Military Spending in Guatemala: The Fiscal and Microeconomic Impact: 1969-1995 Thomas Scheetz

b) The cost of labor and the public sector labor force

A basic principal in economics is that available resources are scarce, and that choices must be made in allocating those resources. Rationality in the distribution of resources is particularly important in the case of Guatemalan public spending, which is severely limited by scarce government income from taxes, a continuing problem with no visible solution. Under rational conditions of budgetary appropriations, salaries of military personnel should be of a similar scale to those of personnel in the health, education and other social sectors, who-one presumes-also exhibit the same spirit of service, patriotism and responsibility as the military.

The use of obligatory military service (cheap labor) means that the army has greater force levels than it really needs. Any officer has access to recruits at insignificant cost to the military institution but at a major cost to society (in terms of GDP not generated by those recruits in an alternative occupation). The difficulties in gathering information on the distribution of Guatemalan military personnel according to rank did not allow for calculations of pay scales or extraordinary differences in salaries according to the military hierarchy. All that we do know is that, in 1994-1995, the number of military officers reached about 11,000 with an additional 25,000 drafted recruits (these latter do not include state-sponsored local militias).

Tables 5 and 6 deal with labor costs in the relevant ministries mentioned in previous sections. As seen in Table 5, 1970 labor costs (basically salaries and benefits) of the Ministry of National Defense represented 9.5 percent of total government spending on personnel, reaching 20.9 percent in 1994 at the same time that the proportion of government spending on salaries of the rest of public sector workers was decreasing.


TABLE 5

Labor costs per ministry as a proportion of total expenditures on personnel of the Central Government of Guatemala (%)
Year
Ministry of the Interior*
Ministry of Defense
Ministry of Health
Ministry of Education
1968
10.4
9.4
12.4
28.3
1969
9.9
8.9
12.0
28.6
1970
9.5
9.4
13.0
28.0
1971
10.0
10.5
13.9
30.3
1972
9.7
9.8
13.8
30.2
1973
8.6
9.3
12.3
27.9
1974
7.2
9.9
9.9
29.0
1975
7.1
9.7
11.4
29.4
1976
7.3
9.1
11.3
30.7
1977
6.5
9.1
10.0
25.9
1978
5.3
8.0
8.1
20.9
1979
9.3
11.5
12.5
28.6
1980
8.9
10.7
12.7
29.1
1981
9.0
11.1
12.7
29.3
1982
9.5
12.5
13.0
30.8
1983
9.6
19.3
11.9
28.7
1984
9.3
19.0
11.9
28.5
1985
9.2
19.6
11.9
28.3
1986
8.4
18.6
11.7
27.9
1987
8.5
17.0
11.7
27.0
1988
9.4
17.3
13.0
28.5
1989
8.3
16.1
13.1
28.4
1990
7.9
15.6
12.8
29.1
1991
7.6
18.2
11.7
29.3
1992
7.4
19.2
10.9
27.6
1993
7.9
18.4
11.6
28.3
1994
7.6
20.9
10.6
28.0

Source: see annex

* The Ministry of the Interior includes the police.

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