China county’s local debt snowballs after it hires army of civil servants, despite paltry yearly salaries of US$2,300
- Expansion of part-time workers has weighed heavily on the unnamed county’s already-strained fiscal budget at a time when local-level debt has become an outsized concern across China, says state media
- Temporary workers make merely a fraction of what full-time civil servants make in their ‘iron rice bowl’ positions
In a rare acknowledgement of the regional financial struggles facing one of China’s most destitute regions, state media has reported on the crushing fiscal pressure resulting from overstaffing.
The report was based on the magazine’s recent visit to an unidentified county in the mountainous Wumeng region, which covers more than two dozen poor counties in southwest China’s Sichuan, Yunnan and Guizhou provinces.
The disclosure came as Beijing has been scratching its head over how to deal with the level of snowballing debt owed by local authorities, which has forced many of them to cut construction budgets or downsize their general spending.
The recruitment process for most temporary personnel lacks central oversight
According to the report, the total wage budget for temporary workers is less than a fourth of what is paid to institutionalised civil servants, who have jobs that are considered to be as secure as an “iron rice bowl”.
However, temporary workers were found to outnumber full-time civil servants in the county by nearly twice as much.
The findings showed that 28,806 temporary workers in the county were each making an average of 16,100 yuan (US$2,268) annually, while the 15,580 civil servants were making an average of 128,300 yuan each – eight times more.
“The recruitment process for most temporary personnel lacks central oversight and appears arbitrary, leading to unregulated growth in quantity, and a lack of quality assurance. Nepotist hiring practices are challenging to eliminate,” the magazine said.
The rapid expansion of temporary workers has weighed heavily on the county’s already-strained fiscal budget.
As land sales, which account for the lion’s share of local government revenue, have been declining amid a real estate slump, the heavily indebted municipalities have been grappling with worsening fiscal conditions.
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With the national economy struggling to find its feet, many local governments are desperate for reliable sources of revenue, and they end up relying on transfers and payments from higher-level authorities.
According to data from the Ministry of Finance, the central government’s budgetary revenue reached 3.4 trillion yuan (US$479 billion) in the first 10 months of 2023 – a 5.8 per cent decline from a year earlier – while local-government revenue dropped by 16.8 per cent to 40 trillion yuan. Land sales dropped by more than 20 per cent, year on year.
In the unnamed mountainous county, the special funds were enough to cover only about 16 per cent of the wages of temporary staff, and most of the rest needs to be reallocated from payment transfers from higher-level authorities to meet these payments, a local official was quoted as saying.
The general public budget revenue falls short of covering wage expenditures for government workers, and the total wage expenditure for temporary staff exceeds the entire county’s total tax revenue, the magazine said.
China’s grass-roots governments usually follow three guiding principles, the magazine noted, pointing to the critical need to “guarantee employee wages, sustain normal operations, and secure the well-being of the people”.
Some counties in the reported region were found to have included wage expenditures for temporary staff in their county-level financial salary budgets, and considerable expenditures were reportedly hidden within the operational expenses of various government departments.
“Higher-level governments should allocate sufficient funds based on functional responsibilities, and specify the funding sources,” an unidentified local official was quoted as saying.
“Otherwise, all of the pressure ultimately falls on county-level finances, and the difficulties accumulate at the grass-roots level.”
