" can be interpreted in several ways, depending on which side you are. On the labour supply side, the employees and prospective employees would crave for "better pay" for the work/service rendered, in some cases irrespective of bad performance and poor profitability. To a businessman, "better pay" is directly affecting his profitability. So in business, "better pay" must be related to productivity and performance. But profitability is mostly directly determined by the state of its market and the macroeconomic environment of the country.
The risk level is higher or acute when the size of the market is not only small but thin and lethargic. This is in fact the state of the market of Brunei Darussalam. The market peaks for about 10 days, after government pay day, after that it fizzles to a low ebb for about 20 days, and then suddenly rises again for 10 days after the next pay day.
This lethargic cycle keeps repeating itself.
In other countries the peak of is always high and dynamic, partly generated by the injection of tourist revenue. For example, Malaysia had about 21 million tourists last year. Now they are targeting for 23 million tourists in 2008. Singapore had about eight million tourists and is targeting 10 million this year; they are now having an F1 race.
For us, we have just a budget of slightly above $5 million per year for tourism development. About B$1.19 per capita per month! Happily now, those awaiting transit are allowed to "look-see" Bandar Seri Begawan and may be Seria, Kuala Belait and Temburong. If they like our country and feel safe and welcome, they may come again and we will gladly welcome them; if not , we say : thank you, safe journey home, adieu!
Even Saudi Arabia is now gearing for "tourism".
Against this brief macroeconomic background, an "imposed- better pay" on the private sector without due, proper consideration of the state of Brunei Darussalam's macroeconomic situation would be a financial hazard to the private sector.
Thus, under normal business risk, wages and other costs must be related to productivity and affordability as dictated by the market. Simply to cajole, entice those "voluntarily unemployed" (unemployment by choice), would inflict myriad of unintended adverse consequences.
A wrong diagnosis will exacerbate the disease and it may become pandemic.
So our terse stand here is be very wary of the so called "experts" in our specific socio-cultural-religious condition and situation. Particularly so if they are just fleeting observers, who know all the answers if you ask the right questions!
"Their intentions are often worthy, but their simplistic ideology and faulty understanding of history, national culture leads them to inflict policy errors on others." (Economist Ha-Joon Chang: "Bad Samaritans-Rich Nations, Poor Policies and The Threat to The Developing World" (2007).
Too many people have the idea that if someone has greater knowledge than they in a specific field, he automatically qualifies to be an expert. In order to earn that status, make sure this person has a success story. Definitely not all consultants are experts.
"Usually ('experts' are) well groomed males with little involvement in the daily struggles of the unseen and unheard multitudes of the world, yet able to influence their lives (most often detrimentally) from a well-guarded distance. ...Why are those qualified to address their own affairs so widely ignored by mainstream channels in favour of intellectual middlemen who purport to have same sort of legitimacy over a range of narratives, without any convincing credentials, let alone first-hand experiences?" (The Brunei Times November 20,2007: "A retort to media's detached experts").
There was this story of European experts/consultants engaged by the Saudi Arabian Government, to resolve the very serious annual problems caused by three or more million pilgrims congregating in Mekah, Arafat and Medina during the month of Zulhijjah (the Haj month). With great authoritative confidence, the consultants recommended that to minimise the multifaceted problems and pressures the annual mandatory pilgrimage must be split into two pilgrimage seasons!!
Certainly children would love to have two Christmases within 12 months, so are Hari Rayas, Kong Hei Fatt Chois, Gawais, and Thaipusams!
Since these very serious issues have a religious bearing, we would again reinforce this habit on the convenient reliant on "experts" or "consultants" on socio-economic-religious issues by reprinting the following religious story:
Go,You do not know him!
A man came to 'Umar ibn al-Khattaab and spoke in praise of another. 'Umar asked him:
"Are you his nearest neighbour such that you know his goings and his comings?" "No."
"Have you been his companion on a journey so that you could see evidence of his good character?" "No."
"Have you had dealings with him involving dinars and dirhams which would indicate the piety of the man?" "No.
"I think you saw him standing in the mosque muttering the Quran and moving his head up and down?" "Yes."
"Go, for you do not know him."
And to the man in question, 'Umar said, "Go and bring me someone who knows you."
Source: "Islam The Natural Way"by Abdul Wahid Hamid, London.
We therefore strongly feel that the recommendations by those foreign experts that the private sector should increase graduates' salaries and that the government (the public sector) should set up a fund for this would really be a package of very detrimental prescription. Simply because the diagnosis of the symptoms was wrong. Too linear and too mechanical.
We should also diagnose the symptoms based on the religious perspective. Hence:
The Holy Quran injunction is: And say: "Work (righteousness); so Allah will see your work and (so will) His Messenger and believers" (Surah Al-Tauba (9): Verse 105)
Another appropriate diagnosis is this Hadith on work:
To try to earn a lawful livelihood
is an obligation
like the other obligations in Islam.
No one has eaten better food
than what he earns
from the toil of his own hands.
It is better for one of you to take a rope
and bring a load of firewood on his back
And sell it
than that he should beg from people
whether they give him anything or refuse him.
Source: Islam The Natural Way by Abdul Wahid Hamid, London.
"Work for the world as if you will live forever; and work for the eternal life as if you will die tomorrow." Hadith.
Yang Dimuliakan Pehin Orang Kaya Lela Raja Dato Seri Laila Jasa Haji Awang Abdul Rahman bin Haji Abdul Karim DSLJ, PJK was formerly Permanent Secretary of the Ministry of Finance and the Ministry of Defence. The views expressed by Pehin Dato Rahman Karim are his own and do necessarily reflect those of The Brunei Times.
I AM referring to articles reported recently in The Brunei Times that refer to matters that would adversely affect the long-term economic survival of Brunei Darussalam I would like to would like to address them. The articles include:
"Private sector needs to offer better pay" (March 2, 2008)
"Call to hike bonus of civil servants" (March 7, 2008)
"Government still employer of choice in Brunei" (March 7,2008)
"Link civil servants bonus to performance" (March 8,2008)
"Soul-searching time for private sector" (Editorial: March 11,2008)
However, amid these foreboding clouds there was a silver lining from the Ministry of Finance breaking in: "Tax rebate move aimed at boosting SMEs" (The Brunei Times 7, 2008).
The issues can not be discussed in isolation detached from the socio-economic-financial-religious situation of Brunei Darussalam. Thus they are complex, delicate and intertwined.
The need for brevity may not offer clarity in our postulations; hopefully they may elicit a serious national debate on these issues.
Financial risk is the inherent factor that bedevils any business. Profitability is the needed combination of the right fertiliser and water for lush growth and multiplication. Competition may kill, but it is also the spur for creativity, innovation, strategising of price, quality improvement, efficient service and marketing, and honing the management skills and agility of the employees and the leadership. So profitability is the lifeblood of a business. Actual productive performance that counts.
What is meant by "to offer better pay" can be interpreted in several ways, depending on which side you are. On the labour supply side, the employees and prospective employees would crave for "better pay" for the work/service rendered, in some cases irrespective of bad performance and poor profitability. To a businessman, "better pay" is directly affecting his profitability. So in business, "better pay" must be related to productivity and performance. But profitability is mostly directly determined by the state of its market and the macroeconomic environment of the country.
The risk level is higher or acute when the size of the market is not only small but thin and lethargic. This is in fact the state of the market of Brunei Darussalam. The market peaks for about 10 days, after government pay day, after that it fizzles to a low ebb for about 20 days, and then suddenly rises again for 10 days after the next pay day.
This lethargic cycle keeps repeating itself.
In other countries the peak of is always high and dynamic, partly generated by the injection of tourist revenue. For example, Malaysia had about 21 million tourists last year. Now they are targeting for 23 million tourists in 2008. Singapore had about eight million tourists and is targeting 10 million this year; they are now having an F1 race.
For us, we have just a budget of slightly above $5 million per year for tourism development. About B$1.19 per capita per month! Happily now, those awaiting transit are allowed to "look-see" Bandar Seri Begawan and may be Seria, Kuala Belait and Temburong. If they like our country and feel safe and welcome, they may come again and we will gladly welcome them; if not , we say : thank you, safe journey home, adieu!
Even Saudi Arabia is now gearing for "tourism".
Against this brief macroeconomic background, an "imposed- better pay" on the private sector without due, proper consideration of the state of Brunei Darussalam's macroeconomic situation would be a financial hazard to the private sector.
Thus, under normal business risk, wages and other costs must be related to productivity and affordability as dictated by the market. Simply to cajole, entice those "voluntarily unemployed" (unemployment by choice), would inflict myriad of unintended adverse consequences.
A wrong diagnosis will exacerbate the disease and it may become pandemic.
So our terse stand here is be very wary of the so called "experts" in our specific socio-cultural-religious condition and situation. Particularly so if they are just fleeting observers, who know all the answers if you ask the right questions!
"Their intentions are often worthy, but their simplistic ideology and faulty understanding of history, national culture leads them to inflict policy errors on others." (Economist Ha-Joon Chang: "Bad Samaritans-Rich Nations, Poor Policies and The Threat to The Developing World" (2007).
Too many people have the idea that if someone has greater knowledge than they in a specific field, he automatically qualifies to be an expert. In order to earn that status, make sure this person has a success story. Definitely not all consultants are experts.
"Usually ('experts' are) well groomed males with little involvement in the daily struggles of the unseen and unheard multitudes of the world, yet able to influence their lives (most often detrimentally) from a well-guarded distance. ...Why are those qualified to address their own affairs so widely ignored by mainstream channels in favour of intellectual middlemen who purport to have same sort of legitimacy over a range of narratives, without any convincing credentials, let alone first-hand experiences?" (The Brunei Times November 20,2007: "A retort to media's detached experts").
There was this story of European experts/consultants engaged by the Saudi Arabian Government, to resolve the very serious annual problems caused by three or more million pilgrims congregating in Mekah, Arafat and Medina during the month of Zulhijjah (the Haj month). With great authoritative confidence, the consultants recommended that to minimise the multifaceted problems and pressures the annual mandatory pilgrimage must be split into two pilgrimage seasons!!
Certainly children would love to have two Christmases within 12 months, so are Hari Rayas, Kong Hei Fatt Chois, Gawais, and Thaipusams!
Since these very serious issues have a religious bearing, we would again reinforce this habit on the convenient reliant on "experts" or "consultants" on socio-economic-religious issues by reprinting the following religious story:
Go,You do not know him!
A man came to 'Umar ibn al-Khattaab and spoke in praise of another. 'Umar asked him:
"Are you his nearest neighbour such that you know his goings and his comings?" "No."
"Have you been his companion on a journey so that you could see evidence of his good character?" "No."
"Have you had dealings with him involving dinars and dirhams which would indicate the piety of the man?" "No.
"I think you saw him standing in the mosque muttering the Quran and moving his head up and down?" "Yes."
"Go, for you do not know him."
And to the man in question, 'Umar said, "Go and bring me someone who knows you."
Source: "Islam The Natural Way"by Abdul Wahid Hamid, London.
We therefore strongly feel that the recommendations by those foreign experts that the private sector should increase graduates' salaries and that the government (the public sector) should set up a fund for this would really be a package of very detrimental prescription. Simply because the diagnosis of the symptoms was wrong. Too linear and too mechanical.
We should also diagnose the symptoms based on the religious perspective. Hence:
The Holy Quran injunction is: And say: "Work (righteousness); so Allah will see your work and (so will) His Messenger and believers" (Surah Al-Tauba (9): Verse 105)
Another appropriate diagnosis is this Hadith on work:
To try to earn a lawful livelihood
is an obligation
like the other obligations in Islam.
No one has eaten better food
than what he earns
from the toil of his own hands.
It is better for one of you to take a rope
and bring a load of firewood on his back
And sell it
than that he should beg from people
whether they give him anything or refuse him.
Source: Islam The Natural Way by Abdul Wahid Hamid, London.
"Work for the world as if you will live forever; and work for the eternal life as if you will die tomorrow." Hadith.
Yang Dimuliakan Pehin Orang Kaya Lela Raja Dato Seri Laila Jasa Haji Awang Abdul Rahman bin Haji Abdul Karim DSLJ, PJK was formerly Permanent Secretary of the Ministry of Finance and the Ministry of Defence. The views expressed by Pehin Dato Rahman Karim are his own and do necessarily reflect those of The Brunei Times.
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