Salaries need to match responsibilities - Gatt - 4/5/2005

link to The Times article

Salaries need to match responsibilities - Gatt
Public Investments Minister Austin Gatt insisted yesterday that the public sector could not continue to expect to recruit the best persons for top management positions if their salaries were not commensurate to their responsibilities.

He said that the chairman of a company with a Lm200 million turnover should not be paid the same as the chairman of a much smaller company, and in all cases, salaries had to match responsibilities. Very few businessmen would continue to work at the top of state companies for salaries of some Lm6,000 a year.

It was true that, ideally, the highest public sector salaries should be paid to the President, the Prime Minister, ministers, the Leader of the Opposition and so on. There were people who argued that if a minister were paid Lm14,000 a year, the CEO of a parastatal corporation should not be paid more than Lm12,000. But the reality was that no self-respecting businessman would accept to run a multi-million-lira corporation for that amount.

Private companies that turned over Lm20 to Lm40 million a year paid their CEOs Lm30,000 to Lm40,000. Larger companies comparable to Enemalta paid some Lm160,000.

The way things were currently being done in the public service was making it increasingly difficult to recruit good people for top management jobs. One could see how a call for application for a human resources director at Enemalta had to be issued four times, and that for CEO at PBS, five times. For how would anyone take on a job where he could expect criticism on every Sunday paper, without being well paid?

Dr Gatt said he sincerely hoped these considerations would be heeded by the government, let alone the opposition. The government should not be afraid to take the right decisions just because it knew it would be criticised by the opposition. This was reality that could not be escaped. Was there anyone who really believed that the CEO of an airline comparable in size to Air Malta would accept to be paid less than the current salary of Ernst Funk?

Excellence could not be bought for peanuts and feet should be kept solidly on the ground. Finding the right balance between responsibility and remuneration was a must.

Unfortunately, the government seemed to see little difference in the remunerations of CEOs of a small or a large company. It was not right to expect that the CEO of, say, Medigrain should be paid Lm9,000 while Enemalta's should be paid Lm12,000, just Lm3,000 more when the two companies were very different. These sorts of fixed rules did not make sense in a changing market.

Joe Brincat (MLP) said it was important to maintain relativity between one job and another. It did not make sense for a financial controller in the civil service to be paid a certain amount for a job, while his counterpart in a parastatal company turning over millions of liri got much more.

Private industry could afford to pay out of its own profits, but it was a different situation in public organisations that had the ultimate backing of the government.

Dr Brincat said he often met the chairman of Mepa - one of the most thankless jobs - who was dedicated and was surely putting in many more hours than he originally expected. It was sure that he worked more for the satisfaction of being of service than anything else.

The same could be said of others, such as Dr Peter Grech from the Attorney General's Office, or, indeed, the Chief Justice, who would earn far more as a legal consultant, with less responsibilities.

An analogous situation was that of certain MPs who accepted Cabinet posts where salaries were far less than what they earned professionally. Indeed, this was a job that could be terminated by the Prime Minister any time. When he himself had stopped being a Cabinet minister in December 1981, all he had been paid for the four weeks over Christmas, with a wife and two young children, was Lm25.

However, it would be unwise to suddenly change scales to such an extent as to unbalance the public sector. Going overboard with huge salaries for people who were well seen by a minister would draw resentment from those who received much less.

Dr Gatt said he was not advocating discrepancies between the public and the parastatal sectors. But both should reflect reality.

While the salaries of certain levels in the public sector, such as clerical and middle management grades, were better than the private sector, there were large discrepancies at the higher levels. He himself had tried to get Dr Grech and the Attorney-General better salaries when he had been Minister for Justice, because the inadequate salaries had made it extremely difficult to attract experienced lawyers to government service. Dr Grech might have other motivations to continue working in government service, but how many like him could be found?

The same went for other circles such as that of architects and civil engineers.

How could the government expect to attract the best Maltese administrative minds by paying a permanent secretary just Lm12,000, when they could graduate MBA or PhD and join private industry?

If the government persisted in maintaining relativity and keeping salaries low across the board, it could not expect excellence.

Politicians were a different kettle of fish. They entered politics willingly and knowingly. But it was also a fact that Malta was the only country where someone who fell out of political activity had no parachute and nothing to help him support his family until he found his feet. It did not make sense to mistreat people who served the country for fear of creating any discrimination.

The conclusion was irrevocable. If Malta wanted the best people for the public sector, there should be competition with the private sector.

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