Reflections on the Indonesian Bureaucracy (Part II)

Cartoon from here.  

In the last post I discussed some aspects of the Indonesian civil service, which has been much maligned in the media over the past couple of years.  I briefly described the post-independence history of the bureaucracy here as well as its role in politics.  I also talked a bit about why having a large and inefficient bureaucracy is bad.  In the post I'm going to continue my discussion of the Indonesian civil service, focusing on an alarming trend that is especially evident where I live: buying and selling jobs with the government.  My district is somewhat famous, at least regionally, because the people here are willing to pay more to become civil servants than in other places.

The Market for Civil Servant Positions

In the previous post I pointed out how lots of people in my district want to get jobs with the government.  Although I used to have a reflexively bad reaction to this, my thinking on the matter has changed since I've been here.  I think the desire to work for the government is a function of the range of possibilities people perceive for themselves or their children.  I mentioned that this area is primarily agricultural, and although the area is highly commercialized now it wasn't so long ago that people here were basically subsistence farmers.  Thus my defense of the "PNS dream" (1) revolves around the notion that becoming a civil servant is the most familiar, the most feasible way out of agriculture for people here.  However, there is a dark side to this.  Because so many people want to become civil servants, and because the positions are limited, there has emerged a market for the civil servant positions.  I base most of the following discussion on word-of-mouth information, bits and fragments I've gathered from people in conversations and chats since I've been here, because it is difficult to collect hard data on things like this.  I've only recently been making more directed inquiries into this issue with an eye towards future research, so take everything you read with a grain of salt.

Cartoon from here.

Though this is a phenomenon that is found throughout Indonesia, the people of my district are said to be more willing to pay to become civil servants, and thus they drive the price up and distort the market.  I've heard a number of explanations for this; some folks say that there is a great deal of prestige associated with being a PNS, but also it is said that people of this district are relatively wealthier than other districts stemming from the traditionally high agricultural productivity of the district.  Based on my own observations the people in this district do seem to be relatively better off than some other places.

A little Betawi.  Cartoon from here.

There is variation based on the position (more on this in a moment), but the price to become a civil servant here is said to be as high as 150,000,000 rupiah (approximately US$ 16,500).  To put this in perspective, the highest starting salary for civil servants in Indonesia is approximately 1,500,000 rupiah per month (+/- US$165).  This means that it would take approximately 100 months, or more than 8 years just to recoup the initial investment from salary alone.  The price associated with becoming a civil servant varies according to a couple of factors.  The first is the level of education for the applicant.  If you have a bachelors degree and you become a civil servant your starting salary will be significantly higher than that of an applicant that only has a high-school diploma or associate's degree.  The price also depends on what office you want to enter.  For example, a job at the public works bureau costs significantly more than a job at the health office.

I asked a number of informants where the money goes, and most of them describe a pyramid structure in which the money is distributed to several different recipients.  Payment is never made directly to a higher-level official in the government; rather candidates for public office (Calon Pegawai Negeri Sipil, CPNS) negotiate with a middleman or broker, who later disperses payments to senior officials in the office the CPNS wants to enter, as well as officials within the government office responsible for administering the civil service as a whole.  Informants indicate that elected officials, including the district headman and members of the district assembly, also get a piece.

Cartoon from here.

Why are people willing to pay so much?  So far I've heard a couple of answers to this question.  The first is that a lot of people that pay get money from their parents, who are willing to dish out this money to ensure a good future for their children.  This makes some sense; after all wealthy parents in the US spend hundreds of thousands of dollars to put their kids through the best universities, and so I'm sure there's some truth to it.  The other common explanation is that people know they will be able to make the money back via corruption, which I'll discuss in the next section.  It's important to remember also that not everyone is willing to pay.  I've had discussions with a number of bright young Indonesians who express disgust at the current state of things here.  Many of them tell me that they once thought of becoming public servants to help improve the country.  At the same time, they wonder why they should have to pay money for a job after paying university tuition and fees for 4-5 years.  Thus it seems that the current system is driving many of the best and brightest away from public service.  As a result, the bureaucracy is overloaded with people with little or no qualifications, which in turn affects policy formation and implementation.  In addition, the whole system seems to undermine the public's trust in the bureaucracy.

It's also important to remember that not all civil servants pay for their positions; some are chosen on the basis of their merits alone.  From what I've seen, these people have to work harder because their colleagues that paid to enter the civil service aren't very productive.  I've heard and read wide ranging estimates as to what percentage of civil servants are actually "capable"; one former Home Affairs minister estimated that approximately 60% of Indonesia's civil service was "unproductive", while the chart I included in the last post indicated that only 3,352 of a total 67,058 (5%) civil servants in the province of North Sulawesi are "competent".  Estimates here put the number of folks that pay for their jobs as high as 90%.  I imagine there is a lot of variation in region and department.


The Upshot: Institutionalized Corruption

Like I said there certainly are cases of rich parents spending lavishly to ensure a stable future for their children, but most people I talk to indicate that willingness to pay stems from the fact that people know they will be able to make their money back through graft.  That's why the price to become a PNS varies from department to department.  Indonesians describe different positions and government offices as being "wet" (tempat basah) or "dry" (tempat kering) depending on the availability of opportunities to enrich oneself through corruption.  For example, the public works department gets a lot of money for infrastructure development, and so there are many opportunities to skim money off the top.  This happens in a number of ways; bureaucrats will inflate the purchase price of everything from staples to bulldozers in the annual budget, pocketing the difference.  They can also get bribes for ensuring that a contract goes to a particular company, which in turn skimps on building materials to make up for the bribe  Another form of corruption is pungli¸ which refers to informal taxes and payments for services.  Another common tactic is to take phantom business trips or submit phony receipts for expenses, which are later reimbursed.

Graphic from Padang Ekspres.

The result is a bureaucracy thoroughly infected with graft.  One recent government study found that 50% of young civil servants had been involved in corruption, mostly assumed to stem from fictitious projects and bribes.  Sensational new stories of corrupt officials embezzling millions of dollars from public coffers seem to emerge on a weekly basis, and most Indonesians feel that corruption is the biggest problem the country faces.  President Susilo Bambang Yudhoyono has attempted to address the problem through the creation of the Corruption Eradication Commission, but their resources are limited and it's said the cases they can get to are merely the tip of the iceberg.  There's also been a backlash against the Commission, which has very broad authority and has been accused of abusing its power.  Most people seem to feel that corruption is such a part of the system that it's impossible to do anything about it.  And although I've had countless discussions on the issue, I still can't understand why people tolerate it.


A Question of Public Morality?

Graphic from here.  

Based on all of this a question occurred to me this past week.  Before I share the question, though, I'd like to propose a few assumptions (2):

1.  People know they have to pay a lot of money to become a civil servant
2.  They also know that there will be chances to get the money back through corrupt practices
3.  By definition they know that corrupt practices are wrong.  They also know that corruption is one of the main problems facing Indonesia today.
4.  Despite this knowledge there are still people lining up to become civil servant in Indonesia.

Based on these assumptions, what kind of statement can we make about public morality here?  I have heard many people say that the system makes people corrupt.  However, if people are willingly entering the system with the knowledge that they will most likely be forced to take part in corrupt activities, can it really be said that the system makes people corrupt?  It seems that they have accepted the rules of the game already; that they have already made their "Faustian bargain".  This would indicate that people have a fundamentally different perception of what the government is for, and that what I've been referring to as "corruption" might be seen by local folks as "fringe benefits".

There are people here that are engaged in a struggle against corruption.  At the national level there are some very strong non-government organizations working hard to monitor corruption and increase accountability in the public sector.  There are some local organizations at work in this district as well.  They investigate corrupt practices and make reports to the Corruption Eradication Commission.  They are vocal in the media and hold public demonstrations.  Unfortunately, it seems to me that most of the time their objections to the corruption inherent in the system seem to stem from resentment that they aren't able to take part in the benefits of the graft.  I hate to say this, and I really hope that I'm incorrect.

My sense is that these facts mean the problem is not merely structural; it's not a question of merely establishing systems of accountability (though this task has proven quite daunting).  Rather it's a question of redefining the role of the public sector in soceity as well as people's perceptions towards the bureaucracy.

Notes

(1) "PNS" is short for Pegawai Negeri Sipil, the Indonesian term for civil servant.

(2)  I am at this point referring to the district where I live.

Reflections on the Indonesian Bureaucracy (Part 1)

Picture from here.  I couldn't find a picture of the
awesome pickle uniforms.

On Monday mornings in my little town I like to sit out in front of my house, which is located on one of the main streets, drinking my coffee, reading, and watching the legions of pickle-green clad civil servants make their way to work (1).  They are everywhere, and this is a reflection of the fact that the bureaucracy plays a fairly large role in day-to-day life in Indonesia.  As a foreigner living here, I've had a good bit of interaction with civil servants here both within the context of my dissertation research and living here in general.  Over the next couple of posts I'm going to attempt to describe the history and role of the bureaucracy in life and politics here while discussing some of the thoughts I've had on the civil-service.

I had my good friend Agung, a civil servant that falls into
the "capable, dedicated, and talented" category, pose for
this picture.  To his credit he refused to change the channel
to a soap opera.  He's watching the news.

My first opinions of the bureaucracy were formed based on the byzantine process I had to go through to get official permission to do my research here.  Before I actually moved to the town (2) I live now, I had to spend several months filling out forms, submitting proposals, and waiting in line at various offices in Jakarta to fulfill all the requirements for foreign researchers.  When I actually moved to the town there was another round of red-tape, because I had to report to all the district-level offices.  One of the things I noticed at the district level was that there usually were a lot of people in the offices, and that most (in some cases 90%) seemed to be occupied primarily by smoking cigarettes and watching soap operas.  Definitely not a good first impression.

Picture of hot civil servant lady from here.

However, over the past 6 months or so I've visited quite a few district-level government offices to conduct interviews or examine documents, and I've met a number of civil servants that I would rank as among the most capable, talented, committed, and knowledgeable people I've met in Indonesia.  It quickly became clear to me that the bureaucracy here is not all bad; though there's a great deal of dead weight, there are also folks that are truly dedicated to their jobs and the future of the country.  There seems to be two bureaucracies working (or not working, in the case of the former) in concert (3).  What accounts for this very clear division in performance and motivation?

A Short History of the Indonesian Public Sector  

The public sector has traditionally been important in Indonesian politics.  Indonesian independence was won by a confederation of resistances rather than a centrally-directed and organized independence movement.  Most of the groups that struggled against the Dutch colonial regime were "locally recruited, financed, and led" (Anderson 1983:481).  The one thing they had in common was a desire for independence from the Dutch.  The result of this was the emergence of a fairly weak state under the leadership of President Sukarno.  There were lot of regional organizations resisting the efforts of the new government in Jakarta to form a coherent, unified national entity.  In order to build national political organizations and strengthen central rule, the bureaucracy was used as a tool to garner support from the masses.  The idea was that if you give people jobs in government, they will be more loyal.  As a result, between 1940 and 1968 the number of civil servants increased from approximately 250,000 to 2.5 million (Anderson, 1983).  One of the problems that emerged was that the government didn't have the resources to pay all of these civil servants, and so individuals began to look for ways to supplement their incomes, and corruption increased dramatically.  Thus the bureaucracy expanded because of political imperatives, but this fostered "rent-seeking" entrepreneurialism on the part of individual bureaucrats as they began to extract payments for services.

Bung Karno pic from here.  

In the late 1960s the Sukarno government crumbled and was replaced by the New Order (Orde Baru) regime of President Suharto.  Suharto was very successful in eliminating opposition and creating a strong, centralized government, but in so doing he also eliminated functioning political parties.  The bureaucracy lost its political role and became an instrument to exercise the priorities of the central government.  In the 1970s the bureaucracy grew by 1.5 million, or almost 400% as the government reaped windfall profits from oil and timber.  All this money enabled the central government to implement sweeping development programs aimed at transforming society.   This growth rate is really striking, especially when compared to other countries in Southeast Asia.  The bureaucracy also grew in Thailand and Malaysia during that decade, but only by 50% and 90% respectively (Hans-Dieter, 1987).  At the same time, the bureaucracy became more technocratic in nature.

When Suharto was deposed in 1998, his regime fell apart as well.  The new government enacted reforms to transfer power to the hundreds of districts that make up the archipelago.  Civil servants and the authority to appoint them, previously held by the central government, was also transferred to the district governments.  At the same time, democracy took root in the districts as regional assemblies and district headmen (starting in 2005) were chosen in general elections.  Political parties mushroomed and once again political power was hotly contested.

Graphic from Manado Post.  Quite revealing.  

This has essentially decoupled the bureaucracy from the mission of development and has introduced a political dimension to the civil service (5).  Whereas during the Suharto years the bureaucracy was part of the pyramid of power, responsible for implementing directives from the top.  Now the civil service is a tool of patronage as well as means for raising revenue.  Unfortunately one of the side effects of the rebirth of democracy in Indonesia has been "money politics".  It costs a lot to get elected here (6), and so people that want to run for district headman have to collect a lot of money if they hope to win.  One way to do this is to promise influential people a job in the government in exchange for their support.  One the new headman is elected, he often appoints members of his "success team" (tim sukses) to high-level positions in the bureaucracy, which allows them to recoup their investment via various forms of corruption.

The expanding the civil service is a key consideration in administrative proliferation, which I've discussed in a previous post.  Ideally the goal of creating new districts is to improve the quality of public service provision and increase public participation in government.  Discussions with public officials, both appointed and elected reveal different motivations, though.  The main consideration cited is to increase the amount of money received from the central government.  Each district receives two types of funds from the government in Jakarta: the general allocation (dana alokasi umum, DAU) and the special allocation (dana alokasi khusus, DAK).  If you have more districts, you get more money.  The second consideration cited by almost all officials I've interviewed is to increase the number of public service positions.

My town provides a good example of this job-generating aspect of administrative proliferation; in 2009 the town, which used to be the capital of the surrounding district, was made an independent administrative municipality, which, in Indonesia's hierarchy of government, puts it on the same level as the district.  Now there are two districts where there used to be one, and so all the offices responsible for running the government have been duplicated.  A recent newspaper article indicated that the town should have 5711 civil servants (for a total population of around 80,000), but there are currently only 3,043, and so they need to recruit 2,668 new public servants.  This is big news in an area where the job prospects are slim.

What Do You Want To Be When You Grow Up?

When you ask people here about their ambitions for themselves or their children, most people will tell you that they want to become a civil servant.  Whenever a new round of recruiting comes up, there are always far more applicants that available positions (4).  When I first started working here I was really distressed by this, because people seem to think that it is the government's responsibility to create jobs, rather than implement policies conducive to private-sector job creation.

Cartoon from here.

This last statement may lead some readers to label me a "neo-liberal".  Briefly this refers to a certain philosophy of politics and economy that insists the government should get out of the way and let the economy develop by itself.  Neoliberals tend to believe that the private sector, motivated by the collective creativity of millions of individuals, is the best engine of economic growth, and that government interference can only get in the way of progress.  The World Bank, International Monetary Fund, and other multi-lateral agencies are often characterized as neo-liberal.  The problem with the neoliberal philosophy, according to critics, is that it doesn't work.  They say it leads to all sorts of bad outcomes, including the concentration of wealth in the hands of a few and the disintegration of the social safety net.  As proof they point to the past; in the 1970s many countries in Latin America were facing economic crises.  In exchange for aid, the IMF forced the countries to agree to dramatically reduce the number of people employed in the public sector and to privatize government-owned enterprises.  The result of these "reforms" was a long period of high unemployment and stagnant economic growth.

Though I don't consider myself a "neoliberal" (I feel like the government needs to have an active role in the economy), I do think that a bloated bureaucracy has adverse effects on society in general.  It appears to me that in the case of Indonesia, the bureaucracy is really constraining economic growth.  And it's not just me that thinks this.  When you look at media accounts and public policy statements, the bureaucracy is often portrayed as one of the major impediments to growth in Indonesia.  President Susilo Bambang Yodhoyono has cited the bloated bureaucracy as a key factor stalling economic progress here and has even gone as far as issuing a moratorium on hiring new civil servants.  A simple google search reveals hundreds of articles detailing examples of how the bureaucracy has fubared things here.

A large inefficient bureaucracy hurts the country in several ways.  It makes it harder to do business; according to World Bank's annual "ease of doing business" survey, Indonesia ranks 129th out of 183 countries (7).  It also means that a large percentage of government spending goes to its own maintenance; in other words, rather than functioning to improve the lives of the people, the bureaucracy becomes an end in itself.  Also if people rely on the government to give them jobs, they are less likely to identify opportunities on their own.  There is a stifling of the entrepreneurial spirit that has proven essential for economic growth (at least at the local level).  Based on all of this you might understand my initial alarm at the thought that being a civil servant represents the apex of the hopes and dreams of the people here.

Ease of Doing Business 2010 map from here.  

Rethinking the Orthodox Thinking....

However, as I started to spend time in villages my thinking on this changed a bit.  Growing up in the west, where we take a diversified economy for granted, we also take for granted an awareness of the multitudinous possibilities of career choices.  "I want to be an astronaut/lawyer/doctor/architect/fireman when I grow up".  But here the economy is overwhelmingly agricultural, and, in the villages especially, almost 100% of the people work as farmers.  So there is no exposure to the diversified economy and people don't grow up observing other possibilities.  Thus it might be beyond the experience of folks here to imagine their kids growing up to be doctors or lawyers, because they don't ever see doctors or lawyers; moreover there isn't an obvious niche or need for doctors and lawyers here.  The one non-farming profession that people do come in contact with on a regular basis is the civil servant or administrator.

People in the village know that farming is hard.  It requires physically demanding labor, and the results are never certain.  There are very limited possibilities for advancement.  Most of the farmers I talk to say they want something better for their children, and they see work in the public sector as a good choice.  Public sector employees don't have to break their backs farming, they have a steady and guaranteed income, and there are all sorts of other benefits.  The children of civil servants have better access to educational possibilities.

Thus I've come to the conclusion that here the bureaucracy might be considered a stage in the "development process".  I suspect that the children of civil servants, because they have broader experience and exposure than the children of farmers, are more likely to go to college or pursue some other post-secondary education, and thus they would be more likely to find other employment.  They would be less likely to want to work as civil servants (though I would have to do a survey to prove this; it's just speculation at this point).

But this still leaves a lot of questions unanswered.  In the next post I'll discuss the "market" for civil service positions and how the politicization of the bureaucracy has opened the door for an increase in corruption.


Notes

(1)  Monday is uniform day here.

(2)  I will avoid referring to my district by name in this post and the next one I write.

(3)  As I thought about this Janus-faced organization I was reminded of a saying the Japanese have: "mado giwa zoku", or  "people by the window".  These are the folks in any organization that aren't particularly capable, motivated, or creative, and so they are given desks near the windows with no real work to do.

(4)  From what I've seen the ratio ranges from 10:1 to 50:1.

(5)  Please remember that I am a geographer and not a political scientist, so this has undoubtedly been formulated elsewhere.  Also remember this is a blog and not an academic paper, so I don't really care.

(6)  I will discuss this in a future post.

(7)  For the sake of comparison, Singapore was #1, Thailand #17 and Malaysia #18.

References and For Further Reading

Anderson, Benedict.  1983.  Old State, New Society: Indonesia's New Order in Comparative Historical Perspective.  Journal of Asian Studies 42:3 pp477-496.

Evers, Hans-Dieter.  The Bureaucratization of Southeast Asia.  Comparative Studies in Society and History 29:4 pp666-685

Kristiansen, Stein, and Muhid Ramli.  2006.  Buying an Income: The Market for Civil Service Positions in Indonesia.  Contemporary Southeast Asia 28:2 pp207.