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Cablegate: Goss Exploring Options for Major Workforce Reduction

VZCZCXRO9458
PP RUEHROV
DE RUEHKH #2046/01 3601323
ZNR UUUUU ZZH
P 261323Z DEC 07
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 9615
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 02 KHARTOUM 002046

SIPDIS

DEPT FOR AF/SPG, EEB/IFD/ODF
DEPT PLS PASS USAID FOR AFR/SUDAN
DEPT PLS PASS TREASURY FOR OFFICE OF INTERNATIONAL AFFAIRS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ELAB EAID PGOV SOCI SU
SUBJECT: GOSS EXPLORING OPTIONS FOR MAJOR WORKFORCE REDUCTION

REF: KHARTOUM 2001

-------
Summary
-------

1. (SBU) The Government of South Sudan (GoSS) has engaged an
international consulting firm to explore options for downsizing its
bloated and unproductive workforce. The GoSS payroll is estimated
to be overstaffed by over 30% (67,000 individuals) and salaries
consume over half of the GoSS budget. The consulting firm estimates
that the cost of downsizing will be more than $100 million over the
first two years of what will likely be a multi-year process. End
summary.

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Overstaffed and Unproductive
----------------------------

2. (U) GoSS officials are keenly aware that the government
workforce is oversized and that salaries are gobbling up scarce
revenues otherwise needed to deliver services and fund investment.
In delivering the Council of Ministers' draft 2008 budget to the
Legislative Assembly on December 10 (Reftel), Finance Minister
Mawein listed excessive and unproductive government manpower as one
of five major obstacles to economic development. Other contacts
have previously noted that salaries account for around half of GoSS
expenditures, seriously constraining its ability to invest in urgent
development projects.

-----------------
Social Employment
-----------------

3. (U) GoSS over-staffing partly results from a conscious Sudan
Peoples Liberation Movement policy of "social employment." The GoSS
has provided "make-work" jobs to SPLA civil war veterans or to their
dependents. In the immediate aftermath of the war, this policy both
provided incomes for deserving war veterans and a means of keeping
an armed and potentially volatile part of the population quiet.
Over time, however, failure to move these excess workers into other,
productive work has proved a serious drag on governance and economic
recovery. The practice also has been an invitation to nepotism and
fraud.

4. (SBU) The GoSS has engaged international consulting firm Adam
Smith International (ASI) to assist it in devising a downsizing
strategy. On December 7, ASI, the Ministry of Finance and Planning,
and the Ministry of Labor briefed the Juba donor community on the
extent of the problem and initial ideas for a possible way forward.

---------------------
Extent of the Problem
---------------------

5. (SBU) According to ASI's estimates, south Sudan's governments
(including those of the ten constituent states) are over 50%
overstaffed - about 67,000 positions. The highest absolute numbers
are at the state level, which employs approximately 150,000; 50%
above their "target" staffing set in 2004. (ASI admits that these
numbers are approximate and the actual number of people drawing
state salaries may well be higher.) As a percentage, however, the
civilian agencies of the GoSS itself are most overstaffed. The GoSS
employs 6673 more than its "target" figure of 7500, or almost
double. In addition, the "organized forces" (SPLA, police, prison
guards) are about 10,000 above their target strength of 33,000.
According to the GoSS Finance Ministry, the salary bill of the SPLA
rose in 2007 as it absorbed personnel from other armed groups in the
South.

-----------
A Way Ahead
-----------

6. (SBU) ASI envisions a multi-year program to trim the GoSS
payroll starting in 2008. The first half of the year would involve
drafting specific plans, securing political commitment and funding,
and putting in place mechanisms to implement reductions. The
program would be launched in the second half of 2008, with an
initial reduction target of 2500 workers. It would continue in 2009
with a further reduction of 15,000. Mechanisms to reduce work rolls
would include retirements, buyouts, and compulsory layoffs. A key
element in planning will be devising a safety net to offer an
alternative to the current "social employment" model. In briefing
the donor community on December 7, Finance Minister Mawein said that
the GoSS does not want to discharge redundant employees without
first establishing alternative employment/incomes for them.


KHARTOUM 00002046 002 OF 002


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Price Tag
---------

7. (SBU) Shrinking the South's government work force will be an
expensive exercise. ASI estimates the cost for each worker
downsized will be U.S. $6,700. Thus, for the 2500 personnel to be
discharged, and adding $6.5 million in startup costs and
incidentals, the 2008 bill will total $23 million. The cost for
2009, with 15,000 to be discharged and $1.5 million in incidental
costs, is estimated at $97 million. Based on experience in other
countries, ASI estimates that the GoSS should begin to realize
savings in two to six years.

----------
Next Steps
----------

8. (SBU) The GoSS already is taking steps to reduce fraud through a
payroll-cleanup initiative that entails screening the rolls,
correcting pay grades, and issuing ID cards to bona fide government
employees. ASI is to return to Juba in January to present its
detailed proposal to the GoSS. Once the specifics are available,
the lead Ministries of Finance and Labor must secure GoSS-wide and
state level buy-in. Finally, the GoSS needs to identify funding
sources to get the program going.

-------
Comment
-------

9. (SBU) Reducing its bloated workforce presents an intractable
challenge for both the GoSS and international donors. The process
will be very costly and carries significant political risks for the
SPLM. Discharging war veterans and widows during the year and a
half leading up to the 2009 election may be the right thing to do in
terms of good governance, but certainly will not be popular. For
this reason, the GoSS may choose to proceed cautiously in the first
year and delay the bulk of the lay-offs until after the election -
especially since the fiscal benefits will be tangible only in the
long term. The coming months will demonstrate whether the political
will and financial resources can be summoned for what promises to be
a lengthy, expensive, and painful process.

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