PUTRAJAYA: Civil servants accounted for about 10% to 13% of the new bankruptcy cases between 2021 and 2024, says the insolvency department.
Its director-general, M Bakri Abd Majid, expressed concern over the rising trend of bankruptcies among civil servants, noting that the increase stands in contrast to the overall decline in national bankruptcy rates.
According to the department’s open data, he said, the percentage of bankruptcies among public sector employees has been rising steadily, from 12% in 2020, 10% in 2021 and 11% in 2022 to 13% in 2023 and 14% so far this year.
"The inability of public servants to manage their finances effectively not only impacts them and their families but also has broader implications for the public service ecosystem,"he said in a statement yesterday.
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In some cases, he said, civil servants have chosen to declare bankruptcy to escape the stress of escalating debts.
He said that from an administrative perspective, department heads must monitor their staff’s financial health and remain alert to any behavioural changes.
“Early preventive measures are crucial, including increasing activities focused on personal financial management.
"Departments should also consider collaborating with certified financial advisers or experts to address financial management issues,"he said, adding that failing to do so could open the door to corruption and misuse of power within departments.
On the Public Service Remuneration System (SSPA), Bakri acknowledged that while salary increases may offer some relief, there remains a risk of "bad loans" being offered to vulnerable staff members.
“This vicious cycle must be stopped to prevent further financial instability among civil servants. The cooperation of all parties, particularly department heads, is crucial in addressing this issue.
"With the new salary scheme, public sector employees are expected to enhance their work practices and productivity. However, this also necessitates a shift in mindset,"he said.
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