Buying an Income: The Market for Civil Service Positions in Indonesia

Kristiansen, Stein. Ramli, Muhid.

Contemporary Southeast Asia: A Journal of International and Strategic Affairs, Volume 28, Number 2, August 2006, pp. 207-233 (Article)
Published by Institute of Southeast Asian Studies

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Contemporary Southeast Asia Vol. 28, No. 2 (2006), pp. 20733 DOI: 10.1355/cs28-2b 2006 ISEAS ISSN 0219-797X print / ISSN 1793-284X electronic

Buying an Income: The Market for Civil Service Positions in Indonesia

Stein KriStianSen and Muhid raMli

in indonesia, positions in the Civil Service are subject to hidden market transactions. the demand for stable sources of income is high, and lack of transparency makes sales possible by government officers in core positions. the recent decentralization reforms have blurred borders of responsibility and lines of reporting in the bureaucracy and facilitated increasing rent-seeking at local levels. the article reports from a study of payment for government positions in an urban and a rural district in a province in indonesia, nusa tenggara Barat. the survey reveals that prices for positions are rising and vary among departments in accordance with available opportunities to boost their income. Prices are higher where many projects are available and the compensation is good. the article concludes that current practices are unethical and hurt the society and that increased transparency in employment procedures must be in place before things can get any better. Keywords: Civil Service, transparency, bureaucracy, corruption, collusion, nepotism, local government, decentralization, buying an income, Indonesia.

Indonesia has recently gone through a dramatic process of democratization, decentralization, and privatization. The fight against corruption has been an important element in the restructuring of society, at least as declared. Demands for law reforms to curb the rampant corruption, collusion, and nepotism (KKN) under the Soeharto regime actually represented a major issue in the reformasi movements from 1998 onwards (Renoe 2002). However, corruption still seems to be systemic and systematic (Holloway 2002), and endemic and exploitative (Goodpaster 2002). Decentralization reforms from 2001 had little positive impact (MacIntyre 2003) and tended to reactivate money
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politics and undemocratic practices at local levels. According to Transparency International (2005), Indonesia is still among the most corrupt countries in the world. Large-scale corruption siphons from society into the pockets of the powerful, while petty corruption continues as a part of life where smaller amounts of money are tapped from ordinary citizens into the palms of civil servants if anything is to get done. A culture has developed in the Indonesian society that gives moral support for rentseeking and priorities to private gains before public ones. Corruption is generally a symptom of the failure of transparency and accountability, the twin prerequisites for good governance, and Indonesias political system has long traditions in the lack of both. Civil servants are at the core of the problem, being the receivers of kick-backs of large projects, petty bribery, and speed money, and often elevated above insight and control, also after the national democratic reforms. The lack of transparency could possibly be a main reason behind corruption and also explains the limited empirical research on this problem. Permanent employment is generally in short supply in Indonesia. Unemployment and underemployment rates may be as high as 40 per cent of the workforce (Dhanani 2004; Jakarta Post, 17 December 2005). So to secure an earning position with stability and reasonable income opportunities, people are willing to make huge investments. In this research, focus is set on the market for local government positions in Indonesia. We present a survey made among civil servants employed in two districts within one of Indonesias 34 provinces, Nusa Tenggara Barat (NTB). Hard facts on amounts paid and payment procedures are presented along with information collected in focus group discussions and anonymous in-depth interviews. Our objective is to unveil the processes of selling and buying Civil Service positions, and possibly also to indicate which are the informal sources of civil servant incomes where investments in positions can be recovered. The article is organized as follows. After this introduction there follows a review of the literature. General theories on corruption that are of relevance for understanding our specific topic are presented. Thereafter we discuss corrupt practices in Indonesia specifically, based on recent literature. Next, we offer an overview of the Indonesian Civil Service, its history, and present status after the decentralization reforms. The methodological approach and study areas are briefly discussed and followed by a presentation of our quantitative and qualitative findings. The article ends with a concluding discussion.

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Corruption and Civil Service: A Literature Review Corruption in general is definitely not a new phenomenon and neither is it bound to specific regions. For centuries and even millennia, rent-seeking and unproductive entrepreneurship based on the monopoly of power were common at various locations, as in ancient Rome, Hellenistic Egypt, and medieval China (Baumol 1990). Even in developed countries today, unclean business practices are frequent and corrupt institutions are numerous. France and Italy are examples of business contexts in Western Europe where scandals of huge corruption cases have been unveiled recently. However, the extent of the problem seems to be larger in transitional political systems, emerging economies, and especially in poor countries with rich natural resources. Post-colonial development often saw the transfer of concentrated power to elites in Africa and Asia, without a subsequent mobilizing of people through education and political participation. A culture could develop, often based on old traditions and inherited logic of negotiation, gift-giving, and solidarity networks, which facilitates dubious economic transactions. When a civil servant gives a position to a relative rather than to a better-qualified applicant, it is nepotism; when a public office is sold, it is today unanimously regarded as corruption (Gardiner 2002; Swart 2002). Corruption is a broader and more embracing concept than nepotism and bribery and represents a kind of behaviour which deviates from the norm actually prevalent in a given context, a deviation associated with a particular motivation, namely, that of private gain at public expense (Friedrich 2002, p. 15). Corruption normally occurs between two parties where a patron or an agent grants the client special treatment in exchange for goods or services. It is normally studied as a process that takes place in the interface between the public and private sectors (Rose-Ackerman 1997). Corruption is commonly defined as illegal and unethical use of official positions, political influence, or public resources for self-interest and private gain. In this research we take a multi-disciplinary approach to understand the problem. Elements in the comprehension of complex forms and functions of corruption may have been lost in the mono-disciplinary research approaches dominating in the 1990s (Heidenheimer and Johnston 2002, p. xiii). An adequate understanding of corruption requires a grasp of an entire network of influence and should be dealt with in a way that embeds it contextually in a broader analysis of a regimes political dynamics (Scott 2002, p. 124).

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From a political economy perspective, the principal-agent-client model offers a framework for theoretical and empirical analyses of corruption. Based on the rational choice theory, the model presumes that an agent, like a bureaucrat, will become corrupt if the net benefits from corrupt practices exceed those of honesty. Costs related to payback to principals or risks of being detected and sanctioned by them, for instance, the politicians or the judiciary, need to be taken into consideration. The model further predicts that a client will accept bribery if a net benefit can be gained compared with undertaking a clean practice. The moral satisfaction arising from honesty also needs to be valued in this model, in balance with moral gains from supplying wealth to ones family and friends (Szanto 1999). Economists studies of corruption often come in the form of econometric calculations of gains and losses for individuals and society from changing system inputs such as salaries, risks, and sanctions (Abed and Gupta 2002). Klitgaard (1988) laid a solid foundation for subsequent political economy research with his well-known equation:
Corruption = Monopoly + Discretion Accountability

It has been generally acknowledged that illicit behaviour flourishes when agents have monopoly power over clients, when agents have great freedom of choice or high discretionary power, and when accountability of agents to the principals is weak (Mitchell and Simmons 1994). Lack of transparency is one among other reasons behind all these weaknesses of bureaucracies. From a political-administrative science perspective, focus has been set on the potential roles of democratic institutions (Geddes 1994; Johnston 1997), the rules and ethics of bureaucracies (Carino 1986; Khan 1998), and the roles of media and civil society in creating transparency (Giglioli 1996; Ruzindana 1997). There are few empirical studies of what actually facilitates or hinders corruption, but there is strong support for a hypothesis stating that the problem increases with lower levels of transparency in a society (Goel and Rich 1989; Szanto 1999). From a cultural science perspective, researchers talk about the cultural embeddedness of the corruption complex (de Sardan 1999). Corruption is regarded as rooted in cultural contexts and webs of social relations. To deal with it, these cultural contexts and relations need to be understood, without adopting cultural relativism and justifications for corrupt practices. Hope (2000) points to the preference typically given to private over public interests in African cultures. Loyalty bonds to kin and friends matter more than obedience to rules and regulations in artificial political and administrative constructs.

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Also, when leaders are corrupt they breed a culture that condones and spreads corrupt practices among ordinary citizens to the extent that corruption almost becomes a part of life. The reasons behind corruption have been classified as individual, institutional, and contextual (Osei-Hwedie and Osei-Hwedie 2000), and they need to be understood from the perspective of both parties involved. People may be prepared to pay the cost of bribes for improved access to resources (contracts, licences, information, positions, and so forth), reduced costs (customs, taxes, and so forth), or increased speed in certain transactions (for instance, obtaining customs clearance, or a drivers licence). Institutions may develop habits and lack of transparency that encourage bribery and hidden transactions. Also the wider contexts may be characterized by cultures, ethical norms, and codes of conduct that facilitate corrupt actions. Corruption hurts most people most of the time, either because they repeatedly have to pay petty irregular fees for services or because common resources are wasted or used inefficiently. The phenomenon, however, must be explained based on the fact that some people, and even larger groups and institutions, generally gain from being involved. Corrupt practices always primarily benefit those already in power or equipped with economic resources, including information. Power relations and the dominance of elites with unifying self-interests in various institutions also contribute to hiding cases of corruption and thereby to the sustainability of that system. Economic resources are used to gain political influence and powerful positions, and vice versa. The system tends to be self-amplifying, unless non-elite interests are able to mobilize and make interruptions. For ordinary citizens, it is often easier to pay a bribe than to demonstrate for his or her rights, and the cost of the petty bribe may be low compared with the cost of not bribing. From around the developing world, we see clear tendencies that corruption is growing in sophistication and complexity and that a collectivization of corruption is taking place. In China, for instance, corruption cases show an alarming tendency for party and government officials to collude with each other in an effort to gain from the public (Gong 2002). In China as well as in Vietnam, collaborative corruption has become more prevalent under decentralization and privatization reforms (Gainsborough 2003). Business enterprises also play a crucial role in corruption, and the interdependence of political regimes and business is typically strong in Asian countries (Lim and Stern 2002). Collective corruption is based on collaboration among groups of power-holders and is utilized for pursuing private gains. By the collectivization of corruption, the institutional framework becomes what the gun or knife

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is for the common criminal a tool to obtain money from victims (Wheeler and Rothman 1982). The institutional framework consists of, among others, mechanisms to gain and withhold information and to avoid transparency and accountability. Civil servants, as gatekeepers of public resources, are often at the core of the corruption problem. A corrupt civil servant typically regards his office as a business, where he seeks to maximize his individual income (Heidenheimer and Johnston 2002, p. 8). Sale of public offices has long traditions as an accepted and legal affair, not least in continental Europe (Heidenheimer and Johnston 2002, p. 79). According to Swart (2002), public offices could be sold for only a few years or for a lifetime and even as inheritable property. Sellers could be monarchs, ministers, or officials themselves. Based on historical examples, van Klaveren (2002, p. 85) explains how a civil service hierarchy might disintegrate into a number of maximizing units with their own interests and thus unreliable for the execution of national policy. The size of the income of the officials typically depends on their rapacity and ingenuity (Swart 2002, p. 96). As a consequence of the system, civil servants are selected on the basis of their willingness to pay and not their professional qualification and capacity. Sale of offices thus has an undemocratic feature, because it confines office holding to people of means (Swart 2002, p. 102) and violates shared standards of justice and equity (Scott 2002, p. 126). Sale of public offices may disappear with modernization but the system certainly prevails in many poor countries, including Indonesia. Civil servants, whether they have bought their positions or gained them in competition based on qualifications, are gatekeepers to resources belonging to the community. Such resources may be natural treasures, government budgets, information, or services related to education and health and, in Indonesia, also religion. Gatekeepers are the agents in the principal-agent-client theory. They may be parts of the executive body at central or local levels of government, or they may be policemen, school headmasters, or health personnel. We present below a model from Kristiansen (2004) illustrating the role of gatekeepers in relation to resources, approvers, and the society (Figure 1). Approvers are those legitimizing the conduct of gatekeepers and they could be democratically elected parliaments at central or local levels, or the military, the judiciary, or any other body with a mandate to enforce. It seems that the closer the approvers are to the gatekeepers and the further from the society, the higher are the opportunities for corrupt practices.

the Market for Civil Service Positions in indonesia Figure 1 The Gatekeeper System
Resources

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Gatekeepers

Approvers

Society

Corrupt Practices in Indonesia Recent research on corrupt systems and practices in Indonesia is dominated by studies initiated by the World Bank and its sister institutions. In their reports, privatization and decentralization are commonly regarded as the main means to overcome the problem. The current dominance of these institutions and solutions appears somewhat strange in an economic and political context where the Washington-based institutions and ideologies for so long played a central role in the game. Little has been done by leading institutions to create transparency and clean practices, either in government or in business. Meanwhile, Indonesian scholars have been persistently discreet on the corruption issue and contributed little to critical research in the Soeharto era as well as later. This may be explained by the fact that most of them are also civil servants and participants in the project-generating and client-serving earning system. As stated by Nugroho (2005, p. 155), Indonesian researchers are still failing to take a critical position, and academicians are subordinate to administrative authority. Indonesian social science may have moved from the tyranny of an authoritarian regime to the tyranny of the market (Hadiz and Dhakidae 2005). Little analytical research is produced, while the earnings of university lecturers is improved. Also, while university

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students and their organizations in Indonesia are often strongly vocal against corruption in the Civil Service, graduates, however, changed to becoming silent when they are absorbed into the system and confronted with the burdens and challenges of entrance fee repayments and pursuing their career in the Civil Service. In Indonesia, also according to the World Bank, the Civil Service is at the heart of the corruption problem and the prevailing bureaucratic culture of secrecy creates a veil behind which corruption flourishes (World Bank 2003, p. 21). According to Goodpaster (2002), corruption in Indonesia joins with organized criminality and feeds on poverty and widespread unemployment. The system bears similarities with feudalism and colonialism, where the lower ranks support the upper. Conditions were ugly in the Soeharto era. Nevertheless, today Indonesian politics is fundamentally money politics of the worst kind. People, offices, and votes and bought and sold (Goodpaster 2002, p. 36). According to MacIntyre (2003), corruption under Soeharto was conducted in an orderly fashion that was within the limits of what the market would bear. In recent years, corruption problems have become larger and more destructive. The major devolution of power from the national government to the district level in 2001 has facilitated regional government officials to maximize their own individual gains with small risks of control and sanctions. The country now suffers from hundreds of little Suhartos (MacIntyre 2003, p. 17). Cassing (2000) employed the intellectual roots from Douglas North and found path dependence in Indonesian institutions that supports continued corrupt practices. Institutional change is only incremental, and political institutions, such as the local parliaments, and those who allocate resources, such as the local bureaucracies, still suffer from a political culture that seeks rewards through rent-seeking instead of honest and productive work for society. According to the above-mentioned report of the World Bank, however, there is steady progress in meeting the three classical criteria for the development of democracy: effective checks on arbitrary rulers, mechanisms for the replacement of arbitrary rulers, and the participation of ordinary people in the making of rules (World Bank 2003, p. 9; Moore 1967). Powerful interests from the Soeharto era, though still allowed to operate and flourish, are under close monitoring by civil society and the media, and there is a reasonable degree of transparency (World Bank 2003, p. 9). Recent research proves differently, however (Kristiansen and Santoso 2005; Kristiansen and Trijono 2005). After the decentralization reforms, transparency seems to have decreased and corruption escalated, due mainly to the development of new local elites at the district level.

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The Indonesian Civil Service The Indonesian Civil Service has its roots in the Dutch colonial administration, which was certainly not free from corruption (Scott 2002). Dutch business interests used to bribe colonial administrators to secure their desired advantages. During the first two presidencies of the new republic, under Soekarno and Soeharto from 1949 to 1998, strong forces worked to concentrate power in the hands of the executive bodies, predominantly at the central level in Jakarta. Limited influence was given to elected assemblies. As far as possible, power should not be separated and information on state and administrative issues was monopolized and portioned out carefully for the benefit of the power-holders by the central Ministry of Information (Lim 2003; Nugroho 2000). Especially during the Soeharto era, the Civil Service was developed to be a political instrument as well as a strong and wide-ranging administrative apparatus. It grew to encompass more than 4 million employees, from central and local administrative units to the police, military, schools, and health institutions. As a political instrument, the Civil Service played an important role in collecting votes for the Presidents party, Golkar. All civil servants were obliged to be members of the so-called functional group. Civil servants careers depended on their contribution to securing the partys leading position, normally winning 7075 per cent of the votes in the regular elections. The system created a culture of unity and reciprocal favours instead of distance and autonomy between politicians and the bureaucracy. The decentralization reform in 2001 had some impacts on the organization and function of the Civil Service. A main provision of the new law on regional government was the abolition of the former strictly hierarchical relationship between the central government, provinces, and districts. Another was that regional heads at both provincial and district levels are now held accountable to regional legislative bodies rather than to higher levels of government. The districts (kabupaten/kotamadya), which represent the third level in the previous five-tier administrative system, now became responsible for the funding and implementation of activities in sectors including education, health, culture, public works, and the environment. A district now has an average total population of 500,000. Three-fourths of the Civil Service, including teachers and health workers, are now assigned to local governments, predominantly in the 440 districts. Around one million central government employees were institutionally transferred to lower regional levels of government

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by the decentralization and regional autonomy reform. Figures on the total size of the Civil Service vary remarkably from source to source and there is no recent exact census. So-called ghost workers contribute to the confusion of numbers. They are names on payrolls, who never show up on pay day while the financial means are still being tapped. Among the current approximately 4 million civil servants (Department of Finance 2004), around one million are school teachers and 300,000 are health workers (BKN 2004). In addition to those formally employed, there are probably close to one million people who have informal contractual arrangements, so-called honorary employees (honorarium daerah, or HONDA). They are not subject to civil service rules and are not formally on government payrolls. All newly recruited civil servants (calon pegawai negeri sipil, or CPNS) must still participate in a joint training programme, the Prajab or Prajabnas (pra jabatan nasional, or national pre-office duty). A local government office is in charge of the training, which is undertaken jointly with officers from the military. The programme used to take place at a military camp but after the reformasi it is conducted at local training centres, where participants must stay for about two weeks. Subjects taught include military discipline, government regulations, and administrative procedures and management. It is only after the Prajabnas that the new civil servants get their final letter of assignment (surat keputusan, or SK) from the Ministry of Home Affairs and subsequently also their first full salary. The training should form the competence basis for the bureaucracy and also a moral instrument to create clean and good governance (Jatim 2005). Another purpose of the Prajabnas is to unite civil servants in loyalty to the state and the constitution. The result has been the construction of a rather exclusive club of people united in a common culture and code of conduct. According to a former Home Affairs Minister, Feisal Tamin, the level of efficiency in the Civil Service is very low, however, and he estimated that the ratio between productive and unproductive civil servants is 40:60 (Kompas, 17 May 2003). The chances of getting fired as a civil servant are very small. The annual quota for new recruitments to the Civil Service is currently around 300,000. The recruitment process is formally made on a national basis but districts are left with a high degree of authority in the selection process. The supply of qualified personnel is high and the recruitment process is characterized by tough competition. In principle, all new appointments and subsequent promotions are to be based on an objective evaluation of competence and performance.

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As regards recruitment and authority in the Civil Service, the lines of authority are not clear (Smeru 2002). Among the central government institutions, the State Ministry for Administrative Reform (Menpan), the National Civil Service Agency (Badan Kepegawaian Negara, or BKN), the Ministry of Home Affairs, and the Ministry of Finance each plays an important role. There may also be a lack of harmonization between the three levels of administration the central, provincial, and district. Decentralization and privatization have not had any immediate positive impact on the level and extent of corruption in society. There is no indication that regional autonomy breeds accountability and transparency. As stated by one of the original architects behind the decentralization reform in Indonesia, local parliaments are places where black money is circulating without any legal instrument available to stop it (Rasyid 2003, p. 66). According to the World Bank (2003, p. 14), the decentralization reform reorganized the whole system of politics and bureaucracy and created a new class of politicians and their agents, the civil servants. Local political and bureaucratic institutions are developed into means for building private wealth. Politicians regard receiving gifts from the executive as something natural (Choi 2004). According to the World Bank (2003, p. 15), civil servants are not particularly underpaid relative to their market comparators. Their salaries and various economic compensations have increased substantially in recent years and are generally competitive with those in the private sector, especially at the lower ranks. However, the basic initial salary for an officer with senior high school education is still only around 800,000 rupiah (US$85) per month, while one with a Bachelors degree should have one million, according to government regulations. There is currently no income tax on salaries under one million rupiah per month. The purchase of a position creates a formal income on a stable basis. In addition, government positions open for a number of informal and often illegal income-generating opportunities. There are good opportunities for farming, especially in structural or gate-keeping positions with decision-making power. Elites in top government positions have a high degree of monopoly power and discretion and are exposed to low levels of accountability. They are dependent, however, on allowing the officials under them to exploit their offices to secure their loyalty and support (Renoe 2002, p. 107). This is a form of a patron-client system. Clients are given ample room to manoeuvre as long as there is loyalty. Advancement relies on the ability to accumulate resources and share upwards with those in charge. Junior officials must pay their superiors a quota from

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their earnings to secure these spots in a kind of payment pyramid. Failure to meet their quota means losing out in favour of those who can (Goodpaster 2002, p. 10). Illegal or unethical earnings that have been reported among Indonesian and other civil servants include various forms of contract kickbacks, payment from staff in exchange for positions and hiring on projects, loan accounts structured to earn interest by the agency, provision of ghost services, inflated invoicing in collusion with contractors, procedures for tax avoidance, irregular payments for health and education services, bribes to police officers and judges, and speed money to obtain formal papers and permits (World Bank 2003; Vian 2005; Chapman 2005; Azfar 2005). In spite of verbal intentions to create transparency as a means to curb corruption, a bill on freedom of access to information has been stalled in the central parliament due to lack of political support ( Jakarta Post, 9 February 2006), and targets on implementing e-government are not met (Rose 2004). As stated by Dwiyanto (2003), if there are opportunities for corruption, civil servants in local governments tend to do what they can to avoid transparency. The prevailing lack of transparency and farming options of civil servants make the positions attractive in spite of the limited formal salaries. Already in 1998, Renoe (2002) found that the price of getting a beginning job as an elementary public school teacher in a relatively remote area in West Sumatra was 5 million rupiah (US$625). Prices for civil servant positions are rising, as we shall see. Methodological Approach Doing empirical research on corruption is not easy. In Indonesia, both giving and receiving bribes are formally forbidden and it is therefore difficult to open even the tight lips of those suffering from petty corruption, not to talk about the perpetrators. Asking information from those who have already paid and gained, and in our case been able to join the exclusive club of civil servants, would normally be futile. However, some years of reformation talks and subsequent eagerness to see results may have created another atmosphere. The incumbent president himself has insistently and repeatedly asked for reduced corrupt practices, and people realize that something should be done to improve the situation. Ordinary citizens are ashamed when confronted with survey results from Transparency International, for instance, and they realize that the societal disease needs active treatment for the improved welfare of ordinary people. There might be reasons for optimism as regards ethics for whistle-blowing in the Civil Service (Vinten 2000).

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Sixty civil servants from various departments accepted to be interviewed and contributed to filling in our two-page questionnaire on age and education, their current position, time of employment, amounts paid to obtain their position, payment procedures, and their perception on fairness. We selected two study areas, Kabupaten Bima and Kota Mataram. Both are within the province of NTB in the eastern part of Indonesia. There is no reason to expect that the selected study areas divert substantially from other urban and rural districts in Indonesia, apart from the fact that payment for positions may be influenced by flows of money and thus by the gross regional product or total district budgets. The province of NTB consists of two main islands, Lombok and Sumbawa, and its per capita gross regional product is about the national average. Kota Mataram is the capital city of the province. It is a middleincome district, located on the island of Lombok, on the border between Indonesias inner (Java and Bali) and outer islands. The population was 328,000 in 2004. The economy is dominated by the service sector: public administration, education, trade, transport, and tourism. The total district budget, APBD, was equivalent to US$23.2 million in 2004 (US$71 per capita). The total number of civil servants in the district is around 5,000. Kabupaten Bima is located on the Sumbawa island, east of Lombok. The population in 2004 was 419,000. It is a predominantly rural district but also includes the town and harbour of Bima, which form the commercial centre of Sumbawa island. The economy is dominated by the agriculture and service sectors. The total population of Sumbawa is 1.2 million, which is about 29 per cent of the total population in the province (4.2 million). The district budget of Bima in 2004 was equivalent to US$27.3 million (US$65 per capita). The exact number of civil servants in Bima is not known but is probably higher than 5,000. The selection of respondents in the two districts was based on a combination of factors: convenience, and purposive and snowball sampling.1 We started by asking someone we knew and who was willing to talk. Thereafter, referrals from earlier participants were used to gather the required number of participants. Many of them were young and newly recruited, and were eager to share their views. Most of the respondents were interviewed in their homes, while some were invited to another informal venue for talks. Much thought had gone into the preparation of the interviews, with emphasis placed on discretion and prudence, and so no foreign researcher took part in the data collection. The background and purpose of the study was fully explained and all participants were formally assured of full anonymity. The number of civil servants in any relevant administrative unit of the selected districts

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was sufficiently high so that it is not easy to figure out the identity of individual respondents in our sample. During the interview, the researcher from the University of Mataram would fill in the 15-issue questionnaire, which had been adjusted twice after five pilot interviews to make all questions consistent and clear to all. Only eight respondents refused to complete the interview after the formal introduction. After a preliminary analysis of the survey data, focus group discussions were conducted in suitable premises in Mataram and Bima. Researchers from the University of Mataram facilitated the organized discussions in groups of approximately ten representatives from govern- ment institutions, students associations, non-governmental organizations, the media, and politicians. Data from the two surveys were presented as a basis for discussion and we had planned to verify reported prices and procedures for government employment and also to assess general attitudes to the practices. A fluent interaction among focus group participants brought out differing perspectives but generally acknowledged the findings on corrupt practices in employment procedures and no great surprise was revealed over the rates applied. The validity and reliability of survey data were supported by these discussions. In addition to the surveys and focus group discussions, we also carried out informal and unstructured interviews with a number of civil servants who were willing to talk in greater detail about irregular payment practices. Findings and Discussion Our 60 respondents are equally divided between the two study areas, Bima and Mataram. Most are males, 65 per cent, and relatively young, as can be seen from Table 1. There is a clear predominance of newly recruited civil servants, with 73.3 per cent employed during the last three years (20022004). For the majority, the current position is the first Civil Service employment. Respondents generally have a high level of education; 58.3 per cent have the minimum of a Bachelors degree from a university. The largest group of respondents is from the offices of the local governments, pemda (21.7 per cent), under the authority of the district heads (wali kota or bupati ). Others are divided among various departments, including two offices that are formally still under the central government authorities, namely, the statistics bureau (Badan Pusat Stastik, BPS) and the department of religion (Departemen Agama). Descriptive statistics are depicted in Table 1. All the 60 respondents admit that they had to pay to obtain their first Civil Service position. The amounts paid for employment are high, especially when seen in relation to the level of formal salaries.

the Market for Civil Service Positions in indonesia Table 1 Descriptive Statistics Variable Study area Bima Mataram Age 2029 3039 = >40 Gender Female Male Year of current employment 199598 19992001 20022004 Education Senior high school Diploma Bachelor or higher degree Employment sector Health Statistics (BPS) Agriculture Education Local government (pemda) Religion Public works number (n) 30 30 25 28 7 21 39 4 12 44 11 14 35 6 2 10 9 13 11 9 % 50.0 50.0 41.7 46.7 11.7 35.0 65.0 6.7 20.0 73.3 18.3 23.3 58.3 10.0 3.3 16.7 15.0 21.7 18.3 15.0

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The overall reported average payment to obtain employment over the last three years is 27.4 million rupiah. For the purpose of comparison, the monthly net initial salary of a government officer is below 1 million rupiah per year, dependent on the educational level. The amount needed to buy a position is thus approximately two-and-half years full salary and investments are in most cases based on loans from family and close friends. There are noteworthy similarities and differences in payment for positions depending on the site, gender, year of employment,

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educational level, and employment sector. Firstly, the cost of obtaining a government position is remarkably equal at the two study sites, as depicted in Table 2. However, the standard deviation is generally higher in Bima than in Mataram. This indicates that the payment for a position in some cases may depend on family relations or friendship. According to a politician in a focus group discussion, money is not the only thing that matters for gaining government employment. Recruitment procedures are also affected by nepotism. Our culture is like in a family everything can be handled personally so its a pity for those who dont have close friends. There is a difference between males and females as regards payment for positions. Males pay an average of 25.3 million rupiah while females pay 22.6 million rupiah for a position. The discrepancy might be explained by differences in level of education, which is higher among the males. However, a closer look at the data reveals that females with lower educational levels (high school) on average have to pay more for a position than their male colleagues with a comparable level of education (means = 20.6 million rupiah and 18.6 million rupiah, respectively). Meanwhile, men with a university degree at the Bachelors level or higher pay an average of 3.4 million rupiah more than the women for a position. Focus group discussions indicate that men may be more aggressive in searching for structural positions and also have a higher social obligation to find an income to support their families. As depicted in Table 3, the prices paid for government positions were stable in the years 19982001, in spite of the high inflation especially in 1998. A dramatic increase occured in rates paid in 2002, as can be seen in Table 3. This was after the implementation of the decentralization reforms. Even when adjusted for increases in the consumer price index, there are significant price hikes recently. We also see that there is a tendency of increasing differences in rates paid, for instance, as indicated by a standard deviation as high as 10.0 in 2004. Increasing rates and price variances are interpreted as results of greater discretionary power among leading district bureaucrats after
Table 2 Average Payments in the Two Study Areas (Million rupiah) Study area Bima Mataram Mean 24.1 24.7 number (n) 30 30 Standard deviation 10.2 8.6

the Market for Civil Service Positions in indonesia Table 3 Payment by Year of Employment (Million rupiah) Year of Current employment 1995 1997 1998 1999 2000 2001 2002 2003 2004 Mean 5.0 10.0 17.5 17.5 17.0 17.5 26.5 25.7 30.8 number (n) 1 1 2 2 5 5 10 21 13 Standard deviation n.a. n.a. 3.5 3.5 4.5 6.6 6.0 8.7 10.0

223

inflation rate (%)* 20.7 58.0 2.0 9.5 12.6 10.0 5.1 6.4

n.a.: Not applicable; no standard deviation with only one case. * SourceS: Badan Pusat Statistik 19992004 (http://www.bps.go.id); International Monetary Fund 199798 (http://www.imf.org).

Figure 2 Increasing Payment after Decentralization

30 25 20 15 10 5 0 27.4

16.6

19952001

20022004

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Figure 3 Differences in Payment for Positions among Major Education Groups

30 23.4 19.3 20 26.4

25

15

10

Senior high

Diploma

Bachelors

decentralization reforms. The numbers of applicants and new Civil Service recruits for the years 20012004 are depicted in Appendix 1 (before the References Cited) for the two districts. The increase in the average payment for positions in the pre- and post-decentralization periods is illustrated in Figure 2. Payments for a position differ significantly among levels of education. The overall average price for a position requiring a Bachelors degree is 26.4 million rupiah, compared with 19.3 million rupiah for positions obtained by candidates with only a senior high school education. The differences among education levels are illustrated in Figure 3. Prices also vary significantly among sectors of government. The cheapest positions are those in the health departments, while applicants to the ministry of religion and of public works have to pay almost double the average prices. In Table 6, the mean rates of entries into positions are depicted, specified for the seven government sectors included in our study. All health department officers in our survey have a diploma education, while those in the agricultural sector hold a Bachelors or higher university degree. Furthermore, respondents in the departments

the Market for Civil Service Positions in indonesia Table 6 Payment by Sector (Million rupiah) Office/department/dinas Health Statistics Agriculture Education Local government (pemda) Religion Public works Mean 17.0 20.0 20.5 23.6 23.7 29.6 30.0 number (n) 6 2 10 9 13 11 9

225

Standard deviation 4.4721 0.0000 10.916 9.1097 9.2767 8.5013 7.9057

of education and religion have higher levels of education than the average participants in the survey. Differences in level of education, and thereby formal salaries alone, do not explain the variances in payment for positions among various government sectors. The variances clearly reflect unequal opportunities for informal income-generation in the different departments. The public works department channels huge flows of money for construction and infrastructure development, and the department of religion has the sole responsibility for issuing a number of certificates as well as for hajj-related activities. As regards forms of payment for positions, survey respondents or participants in focus group discussions do not wish to reveal to whom the payment is made. As stated by one participant in a focus group discussion in Mataram, it is better to cut my head if you want to know more about that. However, most informants indicate that there are brokers with close connections to the highest local government officials. The majority of respondents report that they paid by bank transfer to a known inside officer via a middleman. Regarding payment for a promotion, few respondents have willingly contributed detailed information for that part of the questionnaire Procedures are too complicated as stated by one. Comments clearly indicate, however, that promotions are often dependent more on achievements in irregular income generation than in professional competence and the accomplishment of legal work and formal duties. As expressed by one participant in a focus group discussion: I have not been promoted because if you have no money, things are not running smoothly (tidak ada fulus tidak mulus). The survey instrument does not touch on irregular income opportunities. However, in-depth interviews and focus group

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discussions have pointed to available alternatives. A mark-up strategy in the daily activities at work is widely used to inflate the income of some civil servants. This is an example of how such a strategy may work: In the procurement of stationary items, photocopying, and so forth, the invoice presented for reimbursement are typically jacked up by some 30 to 40 per cent of the real value. Similarly, for employees travels, fake invoices and receipts (for example, air tickets and hotel bills) are regularly made. Depending on the type of services offered, civil servants may demand speed money of varying amounts. Chargeable services include tax avoidance, health treatment, school enrollment, clearance from police inspections, issuance of wedding certificates, and so forth. A fast medical check-up could cost 50,000 rupiah, for instance, and irregular admission fees to schools often reach 1 million rupiah. Money parking (for interest rate gains) and sale of positions represent other sources of irregular income for civil servants. There is general consensus among respondents that the various forms of irregular payment or petty corruption contribute to higher costs and longer waiting time for the provision of regular public services. The larger amounts of irregular payment are normally found in contracts between local governments and suppliers of goods and services. A typical markup is currently between 30 and 50 per cent, which is money taken by public officers in charge and distributed among office members, politicians, and other insiders according to rank and bargaining power. A localized market for government contracts is being developed, which limits competition among suppliers. Civil servants and private businesses collude to decide on the allocation of contracts for construction projects or the supply of products and services to local short-listed companies. This leads to markets with oligopolies, where there is no real competition and where contracts are divided among suppliers according to a rotating system (arisan). Incomes for local government officers are also created from companies payment to get short-listed. A high percentage (76.7 per cent) find that the system of payment for government positions is unfair, unethical, and that it should be changed. Specific reference is made by some to the strict Islamic rules that prohibit the giving and receiving of bribes. A minority of 13.3 per cent report that they find the system to be customary and therefore also acceptable. The remaining 10 per cent did not want to comment on these issues. Among those who accept the current system, a typical remark is that there is no way out. More bureaucratic procedures in the recruitment process would only add

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to the complexity of gatekeepers. The majority, however, regard the lack of transparency in the bureaucracy as the main problem. When asked for their opinion on alternative recruitment procedures, typical comments are must be transparent and merit-based, must be open, transparent, and well supervised, and tight supervision and strong law enforcement. Many also emphasize the need for change in individual morale and institutional culture and some point to the need for independent and professional non-government institutions in the selection of candidates. There is generally little trust in politicians with regard to solutions to the problem of the sale of office positions. According to a participant in the focus group discussion in Bima, local parliament (DPRD) members work in the political milieu, so it is hard to expect that they can represent the true aspirations of the people. Few put any blame on individual applicants who pay to obtain a position that is simply the only way to get in. As stated by a female activist of a non-governmental organization and former civil servant applicant who participated in a focus group discussion: I want to get married and feed my children, so I had to try. The stated recruitment process is only a formality. In reality, its just like a fish market where many people compete to buy certain fishes. Conclusions In this article, focus has been set on the market for local government positions in Indonesia. Our main objective has been to uncover the processes of selling and buying Civil Service positions. We have also collected information on available opportunities to earn additional income from which a major part of their investment gone into seeking positions may be recovered. Doing quantitative research on corrupt practices is obviously complicated and the study has certain limitations. First and foremost, in our survey we were unable to get a random selection of civil servants to interview, and because of this our findings cannot be generalized for the whole of Indonesia. However, by use of focus group discussions and additional in-depth interviews, the validity and reliability of the survey data in the selected province have been checked, and our findings seem to have been supported. Formal positions are generally in high demand in Indonesia, and only 1 to 5 per cent of applicants for Civil Service positions are accepted as new recruits in the two study areas of Bima and Mataram. Based on the data of our survey of the two districts, we can clearly conclude that there is a market for Civil Service positions in Indonesia

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and that the cost of securing a position is high compared with the stated salary the position offers. Our findings also show a definite rise in the rates paid for positions after the decentralization reforms started in 2001. Costs of obtaining positions vary substantially among sectors or departments and reflect the value of alternative and irregular sources of earnings. In 2004, people were willing to pay more than 30 million rupiah (US$3,200) for an average starting position with a formal salary of around one million rupiah. The positions that cost higher are those in the departments of religion and public works and those that require a university education. Willingness to pay is high among potential candidates but the vast majority of our respondents find the system to be unethical and unfair. Those who have paid and obtained a position blame the system and not the individual applicants, and they think that there should be greater transparency to clean up the employment procedures. The selling of public offices is undoubtedly a case of corruption. Corrupt practices are generally a symptom of the failure of transparency and accountability in a society or an institution. In Indonesia, the Civil Service is generally characterized by non-transparency. A culture has developed through the decades, which allows transactions to be hidden and which gives moral support for rent-seeking and priorities to private gains before public ones. In spite of the recent democratization reforms, there is a lack of political will to solve the problem, however. It seems that the new local political elites have colluded with corrupt bureaucrats in unclean and unethical practices. The fact that 60 civil servants have volunteered to tell how their positions have been bought, and that they detest the unethical current recruitment procedures gives reasons for hope. In addition to the main recommendations from the interviewees in this study, focusing on transparency and professionalism in the selection of Civil Service candidates, we will add two policy recommendations. Firstly, there is a need to rework the legal framework to enhance transparency. Those in power generally have no real incentives to fight corruption because they profit from the status quo (Sherlock 2002). However, with the rapid development of politics and civil society awareness in Indonesia nowadays, there are opportunities for political manoeuvring to amend one law and approve another. The current anti-corruption law, putting equal guilt on the briber and the bribed (Undang-Undang no. 20, 2001, Pasal 5) should be amended to reduce the fear to unveil corrupt practices by those who had paid in petty corruption cases. Whistle blowing should be encouraged. In addition, the proposed Freedom of Information Act, which is currently stalled

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in the House of Representatives, should be passed to give everyone the right to insight and information. In the case of Civil Service recruitment and promotion, selection criteria for each specific position should be clearly spelt out, and a list of the applicants should be made generally available, including such information as the applicants name and age, place of residence, educational background, current position, and career track. Secondly, steps should be taken to clean up the Civil Service itself and reduce the incentive to sell positions. The sense of professionalism, efficiency, and hard work seems to be missing in the current system. The Prajab (Civil Service Introductory Course) needs to be reworked. Steps could be taken to bring in rules and procedures often associated with the private sector. There should be stronger demands to meet targets, and individual incentives should be performanceoriented. It should be possible to fire employees who choose to remain inefficient or are involved in illegal activities. The monopoly power of certain institutions could also be curbed. Experiences from improved bureaucracies in other developing countries (Grindle 1997) indicate that high expectations about employee performance and a shared commitment to meet targets were crucial elements of their organizational culture. Privatization of public services itself is probably not the best solution for Indonesia as market failures are substantial and oligopolic forms of collaboration are common. Hence today it may cost even more to get a position in the corporate business sector than in the Civil Service.

Appendix 1 Civil Service Recruitment in Bima and Mataram, 20012004 region/Municipality Kabupaten Bima Year 2001 2002 2003 2004 % no. of applicants* accepted accepted 2,000 4,000 6,000 8,000 50 166 150 283 2.5 4.2 2.5 3.5 Kota Mataram no. of applicants accepted 8,136 5,821 3,154 4,186 115 173 100 211 % accepted 1.4 3.0 3.2 5.0

* No record on exact number. Figures in this column are estimates given by an officer at the human resource/personnel section (bagian kepegawaian) Pemda Bima. SourceS: Kantor Sekda kabupaten Bima dan kota Mataram 2005, 2006.

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NOTES
* The two other contributing authors are Anwar Fachry and Haji Busaini of the Centre for Population and Development Studies, University of Mataram, Lombok, Indonesia. 1 For details on purposive and snowball sampling, see Patton (1990).

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Stein KriStianSen is Professor of Development Studies at the School of Management, Agder University College, Kristiansand, Norway. Muhid raMli is a Senior Researcher at the Centre for Population and Development Studies, University of Mataram in Lombok, Indonesia.