Expected remuneration is one of the factors people consider when applying for a job, and also when deciding whether to remain in a post. Governments also consider this factor, as public resources are limited and should be invested in a well-prepared workforce that can meet societal demands. At the same time, candidates expect competitive salaries that reflect their preparation, effort and responsibilities, and that are fair across the administration and the wider labour market. Factors such as political interference, limited resources, inadequate budget allocation and limited human resource management capacity might contribute to disparities in pay and benefits among civil servants. These may deter highly qualified individuals from pursuing an opportunity in the public service. A competitive remuneration system that creates certainty for those involved and operates under clearly established rules increases the attractiveness of public employment. Furthermore, clear and fair criteria for salary increases help to retain civil service personnel.
In 10 of the 14 surveyed Latin American and Caribbean (LAC) countries with data available (71%), all central government ministries and agencies have the same pay structure, rules and scales (Figure 13.11). If well designed and clear enough, a centralised salary system allows for transparency, which should provide certainty and potentially attract talented individuals to join the public sector. Only in Uruguay. does each ministry determine its own criteria for remuneration rules and scales remunerated on top of a basic structure that applies to the whole administration. Chile has standards and special rules for each ministry, which coexist with common rules for the entire public sector.
In addition to pay structures, LAC countries use other criteria to define the base salary for public positions. By 2022, 9 out of 15 surveyed countries (60%) used job families and grade tables to set base salaries for their civil servants. It is less common in the region for base salaries to be set considering job and market evaluations (2 out of 15, 13%), or educational attainment or local living expenses (3 out of 15, 20%) (Figure 13.12). Not considering the wider labour-market conditions when setting public sector pay may lead to premium pay for some public sector jobs (in particular administrative and support jobs) and substantial pay gaps for others (for example, digital roles), leading to an inadequate workforce.
Pay increases are important for retaining talent in the public sector. Criteria for wage increases vary across countries in the LAC region. The most commonly used in the LAC region are automatic step increases (5 out of 15, 33%) and step increases based on performance (4 out of 15, 27%). These step increases are based on different considerations. For instance, in Uruguay, they reflect negotiations between the government and unions, and in Honduras, they take into account annual minimum wage adjustments. Likewise, there are countries like Ecuador that do not have systematic increases, but base increases on annual inflation. Other countries grant performance bonuses instead of having fixed increases, which is the case in Brazil and Colombia (Figure 13.13).
