D I R E C T I O N S I N D E V E L O P M E N T THE W O R L D B A N K International Public Administration Reform Implications for the Russian Federation NICK MANNING AND NEIL PARISON D I R E C T I O N S I N D E V E L O P M E N T International Public Administration Reform Implications for the Russian Federation Nick Manning and Neil Parison THE WORLD BANK Washington, D.C. © 2004 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail feedback@worldbank.org All rights reserved. 1 2 3 4 07 06 05 04 The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. Cover photograph: The White House, Moscow: Neil Parison. ISBN 0-8213-5572-4 Library of Congress Cataloging-in-Publication Data Manning, Nick, 1951­ International public administration reform : implications for the Russian Federation / Nick Manning, Neil Parison. p. cm. -- (Directions in development) Includes bibliographical references and index. ISBN 0-8213-5572-4 1. Public administration--Cross-cultural studies. 2. Civil service reform-- Cross-cultural studies. 3. Civil service reform--Russia (Federation) I. Parison, Neil, 1957­ II. Title. III. Series. JF1351.M356 2003 352.3'67'0947--dc21 2003053833 Contents Acknowledgments vii Abbreviations and Acronyms xi Executive Summary xiii 1. The Countries Selected 1 2. Reformers' Concerns: What Was Broken? 6 What Did They Want to Do? 6 Reducing Public Expenditure 6 Improving Policy Responsiveness and Implementation 7 Improving Government as Employer 8 Improving Service Delivery and Building Public and Private Sector Confidence 9 Mapping Reformers' Concerns 10 Notes 12 3. Reformers' Activities: What Did They Do? 13 The General Picture 13 The Ingredients of Public Sector Reform 13 "Basic" Reforms: Achieving or Strengthening Discipline 16 "Advanced" Reforms 19 Choices in Advanced Reforms 25 Coherence of Reforms 28 The Level of Reform Activity 29 Notes 32 4. Reformers' Achievements: What Did They Gain? 33 Results Are Difficult to Determine 33 Reductions in Public Expenditure 34 iii iv INTERNATIONAL PUBLIC ADMINISTRATION REFORM Efficiency Improvements 36 Other Gains 37 Unintended Consequences 37 Notes 40 5. Reformers' Traction: Why Did They Do Different Things? 41 A Model for Explaining Reform Activities 41 Points of Leverage 42 Institutional Malleability 43 Mapping Reformers' Traction 44 Explaining Patterns of Reform 44 Notes 46 6. The Challenge for Low-Traction Reformers: How to Achieve Basic Reforms 47 A Dilemma Facing Low-Traction Reformers 47 Seizing Opportunities in Basic Public Expenditure Management Reforms 48 Seizing Opportunities in Civil Service Personnel Management Reforms 49 Seizing Opportunities in Reforming the Organizational Structure of the Executive 50 Seizing Opportunities in Changing the Role and Policy Load Carried by Government 51 Lessons from Low-Traction Countries Needing Basic Reforms 51 7. Implications for the Russian Federation 54 Realism and Managed Expectations 54 First Things First 54 Create More Traction 55 Seize Opportunities 56 Create Opportunities 58 In Looking for Useful Experiences, Look for the Like-Minded 59 Notes 59 Appendixes A. Summaries of Individual Country Reform Experiences 62 B. Reformers' Concerns: Methodological Note 74 C. Points of Leverage for Reformers: Methodological Note 84 D. Institutional Malleability: Methodological Note 88 E. Glossary 92 CONTENTS v References 106 Index 108 Boxes 1. Australian Reform Concerns 7 2. Reform Activities in China 14 3. Reform Activities in Canada 15 4. Associating Performance Information with the Budget in the United States 18 5. Senior Executive Services in Australia, Hungary, and New Zealand 19 6. Advanced Accounting Reforms in the Netherlands 20 7. Budget Reform Activities in Finland 21 8. The Civil Service in New Zealand--An Unusual Case 22 9. Reform Activities in Brazil 24 10. Decentralization in Poland 25 11. Contractual Arrangements within the U.K. Public Sector 27 12. Reform Activities in Chile 29 13. Australian Reform Activities 30 14. Program Review in Canada 35 15. Mixed Signals on Australian Efficiency Savings 36 16. Mixed Reform Outcomes in the United Kingdom 39 17. Unintended Consequences in the Netherlands 40 18. Reform Management in New Zealand and the Republic of Korea 56 19. Dispersed Reform Management in Canada 57 20. Stronger Central Agency in Finland 84 21. Cabinet Office in Australia 85 22. Majority Government in Canada 86 23. Organizational Heterogeneity in Brazil 87 24. Federalism in Canada 88 25. The Civil Service and the German Administrative Tradition 90 Tables 1. Size of the Country and the Economy Relative to the Russian Federation 2 2. Fiscal Decentralization 4 3. Measures of Governance 4 4. Reformers' Concerns 11 5. The Elements of Basic and Advanced Reforms 26 vi INTERNATIONAL PUBLIC ADMINISTRATION REFORM 6. Reform Activities 31 7. Reformers' Traction 45 Figures 1. General Government Employment as Percentage of Total Employment 3 2. Breadth of Reformers' Concerns 12 3. Two Stages in Public Sector Reform 16 4. Overall Reform Activity 30 5. A Model for Explaining Reform Differences 42 6. Reformers' Traction and Reform Activity 46 7. Russia's Reformers in Context 59 Acknowledgments This paper was produced by the World Bank Russia public administra- tion reform team in response to a request from the Russian Federation government. It has benefited from discussions in a series of initial semi- nars held in December 2000 in Moscow and subsequent detailed discus- sions in Moscow from January 2001 to June 2002 with officials and experts engaged in preparing the Russian Federation's Civil Service Reform Program. Experts from the Russian State Service Academy, the Higher School of Economics, Moscow State University, the Institute of State and Law of the Russian Academy of Sciences, the Experts for Labor Foundation, the Institute for Economies in Transition, the State University of Management, and the Siberian State Service Academy par- ticipated in the seminars and subsequent discussions, as did officials from the Ministry of Finance, the Ministry of Economic Development and Trade, the Ministry for Labor and Social Development, the Apparatus of the Government, and representatives from the Administration of the President. The authors would like to express their thanks to all the experts and officials who participated in the seminars and discussions and who all gave so freely of their time and insights--in particular, Professor Lev Jakobson from the Higher School of Economics, who kindly convened and hosted the seminars and discussions. Nick Manning and Neil Parison prepared this paper with assistance from Yelena Dobrolyubova, Kathy Lalazarian, Jana Orac, and Jeffrey Rinne. It draws from a series of country reform summaries that were pre- pared by the following experts: Australia: Geoff Dixon, Geoff Dixon & Associates, Canberra Brazil: Geoffrey Shepherd, Sector Lead Specialist, Public Sector, World Bank, and Jeffrey Rinne, Public Sector Group, World Bank Canada: Gord Evans, Senior Consultant, Institute of Public Administration of Canada Chile: Geoffrey Shepherd, Sector Lead Specialist, Public Sector, World Bank vii VIII INTERNATIONAL PUBLIC ADMINISTRATION REFORM China: John P. Burns, Professor, the University of Hong Kong, with Chau-Ching Shen, Senior Financial Management Specialist, World Bank Finland: Seppo Tiihonen, Senior Public Sector Specialist, World Bank Germany: Dr. Elke Löffler, Public Sector Consultant, Birmingham, United Kingdom Hungary: Georgy Gajduschek, Researcher, Hungarian Institute of Public Administration, with Jean-Jacques Dethier, Senior Economist, World Bank The Netherlands: B. J. S. Hoetjes, Professor and Senior Research Fellow, University of Maastricht and Netherlands Institute of International Relations, Clingendael New Zealand: Graham Scott, Principal, Graham Scott (NZ) Ltd., and Executive Chairman, Southern Cross International Ltd.; Lynne McKenzie, Managing Director, Southern Cross International Ltd. Poland: Helen Sutch, Sector Manager, World Bank; Michal Dybula, Research Analyst, World Bank; Ryszard Jerzy Petru, Consultant, World Bank; Jacek Wojciechowicz, External Affairs Officer, World Bank; Marcin Przybyla, Research Analyst, World Bank Republic of Hakyung Jeong, Director, Planning and Coordinating Korea: Unit in the Civil Service Commission of the Korean Government; Dae-Ki Kim, Senior Financial Economist, East Asia Financial Services, World Bank; Kookhyun Kim, Director General, Ministry of Government Administration and Home Affairs; Jeffrey Rinne, Public Sector Group, World Bank United Kingdom: Jeremy Cowper, Head, Modernizing Government Secretariat, Cabinet Office, government of the United Kingdom United States: William P. Shields, Jr., Program Associate, National Academy of Public Administration; J. William Gadsby, Director, Management Studies Program, National Academy of Public Administration The full reform summaries are available at http://www1.world bank.org/publicsector/civilservice/countrysummaries.htm. The paper has also benefited from many discussions with World Bank staff and others. It has gained particularly from the useful points made by Bob Bonwitt, OECD SIGMA, and Chris Pollitt, Erasmus University, who kindly acted as external peer reviewers, and by Robert Beschel and Dana ACKNOWLEDGMENTS IX Weist, internal World Bank peer reviewers. Additional valuable com- ments were made by Gord Evans, Malcolm Holmes, and Allen Schick. Task manager for the Russia public administration reform work is Neil Parison. The sector managers responsible for providing oversight were Shekhar Shah and Helga Muller, with sector directors Pradeep Mitra and Cheryl Gray and country director Julian Schweitzer. This is a practical document, and text references have been kept to the minimum. Many references are provided to pages within the World Bank website on administrative and civil service reform at http:// www1.worldbank.orgpublicsector/civilservice/. The relevant pages of that site provide the key readings. The authors would like to acknowl- edge the work of the many contributors to the website whose insights are referred to in the technical annex, particularly including Ismail Radwan, Martin Rama, and Guy Peters. Comments are very welcome and should be forwarded to Nick Manning (Nmanning@worldbank.org) or Neil Parison (Nparison@worldbank.org). This paper does not necessarily reflect the views of the World Bank or its executive directors. In addition, contributions provided for the case study country reform summaries by serving civil servants and officials represent only their personal opinions and do not necessarily reflect the views of the government of the country in question. Nick Manning and Neil Parison (with Yelena Dobrolyubova, Kathy Lalazarian, Jana Orac, and Jeffrey Rinne) February 2003 Abbreviations and Acronyms CCMD Canadian Centre for Management Development EBRD European Bank for Reconstruction and Development ERC Expenditure Review Committee of Cabinet EU European Union GDP Gross domestic product GIA Gallup International Association GPRA Government Performance and Results Act IMF International Monetary Fund ISIC International Standard of Industrial Classification IT Information technology NGO Nongovernmental organization NPM New public management OECD Organisation for Economic Co-operation and Development MARE Ministry of Federal Administration and State Reform (Brazil) PPP Purchasing power parity (current international $) PSAs Public Service Agreements Vice President: Johannes Linn (Europe and Central Asia)) Sector Director: Cheryl Gray (Europe and Central Asia Poverty Reduction and Economic Management) Sector Leader, Helga Muller (Europe and Central Asia Poverty Public Sector Reform: Reduction and Economic Management) Team Leaders: Neil Parison (Europe and Central Asia Poverty Reduction and Economic Management) Nick Manning (South Asia Poverty Reduction and Economic Management) xi Executive Summary This paper has four objectives: 1. To offer an analysis of public administration reform experiences in a set of countries chosen to illustrate the range and depth of recent administrative change 2. To pick out from this analysis those variables that seem particularly relevant to the current condition in the Russian Federation 3. To suggest a way of organizing thinking about a very complex and contested field 4. To provide some pointers toward a reform strategy for policymakers in this area in the Russian Federation. Identifying the key country comparators and the relevant variables and offering a way of thinking about their significance are particularly important for the Russian Federation authorities as they prepare for implementation of the Program for the Reform of the Civil Service System in the Russian Federation. As reforms intensify, there will be a flood of serious, experienced international advisers and management experts, but there will also be those with "snake oil" to sell. Reformers need some lenses through which they can critically examine reform pro- posals and evaluate advice from experts. The paper draws its conclusions from an analysis of 14 countries selected by representatives of the Russian Federation government: Australia, Brazil, Canada, Chile, China, Finland, Germany, Hungary, the Netherlands, New Zealand, Poland, the Republic of Korea, the United Kingdom, and the United States. The World Bank was asked to look at a number of countries that faced similar challenges to those facing Russia in this area, while also looking at some countries that faced different problems but achieved interesting results. The analysis of these 14 countries also served to demonstrate that there is at present little international convergence of ideas on administrative reform. The paper focuses on the reform concerns and activities of gov- xiii XIV INTERNATIONAL PUBLIC ADMINISTRATION REFORM ernments in these countries over the last 10 to 15 years. However, it is in the nature of administrative reforms that their beginning and end are dif- ficult to discern exactly; thus this period has been interpreted relatively freely. The paper has also deliberately focused on central or federal gov- ernment, although it was noted that some of the major developments are at lower levels of government (state, provincial, regional, or local gov- ernments). The analysis of these 14 country experiences starts with the question "what was broken?" It sets out the broad reform concerns that to differ- ent degrees were publicly stated by those 14 governments: · To reduce public expenditure · To improve policy responsiveness and implementation · To improve government as employer · To improve service delivery and build public and private sector confi- dence. The paper demonstrates that the set of countries identified as com- parators can be placed along a very rough scale, ranging from the com- prehensive reform concerns of China to the specific and focused concerns of the Netherlands on pay and incentive issues. The paper next asks what they did. It is common knowledge that the period from the mid-1980s to the end of the 1990s saw a huge volume of major and complex public administration reform programs. Here we offer a framework for viewing the four areas of public sector institution- al arrangements and public policy that are amenable to relatively short- term change: 1. Public expenditure arrangements 2. Personnel management and civil service 3. Organizational structure of the executive 4. Role of and policy load carried by government. The paper maps the depth of reform activity in these 14 countries and provides an overview of the impact of reforms in terms of reductions in public expenditure, efficiency improvements, and other gains such as political satisfaction with the policy flexibility and responsiveness that the new arrangements have provided. It also seeks to identify some of the unintended consequences of reform programs. Given that many governments were driven by very similar sets of con- cerns, why then did they often pursue different reform activities? Generally, the paper finds that they did different things because: EXECUTIVE SUMMARY XV · They were constrained by the basic architecture of public administra- tion: Some reformers found themselves able to gain more traction on administrative structures than others. · Some reformers were concentrating on some basic "must-do" reforms, and others that had sound basics in place were selecting from an optional menu of "could-do" reforms. · Those reformers grappling with basic reforms had to be distinctly opportunistic--that is, they had to take advantage of idiosyncratic developments as they emerged. Circumstances dictated action, but the leverage available to reform- ers--the points of entry to comprehensive reform programs--and the malleability of basic public sector institutions varied considerably among countries. Overall, the paper concludes that the level of reform activity is significantly determined by the resulting traction that was available to reformers. The framework recognizes that many reforms rest on a discipline that is ingrained in the behavior of civil servants and the organizational cul- ture of public sector agencies. Discipline means, in essence, formality-- that actual behavior follows the written rules and the budget on paper that parliament agreed to bears a close relationship to the budget that is executed. The framework identifies two stages in public sector reform: basic reforms intended to achieve or strengthen public sector discipline and advanced reforms. It then distinguishes between different paths fol- lowed by the advanced reformers. For example, contractualism has become an important technique, but it is certainly not the only way to go. Beyond the basics, there is more of a choice. Finding a point of entry is the underlying problem facing the reform- ers who have little traction and certain nonoptional basics to achieve. This paper reviews some of the opportunistic strategies seized by reformers in this situation. Finally, review of the possible entry points to public administration reform for the Russian Federation suggests that it could be appropriate for the reform team in Russia to seek to · Keep firmly in mind the need for realism and managed expectations · Start with the basics and focus on fundamental civil service reforms · Create more traction, particularly through developing central agency capacity · Seize opportunities through forging partnerships with regional admin- istrations, cities, municipalities, and districts, and encourage pilot reform schemes and experiments at the agency or subnational level XVI INTERNATIONAL PUBLIC ADMINISTRATION REFORM · Create opportunities through the judicious use of functional reviews and stimulate external pressure on the executive (including the cau- tious introduction of some freedom of information legislation and the development of an ombudsman's office) · Look particularly at the experiences of other low-traction countries that also have broad reform concerns and some need to focus on the basics: Brazil, Hungary, Poland, and the Republic of Korea. 1 The Countries Selected This paper presents a summary assessment of recent experiences in pub- lic administration reform. It draws its conclusions from 14 countries selected by representatives of the Russian Federation government: Australia, Brazil, Canada, Chile, China, Finland, Germany, Hungary, the Netherlands, New Zealand, Poland, the Republic of Korea, the United Kingdom, and the United States. The World Bank received a request to examine countries that faced similar public administration challenges to those confronting Russia, while also looking at other countries that faced different problems but achieved interesting results. The analysis of these 14 countries also demonstrated that there is little international convergence of ideas on administrative reform. Some com- mentators believe that the international debate has been overly influ- enced by the experiences of Australia, New Zealand, the United Kingdom, and the United States. This somewhat skewed debate has masked what are perhaps the more idiosyncratic country realities.1 Many countries have clearly been much less enthusiastic about new public management than these. The 14 countries are a very mixed bag. Table 1 shows that only one (Brazil) is within 10 percent of the Russian Federation in relation to pop- ulation, size of labor force, and per capita gross domestic product (GDP). The scale and structure of general government employment are clear- ly very different among these countries. In terms of employment, figure 1 suggests that Australia, Canada, Finland, the United Kingdom, and the United States have a considerably larger core public sector than the Russian Federation (excluding state-owned enterprises). However, cross- country comparisons of data on public sector employment and wages must be treated with great caution. Numerical comparisons are compli- cated by the variation in functions undertaken by governments, as well as by varying approaches to categorizing data. As a result, these data should be considered only as a broadly indicative overview. The data for the Russian Federation may significantly understate actual total employ- ment because of classification difficulties. 1 Table 1. Size of the Country and the Economy Relative to the Russian Federation (Russian Federation = 100) New Korea, United United Australia Brazil Canada Chile China Finland Germany Hungary Netherlands Zealand Poland Rep. ofKingdom States Total population, (million) 13 115 21 10 857 4 56 7 11 3 26 32 41 190 GDP per capita, PPP (current international $) 329 94 351 116 48 309 318 153 324 256 113 210 296 426 Total labor force 12 101 21 8 967 3 53 6 9 2 25 31 38 184 PPP = Purchasing power parity. Note: See glossary for further details of GDP per capita and PPP and the definition of the labor force. Source: World Development Indicators, all data for 1999. 2 THE COUNTRIES SELECTED 3 Figure 1. General Government Employment as Percentage of Total Employment 30% 25% 20% 15% 10% 5% 0% of UK Brazil Chile China USA Australia Canada FinlandHungary Rep. Poland Federation Korea, Central government Russian Subnational government Education Health Armed forces Note: Central and subnational government totals exclude health and education profession- als, and the distinction between levels of government is budgetary and not geographic. See glossary for further details. Police employment is excluded. Sources: Government employment data are from the World Bank's updated database for An International Statistical Survey of Government Employment and Wages and refer to the mid- to late 1990s. Data for a given country may not refer to the same year. Total employ- ment data are from the International Monetary Fund's (IMF) International Financial Statistics (February 2001 edition) and refer to the late 1990s. Slight discrepancies may arise as a result of the use of multiple sources. Data for the Russian Federation have been updated to reflect 1998 Goskomstat figures and World Bank staff estimates. The 14 governments are structured very differently, according to the degree to which they are decentralized. Table 2 highlights that China, Hungary, the Netherlands, New Zealand, Poland, the Republic of Korea, and the United Kingdom are, in fiscal terms, much more centralized that the Russian Federation. The countries also differ along some dimensions of governance. The measure of contract-intensive money (see note to table 3) suggests that the Russian public is relatively more reluctant to save money in the bank- ing system. Measures of perceptions of corruption in government and the 90 03 64 for United States United States the 18.98 14.96 the and, in and 41 64 glossary e United Kingdom 10.45 3.07 many United Kingdom Se uption ea, of Ger ea, of ernational Canada, 94 27 92 corr Int Kor Rep. 8.16 3.05 Kor Rep. assets. of Finland, Brazil, Gallup 73 96 3 financial ceptions the Russian 15.68 13.28 Federation 1978; Chile, Russian Federation per ea, omfr 86 44 other on 16 as Poland 9.91 6.42 Kor Poland data of Australia, (GIA) and 98 New 1997; Zealand 4.32 4.87 New Zealand Survey. Republic e accounts ar 7 1999 Association 23 Nether- lands bank 13.31 4.84 Kingdom, data Nether- lands % in Statistics, these United 84 36 16 held crime, International Hungary 13.34 6.48 for the Hungary to and supply Financial dates 28 Gallup well Germany 19.36 14.29 The Germany the money of Poland, % Note: 11 the 25 Government of Finland 18.37 14.24 Finland espondingr IMF courtesy GDP years. is of 89 6.56 Netherlands, centage omfr China e 10.68 GDP China of per ovided shar e various, the, government, pr 1999. 93 the 23 13 the e Chile 2.21 ar cent shar 2.02 Chile to in government calculated is per Statistics Hungary cent 93 20 the 44 efersr crime Governance Canada as 30.00 per 23.36 Zealand, Canada %, uption es of that money omfr as China, Financial New corr money 91 Decentralization Brazil of 18.34 12.51 1995; money and Brazil otection 2000. pr expenditur evenuesr 1998; 94 Fiscal Government Measures considering and Survey Australia 19.83 12.59 Australia ceptions 2. Federation, 3. IMF: States, per ontract-intensiveC: ce Contract-intensive: ces service ableT Subnational Subnational Sour Russian United ableT Contract-intensive Public Population Note details. Sour civil Millennium 4 THE COUNTRIES SELECTED 5 confidence that the government is seeking to protect them from crime are worse in the Russian Federation than in most of the other 14 countries for which data are available. The reform concerns and activities of governments in these 14 coun- tries over the last 10 to 15 years are the focus of this paper. However, because the beginning and end of administrative reforms are difficult to discern exactly, this period has been interpreted relatively freely. The paper has also deliberately focused on central or federal government, although it was noted that some of the major developments are at state, provincial, regional, or local levels of government. Note 1. See http://www1.worldbank.org/publicsector/civilservice/oecd countries.htm. 2 Reformers' Concerns: What Was Broken? What Did They Want to Do? Reform of public administration is not a self-evident priority. Given the enormous difficulties entailed in shifting vested interests, there is no intrinsic reason why administrative reform should rank alongside struc- tural reforms or social reforms as a priority for action. There is, of course, a growing recognition that institutions are important for development, but it is not at all clear which institutions are the most crucial, and there is very little evidence that the specific details of government structure and accountability arrangements affect growth. There is also only modest evidence that administrative reform is an independent variable. A rea- sonable argument can be made that it is the consequence rather than the cause of other aspects of liberalization. There are four broad reform concerns that to different degrees were publicly stated by governments in the 14 countries studied for this report: 1. To reduce public expenditure, maintaining the attractiveness of the investment climate and the competitiveness of national firms 2. To improve policy responsiveness and implementation by overcoming resistance from vested interests to the implementation of legitimate policies or the reduction of some programs 3. To improve government as an employer by making government a respon- sible employer, that is, attracting sufficient numbers of appropriately skilled employees while restraining aggregate employment costs 4. To improve service delivery and build public and private sector confi- dence by enhancing the degree of respect and trust accorded to gov- ernment by the private sector and by the public. Reducing Public Expenditure Fiscal pressures lie behind all four areas of concern, and reform rhetoric gen- erally highlights the anticipated savings that will result from the reform pro- 6 REFORMERS' CONCERNS: WHAT WAS BROKEN? 7 gram. However, the extent to which the search for savings in public expen- diture has contributed to reforms in public administration is not clear. This uncertainty arises because in middle- and high-income countries, sociodemographic changes, more than any other single force, have dri- ven increases in public expenditures. The rising proportion of the elderly in the population and the dramatic increase in transfer payments for pen- sions, unemployment, and other benefits are fundamentally questions of policy rather than public management. Reducing the fiscal pressures that arise from these changes in demography and social expectations requires that benefits increases be constrained and user charges be introduced as a device for cost sharing. These policy changes can, in principle, be intro- duced independently of administrative reform. As section 4 of this paper points out, there is only modest evidence that savings have been made as a result of reform programs. Improving Policy Responsiveness and Implementation Many reformers emphasize the need to improve the capability of govern- ment to implement legitimate policy changes. They seek to remove obsta- cles facing governments as they try to change the direction of social and sectoral policy.1 Typically, these reformers emphasize that such obstacles arise either from resistance within the civil service or from limited capa- bility. They note less often that some civil service resistance stems from Box 1. Australian Reform Concerns The first phase of the reforms was triggered by the 1983 Labour govern- ment's desire to introduce an expensive social reform agenda without putting additional pressure on the budget deficit. This meant cutting pro- grams inherited from the previous government to make room for the new spending measures. However, the new government had little confidence in the capacity or the willingness of the federal public service of that time to advise on or implement the restructuring of public spending. Even before winning the election, the Labour party had announced a reform strategy for the public service. The first phase was intended to shift the focus of the bureaucracy from the routine renewal and disbursement of budget appropriations, which were largely unchanged from year to year, to the results being achieved from these entrenched expenditures and better ways of spending budget funds. The second phase of the public sector reforms, undertaken in the 1990s, was intended to increase the efficiency of the delivery of govern- ment goods and services by the introduction of commercial principles. 8 INTERNATIONAL PUBLIC ADMINISTRATION REFORM cynicism that follows a large number of hollow or unimplemented reform directives. Reform ambitions focus on improving the merit basis of public sector employment and changing the incentives that individual civil ser- vants face, aligning them with the overall policy goals of government. Improving merit and reducing patronage is claimed to improve com- petence while reducing the risks that political opposition will find expression through the civil service.2 Such reforms are often aimed only at the central ministries. Access to civil service positions, and responsi- bilities of civil servants, is often legally redefined within a unified and career-protected civil service, with statutory definitions of the scope of the civil service and subsidiary regulations describing procedures. Codes of conduct and equivalent frameworks that govern the behavior of civil servants are also frequently revised. In many cases, the stated target of reform has been the nature of the employment contract between the civil servant and the state, but the direction of reform sought has been distinctly varied. For countries with- out a well-entrenched tradition of merit-based civil service employment, the ambition has been to define legally how access to civil service posi- tions (and the responsibilities of civil servants) is to be obtained. The intention is to place checks and balances around the employment con- tract of civil servants so that they form a distinct and unified corps, with security of tenure and objective bases for promotion used as protections against capricious political action. However, for some other countries that already have a secure, legal, and customary regime for civil service employment, the intention has been to move in the opposite direction. For these, primarily anglophone Organisation for Economic Co-operation and Development (OECD) member countries, the stated direction of reform has been to reduce (although not abandon) security of tenure and the significance of senior- ity in decisions concerning promotion and career advancement. Individual performance contracts have become more important, with civil servants more easily rewarded for results.3 In effect, some reforms are associated with the introduction of career systems in which initial entry to the civil service is determined by independent testing, a relevant university degree, or academic credentials. Some other reforms in sys- tems are position based, where the emphasis is on selecting the best-suit- ed candidate for each position to be filled, and have encouraged more open access, with lateral entry becoming more common. Improving Government as Employer Reformers can seek to achieve a better balance between the fiscal burden of public employment and the need to provide incentives that attract REFORMERS' CONCERNS: WHAT WAS BROKEN? 9 competent staff. The ideal has been reducing the aggregate wage bill while improving pay. Although comparisons with GDP and population are useful only as very rough guides to judgment concerning aggregate employment and affordability of the wage bill, there is an understandable tendency to compare numbers of civil and public servants and the fiscal weight-- public sector wage bill as a percentage of GDP--against international practice.4 In checking that monetary incentives are effective at the level of indi- vidual civil servants, reformers generally note that levels of pay should be sufficiently competitive to recruit, retain, and motivate qualified staff at all levels. They note that often some groups of staff are overpaid by comparison with private sector equivalents, and others underpaid.5 Some pay reforms seek to address the absolute shortage of qualified labor in particular professional skills areas in the country.6 The challenge is in offering pay levels that are sufficient for government to recruit, moti- vate, and retain technical, professional, and managerial staff within the country in competition with domestic private sector and foreign employ- ers. This may be politically challenging if it implies radical decompres- sion of formal pay scales and an accompanying large increase in pay at senior levels. Improving Service Delivery and Building Public and Private Sector Confidence Finally, some reformers seek to improve the confidence of the public and of business that the civil service is both honest and efficient. Low respect for the public service is more than the response of disap- pointed consumers to an inadequate level of service. Government is more than a service provider, and finding the right balance between skepticism and confidence in government will always be difficult. Certainly, though, very low confidence and widespread cynicism about the performance of government can have pernicious consequences, undermining democrat- ic institutions and reducing the attractiveness of the public service career to those with talent. Survey evidence in OECD countries has shown some troubling signs that public cynicism about the public service is increas- ing. Survey data indicate that citizens often have more confidence in pub- lic servants than in politicians. Still, there is only modest comfort in this finding. Citizens tend to rate the ethical standards of both public servants and politicians lower than in other professions.7 Public concern about corruption is a significant driver of low public respect. The World Bank report, Anticorruption in Transition (2000), has usefully distinguished between state capture and administrative corrup- 10 INTERNATIONAL PUBLIC ADMINISTRATION REFORM tion. "State capture" refers to the actions of individuals, groups, or firms in both the public and private sectors to influence the formation of laws, regulations, decrees, and other government policies to their own advan- tage as a result of the illegal transfer or concentration of private benefits to public officials. By contrast, "administrative corruption" refers to the intentional imposition of distortions in the prescribed implementation of existing laws, rules, and regulations to provide advantages to either state or nonstate actors as a result of the illegal transfer or concentration of pri- vate gains to public officials. However, reformers have rarely offered this level of specificity in referring to the corruption that they would like to reduce. In improving service delivery, many reformers' actions have been geared toward forcing greater responsiveness from the bureaucracy by empowering consumer groups through distributing basic data on perfor- mance and implementing methods for client feedback (report cards and other types of client surveys).8 Mapping Reformers' Concerns In reviewing the breadth and emphasis of the administrative and civil service reform programs of the 14 countries selected for this study, this report uses the following six headings to summarize reformers' concerns: 1. Reducing government consumption, including aggregate wage bills (reducing public expenditure) 2. Reducing patronage (improving policy responsiveness and implemen- tation) 3. Developing flexibility in employment contracts (improving policy responsiveness and implementation) 4. Improving monetary incentives (improving government as employer) 5. Addressing perceived corruption and low public respect (improving service delivery and building public and private sector confidence) 6. Improving operational inefficiency and poor service delivery (improv- ing service delivery and building public and private sector confi- dence). Table 4 provides a summary of the reformers' concerns. The full set of reform summaries prepared for this paper is available at http://www1.worldbank.org/publicsector/civilservice/designimple menting.htm. Appendix A provides single-page summaries of the coun- try situations. Appendix B provides a methodological note that sets out detailed background for this classification of reform concerns.9 United States United Kingdom Poland New Zealand Nether- lands ea, of Kor Rep. Hungary Germany Finland China studies. Chile country Canada the Concerns Brazil omfr Australia assessments' Reformers' wage and 4. expen- and espectr delivery e egate e Authors: concerns onage fective ceived uption low ficiency poor ce ableT Public ditur aggr bill Patr Employment contracts tenur Inef monetary incentives Per corr and public Operational inef and service Sour 11 12 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Broadly, the set of countries identified as comparators can be placed along a rough scale, ranging from the comprehensive reform concerns of China to the specific and focused concerns of the Netherlands on pay and incentive issues. Figure 2 provides a rule-of-thumb count of the number of reform targets explicitly addressed in the administrative reforms. Figure 2. Breadth of Reformers' Concerns China, Hungary, New Zealand, Rep. of Korea Broad Australia, Brazil, Poland, United Kingdom Canada, Chile, Finland, Germany, United States The Netherlands Narrow Note: This chart is a heuristic device to illustrate that country situations differ. No claim is made about precision. Notes 1. See http://www1.worldbank.org/publicsector/civilservice/poor.htm. 2. See http://www1.worldbank.org/publicsector/civilservice/patronage.htm. 3. See http://www1.worldbank.org/publicsector/civilservice/individual.htm. 4. See http://www1.worldbank.org/publicsector/civilservice/wageconcerns.htm. 5. See http://www1.worldbank.org/publicsector/civilservice/ineffectivemon.htm. 6. See http://www1.worldbank.org/publicsector/civilservice/limitedrecruit.htm. 7. See http://www1.worldbank.org/publicsector/civilservice/corruption.htm. 8. See http://www1.worldbank.org/publicsector/civilservice/efficiency.htm. 9. The World Bank Administrative and Civil Service Reform website classifies the problems that administrative reforms seek to address under similar headings and provides further background on these topics at http://www1.worldbank.org/ publicsector/civilservice/. 3 Reformers' Activities: What Did They Do? The General Picture The period from the mid-1980s to the end of the 1990s saw a huge volume of major and complex public administration reform programs undertak- en. Although many of the reform programs were driven by the need of governments to solve similar problems (notably concerns about ineffi- ciency, poor service delivery, responsiveness and accountability, and fis- cal pressures), it is noteworthy that a common reform paradigm has not emerged. Some of the reform programs can be characterized by extreme radicalism (reinvention, new public management) and others more by incrementalism. The policy debate has been dominated by consideration of "new public management." This approach has the advantage of being the most inter- nally coherent set of reform measures, but it has only been attempted by a small number of countries with broadly similar characteristics (Australia, New Zealand, the United Kingdom). These characteristics include the absence of institutional and constitutional constraints to radical, top-down, reform program development and implementation and the presence of rel- atively simple state structures. New Zealand and the United Kingdom are both unitary states without written constitutions, and Australia, although a federal state, has traditionally had a strong federal level of government. The reform experiences of other countries we have examined have been less widely studied and less broadly disseminated. It appears that most reform programs have been driven primarily by political and civil service elites rather than pressure for change from the public. Responding to public discontent and dissatisfaction clearly was important to these political elites, but there is a chicken-and-egg issue here. In many cases, public dissatisfaction was encouraged by the reform- ers to justify and accelerate the reform programs. The Ingredients of Public Sector Reform Broadly speaking, there are four areas of public sector institutional arrangements and public policy that are amenable to relatively short- term change: 13 14 INTERNATIONAL PUBLIC ADMINISTRATION REFORM 1. Public expenditure arrangements 2. Personnel management and civil service 3. Organizational structure of the executive 4. Role and policy load carried by government. The public expenditure arrangements include the mechanisms for lim- iting aggregate expenditures, prioritization within those, ensuring effi- cient use of public funds, and the accounting and auditing arrangements that allow public expenditures to be allocated, monitored, and evaluated. Personnel management and civil service arrangements include the mechanisms that determine civil service careers, constrain the action of individual public officials, generate their incentives for action, and deter- mine how and when staff are to be recruited. Box 2. Reform Activities in China The Chinese government conducted major organizational reforms in 1982, 1988, 1993, and 1998 that heavily involved streamlining government agen- cies. For example, in 1982, authorities reported that they cut the number of state council agencies from 100 to 61 and the number of employees from 51,000 to 30,000. In the 1988 restructuring, officials reportedly reduced the number of ministries and commissions from 45 to 41, the number of directly subordinate bureaus from 22 to 19, and the number of state council employees from about 50,000 to 44,000. Many of the cuts in 1993 were made at the local level. Significant cuts were also reported beginning in 1998. The idea was that many of the laid-off staff would enter the growing private sector. However, in spite of sustained effort to cut the number of government employees, the state bureau of statistics has reported continuous growth of government employment during these years. The government implemented a fixed tenure system for government officials, establishing mandatory retirement ages at 60 for most men and 55 for most women. This has secured a younger generation in govern- ment; from 1982 to 1987, for example, the average age of ministers and governors fell from 67 to 59 and from 65 to 55, respectively. The 1993 Provisional Regulations on Civil Servants require that civil servants be recruited into the service through open, competitive examinations rather than labor allocation. They also indicate that wage markets will be used to determine civil servants' salaries, and training for civil servants will be revamped to meet the needs of a market economy. China's civil service does not strongly value political neutrality. REFORMERS' ACTIVITIES: WHAT DID THEY DO? 15 Organizational structure of the executive refers to the reporting lines and accountability arrangements for departments, ministries, and other organizational units and the determination of their responsibilities. In Anglo-Commonwealth terms, this is referred to as the "machinery of government."1 The role and policy load carried by central or federal government refers to the way in which responsibility for core governmental tasks is divided between central or federal and subnational governments and the ability or willingness of government to contract out services or shed ser- vices by reducing the level of service or stopping providing the service altogether. Box 3. Reform Activities in Canada Between the mid-1960s and the early 1970s, public sector reform was con- cerned with the creation of the welfare state. During this period, the major social programs were established and government involvement in the economy increased. By the mid-1980s, pressures to curtail government growth existed, but few concrete actions were taken. The 1985 Nielson Task Force, drawn pri- marily from the private sector, recommended the elimination of more than 1,000 government programs costing Can$7 billion, but few recommenda- tions were ever implemented. In 1989, Public Service 2000 was launched to renew the public service, but again the resulting changes were very modest. In contrast to New Zealand, Australia, and the United Kingdom, very little of the international enthusiasm for new public management resonated in Canada. Real restructuring did not begin until 1994 with the launch of Program Review. Unlike its predecessors, this reform initiative produced significant changes in the role and size of the public sector. The key was that, in the public's mind, future prosperity was linked to the restoration of fiscal responsibility. Measures included cutting 45,000 civil service jobs, reduc- ing provincial government transfers by Can$4.5 billion, eliminating 73 government boards, commercializing or restructuring 47 others, ending agricultural and transportation subsidies, and reducing business subsidies by 60 percent. By using fiscal urgency as a backdrop, public support for the cuts and restructuring was maintained. A further reform effort, La Relève, was initiated in 1997 and dealt with less controversial issues, such as attracting and retaining skilled public servants. Increasing emphasis was also placed on e-government. 16 INTERNATIONAL PUBLIC ADMINISTRATION REFORM "Basic" Reforms: Achieving or Strengthening Discipline To the extent that any consensus exists among observers of public sector reform, it is that many reforms rest on an ingrained discipline in the behavior of civil servants and politicians that has become entrenched in the organizational culture of public sector agencies and in the political cul- ture. Discipline means, in essence, formality--that actual behavior follows the written rules, and that the budget on paper that parliament agreed to bears a close relationship to the budget that is executed (Schick 1998). This formality can be most easily recognized in two areas: personnel management and budget management. In personnel matters, the differ- ences between recruitment, promotion, and pay determination based on explicit rules monitored by a central agency and arrangements in which personal connections determine who gets hired and how much they get paid are stark. In budget management, there are clear differences between a budget process in which policy choices are made by politicians and disciplined by budget realities, and an informal process whereby the budget is made and remade constantly during execution, as well as between a formal budget agreed on in advance by parliament and an informal process driven by the availability of cash. Formality is a neces- sary base on which other public management reforms can be built. These "basic" reforms are undertaken to achieve or strengthen public sector dis- cipline. The cases examined for this study bear out the distinction between the "basic" and "advanced" reforms. In public expenditure management reforms, the basics include hard- ening the budget constraint as part of a more top-down approach to budget formulation and strengthening the discipline with which input- oriented line-item budgeting is enforced.2 Other public expenditure Figure 3. Two Stages in Public Sector Reform Stage 1: Stage 2: Reforms intended to achieve Advanced reforms or strengthen public sector discipline Incremental modernization Formality threshold: Weak basics: Tradition of Informal public rule following is sector behavior well entrenched New contractualism REFORMERS' ACTIVITIES: WHAT DID THEY DO? 17 management reforms at this stage include the strengthening of cash accounting capacity through training and improved remuneration to attract competent staff, and strengthening traditional financial and compliance audit. Again, some performance auditing could be under- taken, but at this stage of the reforms, this is unlikely to be a major activity. In addressing the basics, a general performance orientation has been usefully given to the budget through circulating some information on performance, and this provides a reminder that ultimately it is service delivery rather than simple compliance with the budget that is the goal. However, at this level of reforms, performance information has relative- ly few direct implications for resource allocation at the center, and this performance orientation is generally achieved simply by the greater dis- semination of performance monitoring data. Despite the widespread use of terms such as output-based budgeting or performance-based budgeting, there are few examples of mechanical connections being made between measures of performance and budget allocations. Although not exam- ined in this assessment in any detail, it should be noted that reforms in the area of public procurement are also noteworthy features of the over- all reform programs in a number of the countries examined. In civil service personnel management reforms, basic reforms include enhancing job security, strengthening protection from political interfer- ence, and creating a legally defined civil service cadre with common terms and conditions. Reforms that affect individual incentives in the civil service include the standardized application of promotion and reward rules and the encouragement of long-term careers within the civil service, building a relatively closed career system. Reform approaches in this area show considerable differentiation. In some countries, particularly at the early stages of reform, the priority need has been to create a small, senior-level, civil service­wide cadre. The intention has been to reduce fragmentation, provide strengthened civil service management capacity, and provide a better basis for civil service management development. Senior executive services can be one of the leading players in the further development and implementation of reforms. In some countries experiencing recruitment and retention difficulty, there has been a concerted approach to make civil service pay and condi- tions more competitive with those prevailing in the private sector. Some countries have sought to strengthen application of the merit principle through centralized use of a check and balance external to the executive, such as a civil, state, or public service commission. In other set- tings, the decentralization to unit management of greater powers to recruit, transfer, promote, and fire unit employees may have led to a 18 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 4. Associating Performance Information with the Budget in the United States In 1993, the U.S. Congress enacted the Government Performance and Results Act (GPRA) to improve the effectiveness, efficiency, and account- ability of federal programs by having agencies focus their management practices on program results. The GPRA seeks to help federal managers improve program performance; it also seeks to make performance infor- mation available for congressional policymaking, spending decisions, and program oversight. With regard to spending decisions, the GPRA aims for a closer and clearer linkage between resources and results. The act can be seen as the most recent event in a now 50-year cycle of federal govern- ment efforts to improve public sector performance and link allocations to performance expectations. The GPRA requires each agency to develop strategic plans covering a period of at least five years. Agencies' strategic plans must include a mis- sion statement, identify long-term general goals (including outcome-relat- ed goals and objectives), and describe how the agency intends to achieve these goals through its activities, human capital information, and other resources. Under the act, agency strategic plans are the starting point for setting annual program goals and measuring program performance in achieving those goals. To this end, strategic plans must include a descrip- tion of how long-term general goals will be related to annual performance goals, as well as a description of the program evaluations used to establish those goals. Strategic plans must be updated at least every three years. The GPRA also requires each agency to prepare an annual performance plan that includes the performance indicators that will be used to measure the relevant outputs, service levels, and outcomes of each program activi- ty in an agency's budget. The annual performance plan provides the direct link between strategic goals outlined in the agency's strategic plan and what managers do day-to-day. Past efforts failed to link executive branch performance planning and measurement with congressional resource allocation processes. The GPRA requires explicit consultation between the executive and legislative branches on agency strategic plans. weakening of the application of the merit principle, with consequential implications for fairness and equity concerns. It is also possible to discern some increased emphasis on civil service ethics. This is partly a response to concerns that have arisen from the weakening of the public sector ethos through extensive external recruit- ment and the setting up and exposing to market and competitive pres- sures of new types of autonomous service delivery bodies and agencies. REFORMERS' ACTIVITIES: WHAT DID THEY DO? 19 Box 5. Senior Executive Services in Australia, Hungary, and New Zealand In Australia, at the federal level, a group of senior public servants has been identified as a Senior Executive Service. This is a mobile cadre of senior executives that have broad management expertise and an overview of pub- lic sector values and responsibilities. The purpose of the senior executive service is to prevent the management of individual departments from becoming ingrown and promote policy coordination among departments. A similar term is used in Hungary. A bill on the amendment of the civil service act has been submitted to parliament. A crucial part of the amend- ment is to establish a cadre of a few hundred senior civil servants. These people could hold this status for five or six years and could not be removed by the next government. The salary of this group would be 5­10 times higher than that of the average civil servant. There is some concern that the proposal seeks to lock a politically loyal set of civil servants into position. In New Zealand, provision was made in the State Sector Act 1988 for the creation of a Senior Executive Service. Individuals would be desig- nated members, transferred around ministries and departments, and trained for senior management positions. This has not been a success. It has not been supported by chief executives or actively promoted by the state services commission. Chief executives expressed dissatisfaction with investing in people they might subsequently lose from the organi- zation. Although this is arguably a narrow and shortsighted view, it is a powerful one. In reforming the organizational structure of the executive, basic reforms include the simplification and consolidation of ministry struc- tures. There is a very limited use of performance contracts between gov- ernment and some arm's-length agencies. If public agencies are given tar- gets, then they tend to be indicative within annual plans, with no auto- matic consequences if they are not achieved. In reducing the role and policy load carried by government, basic reforms are likely to include some minor changes of responsibility among levels of government and some equally minor reductions in service provi- sion. Contracting out will be restricted to the easily specified support tasks. "Advanced" Reforms If the first set of reform activities comprises a series of changes that, although politically challenging, can in principle be made by fiat, the sec- 20 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 6. Advanced Accounting Reforms in the Netherlands During the 1980s, extensive financial management reforms were instituted in both central and local government. A key element of this consisted of the introduction of "encumbrance" accounting in central government, to be applied in conjunction with the cash accounting already in use. This approach accounted for obligations to assist in controlling spending. Arguably, this is not as developed as the full accruals accounting being introduced in Australia, New Zealand, and the United Kingdom, but it clearly represents a significant reform. ond generation builds on an entrenched discipline in the behavior of civil servants and a strong organizational culture of following the rules. Advanced reforms in public expenditure management to achieve aggregate cost reductions include "block" or "frame" budgeting, where budgetary resources are provided to line agencies in a single block, with fewer line-item constraints on managers concerning how the resources can be applied. This flexibility is coupled with stronger mechanisms for holding managers to account for the performance results that they achieve. In many cases, the format of the budget is changed to indicate more clearly to parliament and other actors during budget preparation the likely effectiveness of funds allocated to different purposes. Advanced accounting reforms include double-entry bookkeeping and the introduction of accrual accounting. Advanced auditing reforms include an institutionalization of performance auditing in the supreme audit institution and in internal audit. Advanced civil service personnel management reforms are in many ways the opposite of the basic reforms. In career management, many advanced reformers are decreasing tenure and making terms and condi- tions more equivalent to those found in the private sector. The unity of the civil service is being reduced through fragmented and diversified pay arrangements that are determined at agency level. Annual performance targets increasingly inform individual incentives, although the use of performance-related pay remains limited and controversial. This trend has been reinforced in those cases where the government moves to open external recruitment at all levels for posts in particular areas, often man- agerial, finance and accounting, or information technology (IT). In other areas, the impact of opening up a service to competitive tendering, com- bined with the move away from service-wide pay and benefits--and terms and conditions--to agency-specific arrangements, has been to worsen the pay position of some employees, particularly but not exclu- sively in blue-collar areas. Use of fixed-term contracts, particularly for REFORMERS' ACTIVITIES: WHAT DID THEY DO? 21 Box 7. Budget Reform Activities in Finland By 1995, all of central government was formally operating through a results-oriented budgeting system in which the line ministries have the authority to allocate resources to their administration within given budget guidelines decided by the government. In this system of budgeting, the government sets politically binding budgetary ceilings for the ministries in February for the following year and for two years thereafter. These budget ceilings and guidelines create an absolute expenditure cap. Ministries have full responsibility in allocating the funds for each agency under their control and full responsibility for steering and controlling the budget process in their sector. This system allows the government to integrate the process of multi- year budgetary planning and strategic planning in the ministries into the annual budget process. The top-down expenditure ceilings have enhanced budgetary discipline in the ministries and increased efficiency in the use of existing resources. The budget ceilings have restrained bottom-up expenditure demands. The system of budget ceilings has been criticized by members of par- liament, who argue that they are given no opportunity to participate in the process of setting the budget ceilings. In March 2000, the government submitted the budgetary appropriation guidelines for the next four years to parliament for the first time, to encourage parliamentary participation in the budget process. Parallel reforms were undertaken in financial control and evaluation. The most important steps were taken in the early 1990s, when ex ante budget controls were replaced with ex post reporting, auditing, and eval- uation. In 1998, the government accounting system was changed to busi- ness accounting based on accrual concepts. Full cost attribution has been regarded as an important contribution to effectiveness. In 1991, a pension charge on the wages and salaries paid by agencies was adopted, and a system of charging market-level rent for state-owned office premises was introduced in 1994­95. Finland adopted accrual accounting systems in all agencies in 1998. All agencies and ministries are responsible for preparing an annual report. Performance information on the annual reports is included in the government report on public finances to parliament. In the future, the sys- tem will be developed so that the reports include more information on progress in the effectiveness, quality, and economy of the services and production activities of the agencies and ministries. management positions--together with full, open, external recruitment for such positions--has also been comparatively widespread. Other advanced civil service reforms include strong moves toward position- based systems, where the emphasis is on selecting the best-suited candi- 22 INTERNATIONAL PUBLIC ADMINISTRATION REFORM date for each position to be filled, with increased opportunity for lateral entry. In the anglophone OECD countries, the direction of reform has been most striking in reducing security of tenure and downplaying seniority in promotion and career advancement. In these settings, the unity of the civil service has also been reduced somewhat as individual agencies become more akin to separate private sector employers with divergent terms and conditions for their staff. In other settings, concern that there was no well-entrenched tradition of merit-based civil service employ- ment caused the focus to change to improvement of the legal arrange- ments defining access to civil service positions and the responsibilities of civil servants. Box 8. The Civil Service in New Zealand--an Unusual Case Nearly all OECD countries have legislation that provides civil servant sta- tus for some employees. The recent reforms in New Zealand have made it one of the few exceptions. Public employees in New Zealand are covered by the general labor law. A sample of 34 OECD and European Union (EU) accession countries showed that 31 had civil service laws that covered some of the public employees.3 These laws · Define job duties and responsibilities in 25 cases · Delimit tenure and security in 29 cases · Set out disciplinary arrangements in 25 cases · Determine the methods for setting rewards and wage bargaining in 28 cases. From the same sample of 34 countries: · Health employees are considered national civil servants in 14 cases. · Education employees (teachers) are national civil servants in 16 cases. · Police are national civil servants in 22 cases. · Subnational government employees (excluding education, health, and police) are defined as national civil servants in 18 cases. In 11 cases, there is a separate civil service for subnational government. The judiciary in the OECD member countries is rarely made up of civil servants. However, they are often subject to civil service­like arrange- ments that define their employment status. This is generally provided by a judicial career law, which applies to judges at all levels--from traffic court to supreme court justices, although rarely to constitutional court judges. Judicial support staff (such as court administrators and clerks) are often civil servants, but this is not inevitable and practice varies widely. REFORMERS' ACTIVITIES: WHAT DID THEY DO? 23 Similarly, advanced reforms show diversity in relation to politiciza- tion. On the one hand, the increased use of political advisers in increased numbers in the United Kingdom has, when combined with the now extensively used method of filling senior posts with external applicants on fixed-term contracts, possibly led to an increased politicization of the senior civil service. In other countries, such as Hungary and Poland, the problem was more to disentangle and unbundle political appointees from career civil servants. A number of countries have used the intro- duction of a state secretary position as the most senior civil service posi- tion in a central ministry to clarify the exact boundary between career civil servants and political appointees. The case of performance-related pay merits separate comment. There appear to have been many negative experiences of applying perfor- mance-related pay schemes to individual employees as opposed to indi- vidual work teams. Such schemes by their very nature reward a small percentage of employees, with the risk then being that the remaining majority experience some demotivation, a risk greatly increased if the process of selection for recipients of any significant performance-related supplements is not perceived by unit staff as credible and fair. There appear to have been some more positive experiences with the use of per- formance awards for teams instead of individuals. Even here, in many parts of the public sector, it can be problematic to seek to relate outcomes, which also may not be visible except in the medium to long term, to indi- vidual team contributions. Advanced reforms to the organizational structure of the executive are again in many ways moving in the opposite direction from the basic reforms. Specialized, single-purpose agencies are created. Increasing use is made of contract-like mechanisms within the public sector, and agen- cies are given specific binding targets, with real consequences for the tenure of the agency head if these are not met. Finally, advanced reforms that change the role and policy load carried by government include major reallocation of responsibilities from central to subnational government, radical service shedding of previously accepted government tasks, and the extensive use of contracts across the public sector, not just in the easily specified areas of maintenance and cleaning. The principle of subsidiarity--decentralizing the provision of public service to the lowest possible appropriate level of government-- has been an important component of these reform programs. Many approaches in this area center around privatization. Of the countries assessed, this is a particularly significant part of the reform pro- grams in New Zealand and the United Kingdom, and to lesser degrees and to varying extents in Canada, Finland, and the Netherlands. Outcomes in this area are extremely clear--shrinking the public sector 24 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 9. Reform Activities in Brazil The reforms planned by the first Cardoso Administration (1996­99) envis- aged that regulation, inspection, public safety, and basic social security functions would be undertaken by autonomous agencies that would oper- ate under a management contract. The director of each agency would be given wide-ranging freedom if performance targets were met. Universities, hospitals, and museums would be converted into even more arm's-length social organizations, which would receive specific authorization from the legislature to sign management contracts with the executive branch to receive budgetary allocations. Parallel civil service reforms were to permit public workers to be fired for unsatisfactory performance, or to reduce an excessive salary burden, and pay was to be more tightly controlled. In fact, few autonomous agencies and social organizations have been created, partly because the government was not prepared to provide priority in the flow of budget funds to such agencies. However, these reform efforts did succeed in some public rehabilitation of a public administration that had fallen into disrespect, and they also succeeded in putting further perfor- mance-based managerial reform firmly on the agenda. Under the second Cardoso Administration, the emphasis has been on budget reforms. The government's business is organized into programs that stress the desired output rather than the logic of production. Programs have simple, self-explanatory titles, objectives, subsidiary actions necessary to obtain these objectives, and output indicators for these actions. This information is publicly available through the Internet. The 2000­03 multiyear plan system is strongly committed to an evaluation system, but this has not yet been designed. through one-off disposal of state assets. Opportunities in this area for reforming countries will be determined by how minimalist a view they take of the role the state should play. This view may itself be shaped by affordability concerns, a desire to achieve one-off revenues for the bud- get, or both, together with an assessment at the level of the political elite of the political costs and benefits of pursuing such initiatives. This level of change also includes contracting out core functions, well beyond the usual janitorial and clerical services to the policy and pro- grams undertaken by government. These more advanced areas for out- sourcing include payroll, some aspects of policy formulation, and some areas of audit and inspection. A further key area here is deregulation, which can both significantly improve the country's business environment and considerably reduce the number (and aggregate cost) of its public sector, while also reducing administrative corruption. REFORMERS' ACTIVITIES: WHAT DID THEY DO? 25 Box 10. Decentralization in Poland Gmina-level self-governments were restored in 1990, after a 40-year hiatus. In line with the principles of deconcentration, gminas (basic level of public administration) form the basic and most important level of public admin- istration. It is here that the most important collective needs of local com- munities are met. Gminas run nurseries, kindergartens, elementary schools, libraries, and cultural centers and maintain local roads. They also share responsibility for maintaining public order (using gmina and city guards for this purpose) and environmental protection within their juris- dictions. There are 2,489 gminas in Poland. Their democratically elected councils establish management boards with executive powers. Some rural gminas are headed by voits (regional administrators), other rural gminas with townships and urban gminas are run by mayors, and large cities are gov- erned by presidents. An average Polish gmina has 10,000­15,000 inhabi- tants; rural gminas average 3,000 inhabitants, and the largest urban gmi- nas have populations of several hundred thousand inhabitants. Table 5 summarizes the elements of these two stages of reform. Choices in Advanced Reforms Reformers have followed different paths once they are well past the threshold of formality. In some settings--most notably New Zealand, but to a lesser extent, Australia and the United Kingdom--the advanced reforms have enabled the public sector to be driven to a large degree by a set of contractual relationships. In its most developed form, in New Zealand, ministers "purchase" outputs from their departments through formal contracts. Chief executives of departments and agencies in turn purchase outputs from other public sector bodies in more or less the same way that they contract with private sector providers. The lan- guage of contractualism pervades the entire public sector, and much of the reorganization has been driven by the need to split large depart- ments and ministries into separate purchaser and provider units so that a contract can be established between them. There has been much dis- cussion of the relevance of this new contractualism outside these par- ticular settings.4 The basic reforms embodied a general trend to reduce the number of central ministries and focus these remaining ministries more closely on providing core policy analysis and advice to politicians. Among the advanced reformers, New Zealand provided an extreme case of contrac- it in link d-to- to and the auditing systems, entry har arrange- oss accepted manage- agencies government or bookkeeping acr oll budget pay gets eformsr lateral the institution tar of esponsibilitiesr eviously payr gets of performance of pr strategic as e contracts budgeting audit tar diversify position-based subnational of of of such Advanced double-entry accounting d tenur single-purpose to tasks out format eme frame plans and use e ual audit performance policymaking or supr towar binding sector eallocationr tasks, accr easing encouragement central shedding or futur oducing the Block Changing to Intr and Institutionalizing in internal Decr Fragment ments Annual Moves with Specialized, Extensive public Specific Major omfr Major government Contracting specify ment -- s-' d - ence arm e plans contracts specified achieve discipline under cadr service to budgeting performance financial auditing standar interfer conditions ministry some and and of ulesr in d and annual easily sector constraints some accounting and development defined and esponsibilityr the intended line-item audit political eer of public cash traditional security system terms ewarr performance of performance gets eductionsr Reforms budget culating job omfr car consolidate legally application of out and tar eformsr cir a closed and government some a es use tasks agencies changes engthen minor dening haps compliance common Basic str engthening engthening otection eating omotion uctur ovision or Har Input-oriented, per information Str Str and taking Enhancing pr Cr with Mechanical pr Encouraging within Simplify str Limited between length Indicative Minor Some pr Contracting support Advanced and gets tar service Basic eductionsr ovements agency of eformsr civil of out cost impr eformsr incentives the management size decentralization of shedding egate eer Aggr Efficiency Accounting Auditing Car Unity Individual Openness Agency Contractualization Specification Political Service Contracting Elements The the by 5. of policy expendi- e manage- eformsr service and carried ableT e ganizational uctur Public tur ment Civil personnel management eformsr Or str executive Role load government 26 REFORMERS' ACTIVITIES: WHAT DID THEY DO? 27 tualism in introducing formal contracts between organizations within the public sector. In the "new public management" countries (Australia, New Zealand, and the United Kingdom) in particular, but also in a more tar- geted and selective fashion in Finland and Germany, reforms have unbundled existing multiclient service providers and restructured them on the basis of specific client orientations. Organizational arrangements have been changed to reflect splits between funding and purchasing and purchasing and providing. Overall, service delivery organizations have been more exposed to competitive pressure through market testing or outsourcing. Such changes have led to the setting up of what may appear to be a bewildering array of new autonomous or semiautonomous public bodies Box 11. Contractual Arrangements within the UK Public Sector The reforms of the current administration are based on the framework of performance management provided by the Public Service Agreements (PSAs) introduced after a comprehensive spending review in 1997­98. These agreements are struck between ministers in charge of departments and the treasury. The second round of 23 PSAs (18 involving just one department and 5 with responsibility shared between or among two or more departments) set out the government's priorities for delivery and its spending decisions. Each agreement is based on a three-year resource allocation. It sets out the policy outcomes and objectives the department aims to achieve and the measures against which it will report. The num- ber of objectives in the second round of PSAs was reduced from 630 to some 160 in an attempt to simplify performance information overall and make it more useful, in part taking a lesson from experience of agency tar- gets. All PSAs are published. Ministers are accountable to a ministerial committee, which is advised by the treasury and cabinet office. A new performance information frame- work and strategy were developed by these two departments and pub- lished during the spring of 2001. PSAs are underpinned by Service Delivery Agreements, setting out in more detail how the department will go about its business. The PSAs provide the framework for business plan- ning within departments, resource allocation to executive agencies, and the setting of their performance targets. They are therefore reflected in the personal job plan of individual civil servants, including the head of the department, on which their performance and some elements of their remuneration are judged. The government has recently introduced a series of pilot local PSAs with local authorities. 28 INTERNATIONAL PUBLIC ADMINISTRATION REFORM in place of relatively homogenous and integrated ministries. Executive agencies have been established in Australia and the United Kingdom, special operating agencies in Canada, crown entities in New Zealand, and self-standing managed organizations in the Netherlands. In all cases, such reforms need to build on pre-existing strong systems of financial input control and provide for a greater degree of explicitness in perfor- mance management and accountability arrangements. Contractualization has not always been successful--for example, in the Netherlands, central agency management appears to have blocked a number of planned initiatives. In other cases, delegation of service provi- sion responsibilities to autonomous business units has had the effect of changing the shape of both government and service providers, as hap- pened with delegation of substantial management responsibilities (finan- cial and personnel) to head teachers in the United Kingdom under local management of schools. Contractualism is certainly not the only way to go. Other advanced reformers have also increased the flexibility available to managers while increasing the focus on monitoring performance--balancing enhanced autonomy with a greater emphasis on results and measuring achieve- ments. This group can be seen as "incremental modernizers."5 Coherence of Reforms Some reform programs are distinctively sequential. There can be a flow of reform initiatives, each seemingly a logical follow-up to the one before. Alternatively, reform can have a more staccato nature, with a series of episodic, opportunistic reform interventions. Not all reforms are strictly within the executive. A further important reform area in many of the countries assessed was the strengthening of checks and balances. This includes ensuring the accountability of the executive to the legislature through expanding the remit of supreme audit institutions beyond compliance and toward monitoring of efficien- cy and effectiveness. Examples include the developing role of the National Audit Office for central government and the Audit Commission for local government in the United Kingdom. The introduction or strengthening of freedom of information and sim- ilar acts in Finland, the Republic of Korea, the United Kingdom, and the United States, and the growing power of parliamentary select committees and other specialized committees, have also enabled more in-depth scrutiny of the activities of the executive. This has been further reinforced by the development of ombudsman's offices in the Netherlands and the United Kingdom. REFORMERS' ACTIVITIES: WHAT DID THEY DO? 29 Box 12. Reform Activities in Chile From 1973 to 1990, a military dictatorship governed Chile. That govern- ment changed the way the state did business--from owner and service provider to regulator, and from centralized to decentralized service provider. To accomplish this, the authoritarian regime benefited from the pre-existing professionalized civil service. It centralized financial control within the executive, reduced the influence of interest groups, unified civil servant pay scales, strengthened meritocratic rules, and decentralized some activities while devolving others to the private sector. In 1986, the government formalized into law the distinction between policymaking ministries and autonomous agencies providing services. These reforms led to a system characterized by the combination of a centralized, rigid control of resources (inputs) with decentralized imple- mentation (budget execution, personnel management, and procurement). This reformed system was effective in maintaining macroeconomic con- trol, but less so in the efficient allocation of resources or delivery of ser- vices. Since the elections of December 1989, Chile has been governed by a president and legislature chosen though free elections. The new democrat- ic government sought to devolve further public services to the private sec- tor, improve the performance of regulatory agencies, and improve social services. It also wanted to address the rigidities arising from hierarchical decisionmaking and the emphasis on input controls. The government has gone about further reform in a gradualist man- ner. A participative form of strategic planning was introduced in 1993. In 1994, modernization agreements between the president and individual agencies were introduced, and experiments in performance-based pay were introduced in some agencies, covering all agencies by 1999. In 1995, budget-based performance indicators were introduced. At the end of 1996, agencies started producing annual performance reports and a sys- tem of evaluating public programs was introduced. These reforms have been accompanied by substantial increases in the resources applied to training. The Level of Reform Activity Table 6 provides a summary of the scope and depth of the country pro- grams. Appendix A provides single-page summaries of the country situ- ations. 30 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 13. Australian Reform Activities The first phase of the reforms involved increased financial flexibility for government departments, a more certain operating environment through the introduction of rolling forward estimates­based budgeting, and an increased focus on identifying program objectives and reporting program outcomes. This altered the focus of the annual budget preparation from the financing of existing government programs to the improvement of those programs. The second phase of the public sector reforms, undertaken in the 1990s, was intended to increase the efficiency of the delivery of government goods and services by the introduction of commercial principles. These included contestable contracts, more flexible personnel management, and service delivery agreements based on the full cost of providing the ser- vice, determined in accordance with accrual accounting principles. If intense reform activity is reflected in wide reform concerns, broad reform scope, and a greater use of advanced reforms, then a rough order- ing emerges, as set out in figure 4. Figure 4. Overall Reform Activity New Zealand Extensive Australia, United Kingdom China, Finland, Hungary Canada Brazil, Chile, Poland, United States Rep. of Korea Germany, Netherlands Selective Note: This chart is a heuristic device to illustrate that country situations differ. No claim is made about precision. United States United Kingdom Poland New Zealand Nether- lands ea, of Kor Rep. Hungary Germany Finland China Chile studies. Canada country the Brazil omfr Activities Australia e assessments' Reform the by achieve eformsr the by 6. eformsr to of policy of policy sector expendi- e expenditur e engthen management service and carried service and carried Authors: ce ableT Basic str e ganizational uctur Advanced ganizational uctur Continuity eformr 1. intended or public discipline Public tur eformsr Civil eformsr Or str executive Role load government 2. Public management eformsr Civil eformsr Or str executive Role load government 3. of Episodic Sequential, continuous Sour 31 32 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Notes 1. That term has some resonance in other settings, although in the United States, its usage includes more political concerns. It is used here to refer to the organizational structure of the executive (including the reporting lines and accountability arrangements for departments, ministries, and other organization- al units) and the allocation of functions to those organizations. Usage of the phrase in New Zealand also seems to refer to the softer systems for coordination between these organizational units. This important issue is not implied by the term as used in this note. See http://www1.worldbank.org/publicsector/ civilservice/machinery.htm. 2. In some cases, this hardening of budget constraints is accompanied by actu- al top-down budget reductions in particular sectors. This is equivalent to "cheese slicing" because it entails a top-down reduction in the funds available for several sectors by a relatively small proportion of the total. 3. Full details of the survey of civil service legislation are available at http://www1.worldbank.org/publicsector/civilservice/. 4. See Davis, Sullivan, and Yeatman (1997) and Schick (1998) for the origins of this term new contractualism. 5. The term modernizers derives from Pollitt and Bouckaert (2000). 4 Reformers' Achievements: What Did They Gain? Results Are Difficult to Determine These reform activities show remarkable diversity, but the real test of a reform approach lies in its eventual impact on service delivery, account- ability improvements, and aggregate expenditure. Case by case, there are undoubtedly many examples of specific improvements in particular ser- vices or in the work of ministries or other organizations. There is, how- ever, remarkably little evidence of the overall impact of reforms.1 Clearly, there have been results in terms of reformed public manage- ment processes. In both radical and incremental or gradualist reforming countries, there has been a willingness to borrow either wholesale or in a more targeted fashion from private sector management models, despite the often significant difference between the two contexts. On the one hand, the private sector seeks comparatively simple outcomes in often very competitive markets with relatively straightforward client-customer relationships and extremely powerful and shared performance incen- tives. On the other, the public sector seeks an often extremely complex set of outcomes, with providers operating in a situation of limited or no com- petition. The public sector also must deal with a very diverse set of direct and indirect clients, service users, and beneficiaries, and in a situation of often multiple and sometimes conflicting performance incentives. Many of the reform programs apparently have delivered only small parts of what their designers had intended. Clear evidence as to the out- comes actually achieved is generally lacking. There has been very limit- ed formal evaluation, either internally or externally, of the system in question. In many cases, there is a continuing controversy as to the out- comes of the reform programs. One such controversy concerns the sig- nificance of IT as a driver of organizational operational efficiency improvements, with some arguing that it is the new technologies rather than the managerial changes that are the key. Other controversies concern the degree to which reform gains are counterbalanced by unintended losses. Some argue that efficiency and 33 34 INTERNATIONAL PUBLIC ADMINISTRATION REFORM flexibility have been achieved at the cost of staff loyalty. Others suggest that efficiency has been achieved at the expense of coordination. Some critics point to the increasing number of semiautonomous service providers, run on more businesslike lines, that are found within the pub- lic sector and suggest that they are individually more efficient but collec- tively more fragmented and hard to control. Reductions in Public Expenditure A recent review (Pollitt and Bouckaert 2000) of the impact of OECD reform programs points out that although there are some signs of a reduction in general government outlays as a percentage of GDP, with a small but detectable trend toward reduced deficits, gross public debt as a percentage of GDP has in fact increased. Thus, the evidence that fiscal pressures have really been addressed is mixed. The Canadian Program Review exercise and the New Zealand reforms are among the clearest exceptions. In New Zealand, the fiscal impact of the reforms has been dramatic. Following the reforms, the government moved from a severe fiscal crisis to attain a positive net worth in fewer than four years. Large increases were avoided in the public sector wage bill, and the government has been running a surplus on both cash and accrual bases. Chief executives reportedly treat the parliamentary appropriations as "electric fences," and breaches are extremely rare. More generally, however, the study points out that that: · There seems to be little relationship between the depth of reform pro- grams and any identified savings. · The effects of larger macroeconomic changes are such that it is unclear that any savings are the direct result of a particular reform program. · Rather than reform leading to savings, it is equally probable that sav- ings from more or less arbitrary cuts lead to reform (Pollitt and Bouckaert 2000). One contention of the reformers is that even if expenditures have not been decreased, at least they have not continued to grow at the same rate. The principal outcomes of the "lean state" exercise in Germany were a reduction and streamlining in the number of federal authorities, a more flexible budget law, and a reverse in the staff increases brought about by reunification. The federal administrative apparatus had grown from 300,000 established posts in 1989 to 381,000 by the end of 1992. This num- ber was then reduced to 315,000 by 1998. REFORMERS' ACHIEVEMENTS: WHAT DID THEY GAIN? 35 Box 14. Program Review in Canada In fiscal year 1993­94, the federal deficit in Canada stood at Can$42 bil- lion, or 5.9 percent GDP. By 1994­95, net public debt had reached Can$546 billion, or 72.8 percent GDP. The annual public debt interest payments had reached Can$42 billion, or 35 percent of program spending. Worse, by February 1995, public debt charges had increased by Can$7.5 billion beyond the previous year's forecast as a result of rising interest rates. At this time, Canada was just beginning to emerge from its worst recession since the 1920s. In the public's mind, future prosperity was linked to the restoration of fiscal responsibility. Program Review was the government's response. In the February 1994 budget, the government set an objective of reducing the deficit to Can$24.3 billion, or 3 percent GDP, by 1996­97. This set the deficit on its first sustained downward track in 23 years. To accomplish this, a three-year expenditure reduction target of Can$29 bil- lion was set. Measures included cutting 45,000 civil service jobs, reducing provincial government transfers by Can$4.5 billion, eliminating 73 gov- ernment boards, commercializing or restructuring 47 others, ending agri- cultural and transportation subsidies, and reducing business subsidies by 60 percent. The process involved both the administrative and the political levels. Its objective was "to identify the federal government's core roles and responsibilities and allocate resources to priority areas in order to provide effective, affordable, government" (Duhamel 1995). Notional budget reduction targets between 5 and 60 percent were set. To guide the process, departments were instructed to review their opera- tions against six questions: Is a public interest involved? Is this something the federal government should be doing? Can this be transferred to the provinces? Could this be done by the private sector? Can this be made more efficient? Is this affordable? A committee chaired by the Clerk of the Privy Council (cabinet secre- tary) reviewed proposals to meet the target with each department. This was followed by a cabinet committee review and then a review by the full cabinet. From a fiscal perspective, the results were highly successful. By 1997­98, the budget was in surplus. For 1999­2000, the budget surplus rose to Can$12.3 billion, and program spending accounted for only 11.5 percent of GDP, the lowest level in 50 years. Forecasts through to 2006 indicate continuing surpluses of more than Can$10 billion annually against a backdrop of significant tax cuts. 36 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Efficiency Improvements Difficulties in identifying aggregate expenditure reductions do not, of course, lead to the conclusion that there have been no efficiency improve- ments. Arguably, expenditure increases would have been more signifi- cant, and service quality subject to deterioration, without the efficiency improvements enabled by the reforms. However, the evidence is uncertain. Even in New Zealand, it is very difficult to assert exactly what has improved as a result of the systemic changes (Boston 2000). Efficiency gains in the departments and ministries have been noted,2 and others have reported that there is a wide consen- sus that the reforms have resulted in an improvement in the efficiency of the core public sector (Petrie and Webber 2001, p. 28), not least because capital is used more efficiently as a result of the imposition of a capital charge. However, there have been no comprehensive studies of efficiency gains across a wide selection of departments and ministries, so it is not possible to quantify the level of gains.3 Similarly nuanced findings are reported in the United Kingdom (Pollitt, Birchall, and Putnam 1998), where the reforms seem to be achiev- ing about 3 percent year-on-year efficiency savings in the running costs (quoted in Scott and Taylor 2000). Given that running costs are small rel- ative to program costs, this is a rather modest saving. Box 15. Mixed Signals on Australian Efficiency Savings Phase 1 of the Australian reforms in the mid-1980s attracted international attention because of the large-scale reprioritization of spending achieved by successive annual budget cycles. At the same time, the aggregate bud- get outcome was transformed from deficit to substantial surplus. Phase 2 of the reforms (particularly the introduction of accrual budget- ing) has also received international recognition because of the scale of the transition involved. Phase 2 has the potential to further reduce the resources required to deliver "public" goods and services as a result of the introduction of appropriate costing procedures and competitive pressures. However, the jury is still out on the scale of the benefits. It is clear that there have been some problems in introducing accrual budgeting. It also remains to be seen whether individual departments have fully developed the skills needed to manage service contracts with arm's-length suppliers well enough to keep costs below levels that were achieved under phase 1 reforms. REFORMERS' ACHIEVEMENTS: WHAT DID THEY GAIN? 37 Other Gains Expenditure reductions and efficiency savings were not the only ambi- tion of the reformers, however. In New Zealand, ministers have expressed satisfaction with the policy flexibility and responsiveness that the new public management arrangements have provided. Even the 1999 Labour-Alliance government, which campaigned on making changes in the public sector, has stated that it will not alter the fundamental build- ing blocks of the State Services Act, State Owned Enterprises Act, Fiscal Responsibility Act, and Public Finance Act, although it has modified employment law to increase the potential role of trade unions. Significant gains have been made in accountability improvements at the level of the whole of government and for individual government agencies. Better specification of organizational performance ex ante and reporting on achievements ex post with comprehensive auditing require- ments are providing a more robust basis for judging the performance of public sector agencies. Transparency more generally has increased through much broader availability of performance data. However, although this is widely used by parliamentary select committees, opposi- tion parties, the media, and interest groups in reforming countries, much performance data are still not in a form that is particularly relevant or easily understood by consumers and the public. In the civil service, the results have been significant, although the impact on outputs is less obvious. Performance-based pay is more dis- cussed than used, and the heads of ministries and departments are still predominantly drawn from the public sector. In many reforming coun- tries, there is an increased ability to appoint new people on fixed contract terms. However, in many settings, there are still problems with attracting high-caliber candidates to head agencies, because these positions are not as attractive as those in the private sector. Unintended Consequences Reforms have sometimes generated problems of their own. Autonomous agencies have proved problematic in many countries, including the Netherlands and increasingly in New Zealand. The widespread historical difficulties in enforcing performance contracts with state-owned enter- prises have been replicated to some degree in the new generation of arm's length service delivery agencies. The increased management autonomy has led to some instances of expenditure by government agen- cies that have attracted adverse political and public comment, such as 38 INTERNATIONAL PUBLIC ADMINISTRATION REFORM spending on air travel, payouts to departing chief executives, and failed implementations of IT systems. The new public management argument for agencies is that service providers should concentrate on efficient production of quality services, with the distractions of evaluating alternative policies removed. The dis- cussion of the creation of executive agencies in the United Kingdom and the similar developments in Australia, Canada, France, Iceland, New Zealand, and Norway have been replete with references to clear, well- defined targets that allow providers to concentrate on their core business. Similarly, policymaking is seen to be more focused, more rigorous, and sometimes even more adventurous if it can be accomplished without the undertow of concern for the existing service providers. The argument, put simply, is that policymaking and service delivery are distinct tasks, and each benefits from the additional attention it receives if it is not com- peting for management time with the other. In addition, of course, once purchasing has been detached from policymaking, there are opportuni- ties for creating contract-like arrangements to provide performance incentives. Still, some commentators and some politicians have expressed con- cerns that this leads to an erosion of a public service ethos and a loss of continuity and institutional memory (Schick 1996). There has also been some speculation that fragmentation may be undermining policy analysis. Other skeptical observations concern the degree to which the users of public goods can be regarded as freely choosing consumers. One of the ideas that powered the new public management was that consumers could be motivated to complain about public services, whether these were local (such as health services or education) or national (such as the provision of passports or customs control). Skeptics have suggested that the consumerist trappings of citizens' charters were more symbolic than real (Flynn and Pickard 1996, Miller 1996). They point out that there was little or no chance of judicial intervention to resolve contractual disputes and equally little chance of "exit" for the service users.4 REFORMERS' ACHIEVEMENTS: WHAT DID THEY GAIN? 39 Box 16. Mixed Reform Outcomes in the United Kingdom One yardstick of the impact of the UK reforms is that, at the start, it would have been unthinkable for prisons to be run by a private company. By the end, this had not only been thought of but was being done, although with some elements of curiosity and hostility. There has been a marked shift toward a contractual paradigm within government. This has been accompanied by a growth in the supporting regulations to arbitrate between the contracting parties--to such a degree that some observers have pointed to regulation as the growth sector of public administration in the United Kingdom. The Modernizing Government initiative of the current Labour government has sought to build on this acceptance of contracting, with a greater emphasis on collab- oration and partnership--moving on (in rhetoric at least) from the man- agerial agenda of the 1980s to one that puts the users of services and the outcomes they need at the heart of further change. The administrative reforms of the 1980s and early 1990s strengthened the performance orientation of the public sector and increased technical efficiency. However, the public service ethos in the United Kingdom, as well as staff morale, may have suffered in the process. League tables for schools and hospitals have proved very popular with the public, but much other performance data go unused. To sum up, the 1980s saw the development of a model of public administration that was focused on the efficiency of business processes, the idea of the distinction between policy and operations, and multiplica- tion of performance indicators. This model delivered substantial advances and is still at the heart of further improvement. But in many respects, this model has come up against limits. Recent government analysis identified problems in terms of horizontal coordination and capacity to tackle the deep-seated social prob- lems that cut across traditional ministerial and organizational portfolios. The analysis suggested the limitations of the paradigm for the new, infor- mation-age environment and raised questions concerning its impact on the motivation of public servants. 40 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 17. Unintended Consequences in the Netherlands The General Administrative Law Act has made all government decisions liable to appeal in an independent court of law, instead of having a sepa- rate channel of administrative appeal in specialized courts. In practice, the law has enabled groups of citizens to fight any policy decision in court. Because this entails a huge burden of juridification in the courts, most government institutions have created preliminary com- mittees of appeal to handle citizens' appeals in different fields of policy, including personnel issues (reorganization, transfer and dismissal, and so on). The act has widened the possibilities for appeal and slowed down the pace of internal reform and reorganization in the public service. At the same time, the large number of parliamentary inquiries into pol- icy failures has led to an investigation culture, which has made public ser- vants increasingly cautious and reluctant to take on initiatives and responsibilities. Notes 1. See http://www1.worldbank.org/publicsector/civilservice/oecdcountries.htm. 2. OECD. 1999. "Measuring Public Sector Productivity." PUMA/SBO (99) 6. Paper prepared for the 20th annual meeting of senior budget officials, June 3­4, Paris. Quoted in Petrie and Webber (2001). Note that public service staff numbers fell from 67,600 in 1987 to 31,500 in 1992. 3. See the New Zealand case study in Public Administration Reform: Country Reform Summaries, http://www1.worldbank.org/publicsector/civilservice/ designimplementing.htm. 4. Schick (1998) makes the related point that expectations of standards of con- duct migrate between the private and public sectors: Low expectations of busi- ness conduct translate into low expectations of government performance. 5 Reformers' Traction: Why Did They Do Different Things? A Model for Explaining Reform Activities This paper has examined public administration reforms in four thematic areas: 1. Public expenditure arrangements 2. Personnel management and civil service 3. Organizational structure of the executive 4. Role and policy load carried by government. It has set out two levels of reforms: basic reforms intended to achieve or strengthen public sector discipline, and advanced reforms that build on an entrenched discipline in the behavior of civil servants and a strong organizational culture of following the rules. It has also suggested that the advanced reforms allow a choice between the new contractualists and the incremental modernizers. To the extent that many governments were driven by very similar sets of concerns, why did they pursue different reform activities? One set of answers must lie in country-specific political economy issues. The particular alignment of interests and the historical momen- tum that different factions have obtained must be a (if not the) major fac- tor. However, such analyses offer little comfort for other observers, because there are few political economy stories that can be readily trans- ported from one setting to another.1 Consequently, this paper looks at the institutional arrangements within government that have given traction to reformers. It points out that much of the pattern of reform can be explained by the leverage that was available to reformers and the intrin- sic malleability of state structures. Figure 5 emphasizes that these seem to rank alongside the idiosyncratic political economy issues as key explana- tory variables in determining why different reform paths were followed. 41 42 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Figure 5. A Model for Explaining Reform Differences Country-specific political economy issues Reformers' activities, scope, and depth of reform: Reformers' concerns: · Basic reforms intended to Broad/narrow achieve or strengthen public sector discipline · Advanced reforms · Continuity of reform Reformers' traction: · Points of leverage · Institutional malleability Points of Leverage Some reformers had more leverage than others, because institutional arrangements provided them with some powerful points of entry to com- prehensive reform programs. In examining leverage for reform, the inten- tion is not to suggest that all reforms are equally valuable and therefore all opportunities that facilitate reform are to be welcomed. There is a diverse range of levers available to some reformers. Governments that have control over a single strong central agency have often been able to drive through major changes. Single-party majority governments are particularly well positioned to drive through complex reform programs that would create tensions within coalition govern- ments. When the system is such that senior civil servants frequently become ministers at some point in their careers, and vice versa, owner- ship of reforms is likely to be deeper at senior levels. Also, some public sector environments find it easier to tolerate experimentation and are more likely to foster innovations. The leverage available to reformers can be identified under four head- ings or traditions: 1. A single, strong central agency 2. A single-party majority 3. Integrated mandarin/ministerial careers 4. Heterogeneity in the public sector. REFORMERS' TRACTION: WHY DID THEY DO DIFFERENT THINGS? 43 This is an incomplete list. Many forces outside this rather narrow set of internal and institutional arrangements could be construed as levers. A discontented public can be a radical force for reform. There is seemingly a distinction to be drawn, however, between the pressures for change arising from a public that considers government corrupt, and to some degree illegitimate, and the pressure for change from a public that has a grudging respect for the probity of the civil service but considers that it is unduly bureaucratic and self-interested. Put starkly, there is a differ- ence between the pressures that mounted in Indonesia and the forces that initially welcomed change in New Zealand. Another set of opportunities outside the public sector arises from the pressures that can be mounted and contributions that can be made by think tanks, management consultants, and academics. Again, the exam- ples of the United Kingdom and New Zealand suggest that these radical reformers were helped considerably by the presence of intellectually, financially, and politically powerful think tanks. Appendix C provides a methodological note that gives further back- ground on this classification of reform levers. Institutional Malleability While reformers may have distinctively different leverage in the public sector, the basic institutions of the public sector can be more or less mal- leable. Malleability is not all good; a reformer's rigidities are, of course, someone else's checks and balances. As one example, a strong political lead in the United Kingdom was able to produce radical changes in the pattern of public sector employment and reporting arrangements within the public sector, with remarkably few legislative obstacles. That same malleability also facilitated the abolition of an entire tier of government in London and other major metropolitan areas in England in a manner that would have been inconceivable in other European settings--and to the consternation of many administrators within the United Kingdom. The opportunity for swift and radical reform may also be an opportunity for ill-conceived change. Time alone can confirm which category such reforms fall within. Centralization provides considerable malleability. Governments in states that have divided authority constitutionally between levels of gov- ernment are less able to drive through comprehensive and uniform reform programs. Political neutrality at senior levels also fosters mal- leability, because when the majority of senior public official positions is politicized, with consequent high levels of turnover after a change of gov- ernment, it is harder to sustain a reform effort. The Germanic and the tra- ditional Scandinavian state traditions provide some legal rigidity. By con- 44 INTERNATIONAL PUBLIC ADMINISTRATION REFORM trast, the Anglo-Saxon state tradition is peculiarly compatible with recent reform efforts. Governments in this tradition are regarded as something of a necessary evil that must be held to account at all times. The law is in the background, and enforcing the law is implicit rather than explicit as a principle in the work of civil servants. Extensive trade union membership in the public sector makes sub- stantial resistance to reform more probable, although this is emphatically not to argue that trade unions are intrinsically obstructive and could not or should not be fundamentally involved in reform design. Malleability can be assessed along the following dimensions: · Degree of centralization · Politically neutral, permanent senior administrative positions · Anglo-Saxon administrative tradition · Limited trade union membership in the public sector. Appendix D provides a methodological note that gives further back- ground on this classification of constraints to reform. Mapping Reformers' Traction The term traction refers to the combination of leverage and institutional malleability available to reformers. It is important to emphasize that these are not "virtues." They are simply distinctive arrangements that give reformers a stronger grip on the public sector. Appendix A provides single-page summaries of the country situations. Table 7 provides an overview of the traction that reformers can get in the public sector in the 14 countries. Explaining Patterns of Reform If the overall level of reform traction is assessed by the availability of reform levers and the degree of institutional malleability, then a rough ordering emerges.2 Figure 6 suggests that the level of reform activity is significantly determined by the traction available to reformers. United States United Kingdom Poland New Zealand Nether- lands ea, of Kor Rep. Hungary Germany Finland China Chile studies. Canada country the actionrT Brazil omfr Australia eers in - assessments' Reformers' a car senior 7. leverage of ong of of of sector neutral, trade of str agency of member the sector ogeneity ee public in Authors: ce ableT Points raditionT single, central raditionT single-party majority raditionT integrated mandarin/ ministerial raditionT heter the Institutional malleability Degr centralization Politically permanent administrative positions Anglo-Saxon administrative tradition Limited union ship public Sour 45 46 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Figure 6. Reformers' Traction and Reform Activity Reformers' traction A lot Reform activity New Zealand, New Zealand United Kingdom Australia, United Australia, Canada, Chile Kingdom China China, Finland, Hungary Finland, United States, Canada Hungary, Rep. of Korea United States, Chile, Brazil, Poland Netherlands Rep. of Korea Brazil, Germany, Germany, Poland A little Netherlands Note: This chart is a heuristic device to illustrate that country situations differ. No claim is made about precision. Notes 1. See http://www1.worldbank.org/publicsector/civilservice/engaging.htm for some discussion of this. 2. This ordering assumes that the Anglo-Saxon administrative tradition is a particularly powerful lever, followed in significance by the traditions of a single- party majority, integrated mandarin/ministerial careers, and heterogeneity in the public sector. A tradition of a single, strong central agency is taken to be the weak- est form of leverage. The ordering also assumes that a high degree of centraliza- tion makes the institutional arrangements distinctively malleable, followed by nonpoliticized senior administrative positions. 6 The Challenge for Low-Traction Reformers: How to Achieve Basic Reforms A Dilemma Facing Low-Traction Reformers The 14 cases examined for this paper can be roughly divided between six high-traction countries (Australia, Canada, Chile, China, New Zealand, and the United Kingdom) and eight with low traction (Brazil, Finland, Germany, Hungary, the Netherlands, Poland, the Republic of Korea, and the United States). The more recent reformers among the group of low- traction countries (Brazil, Hungary, Poland, and the Republic of Korea) tend to focus on basic, as opposed to advanced, reforms--particularly in relation to the civil service and the role and policy load carried by gov- ernment. In focusing on the basic reforms as low-traction reformers, Brazil, Poland, and the Republic of Korea have to solve a fundamental problem. The basics of strengthening discipline and formality so that recruitment, promotion, and pay determination are based on explicit rules; the signif- icance of personal connections reduced; and the credibility of the budget process restored are in essence cross-cutting reforms that require the broad application and entrenchment of common rules and principles. However, the simultaneous introduction of sweeping, theoretically coherent, and uniform reforms across the public sector is the very thing that is hard to do without traction. The question becomes how to achieve progress on these basic cross-cutting reforms--to address poor public sector discipline, weak rule credibility, and often also comparatively high levels of corruption, informality, and patronage--when the public sector institutions are unyielding and not intrinsically malleable and reformers have so little leverage. The answer, it seems, is distinctly country specific. Those reformers finding themselves with limited traction had to be distinctly oppor- tunistic, taking advantage of idiosyncratic developments as they emerged. This seems to have been the hallmark of all the low-traction countries. 47 48 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Seizing Opportunities in Basic Public Expenditure Management Reforms In terms of achieving aggregate cost reductions, under the Collor Administration, Brazil attempted to achieve a 30 percent reduction in civil servant numbers. The consequences support the basic thesis about the difficulties facing low-traction reformers, because this reduction proved in practice to be impossible to sustain (although numbers in the executive were reduced from 705,550 in 1988 to 587,200 in 1994). The attempt led to serious damage to the quality of the Brazilian civil service, and many of those shed were subsequently reinstated. Brazil is, in the categorization used for this analysis, a low-traction coun- try with broad reform concerns. Developments in Brazil contrast marked- ly with the experience of other low-traction countries with narrower reform concerns. Finland was able to reduce the number of civil service personnel from 27,000 in 1991 to 24,000 in 1996 and reduce the number of employees financed from the state administration budget from 215,000 in 1988 to 124,000 in 2000 (a 43 percent reduction). Public expenditure overall was reduced by 8 percent of GDP in 1999 compared with the 1991 figure. Finland was also able to move to a system of block transfers from the cen- ter to municipalities (with pilots in 1987 and full implementation in 1994). After reunification, Germany was able to achieve a reduction in the num- ber of federal government staff from 652,000 in 1991 to 526,431 in 1997. The United States was able to reduce the federal civil service by 17 percent (377,000 employees) in the period from 1993 to 1999 and the size of the national government civilian workforce by approximately 15 percent (325,000 full-time equivalent employees) over the period from 1993 to 2000. The achievements of the more narrowly focused of the low-traction coun- tries compare favorably with the record of the high-traction countries (see, for example, box 14). In seeking efficiency improvements, Brazil is moving to develop a per- formance focus for the budget (see box 9). This is an interesting idiosyn- cratic development in that Brazil is essentially retrofitting programs around what government is already doing. It is in effect putting existing public business into new boxes, directing government attention to out- puts and outcomes rather than inputs or processes, case by case. Programs have simple, self-explanatory titles, objectives, subsidiary actions necessary to obtain these objectives, and output indicators for these actions. This information is publicly available through the Internet. In turn, programs and actions are clearly linked to discussions about bud- getary resources for the four-year plan period. Strikingly and in keeping with the logic of opportunism, the program approach has been launched with no explicit statement about where it will lead. THE CHALLENGE FOR LOW-TRACTION REFORMERS 49 The low-traction reformers with a narrower reform focus could move faster. Finland moved to a results-oriented budgeting system (see box 7), including three-year planning and annual agency reports. This approach, combined with managerial and personnel decentralization, was claimed to have led to significantly increased efficiency. Germany's New Steering Model (implemented incrementally and bottom-up, and with local authorities and then the Länder [states] being the most advanced in this respect) involved a performance management system with outputs defined more clearly, use of performance contracts for managers, flexible resource allocation, and greater reliance on outcomes and contracting out. The Netherlands also effected a move to output-based budgeting with significant resulting efficiency savings claimed. The United States, under the 1993 GPRA (see box 4), moved to five-year strategic planning, with resources and results linked and a clear focus on program results, performance information available for congressional oversight, and annual performance plans for each agency and performance indicators to measure outputs, service levels, and outcomes of each program activity. However, none of the low-traction countries could move at the speed of their high-traction comparators. Australia, Canada, New Zealand, and the United Kingdom have probably implemented the most radical and comprehensive set of reform measures in this area. In the area of accounting reform, low-traction but broad concern Hungary has taken advantage of the supply of well-trained personnel to move to double-entry bookkeeping. Narrower focus low-traction coun- tries made deeper changes, with Finland moving in 1998 to accounting based on accruals concepts and the Netherlands moving from cash accounting to encumbrance accounting (see box 6). However, again, the high-traction reformers have moved further and more rapidly in this area. Seizing Opportunities in Civil Service Personnel Management Reforms In the area of career management and depoliticization, Brazil again took advantage of some idiosyncratic opportunities to develop a fairly effec- tive senior executive service, together with ministry-by-ministry, merit- based career systems. Hungary illustrated the challenges facing reform- ers with little traction when it made merit and depoliticization key pillars of its 1992 Civil Service Law, but the mere passing of the law has not been sufficient to affect the established political spoils system. Sixty-one per- cent of administrative state secretaries have spent less than two years in office. Similarly in Poland, although the civil service is also in theory merit based and depoliticized (and with a Civil Service State Commission set up to help protect this), there is significant senior staff turnover at 50 INTERNATIONAL PUBLIC ADMINISTRATION REFORM change of government. In the Republic of Korea, a Civil Service Commission was set up in an attempt to protect merit and political neu- trality in the appointment of civil servants, and an open recruitment sys- tem for senior government positions was established. The consequences are not yet clear. Again, the low-traction reformers with a narrower reform focus were in a stronger position. Finland has a decentralized, flexible, competitive personnel policy, with significant delegation to agencies. Merit-based recruitment appears to be strongly engrained. The Netherlands displays a number of market-like features, with, for example, pay increases and promotion decisions increasingly dependent on performance. The U.S. system, which has clear demarcation of the large number of political appointees in the system, also set up in 1983 a Senior Executive Service of about 8,000 senior civil servants. At the start of the reform processes of the last 10 to 15 years, these countries already had in place rules- based, disciplined systems with minimal patronage and corruption. The general rule for the low-traction countries seeking to achieve basic reforms seems to have been to move incrementally, avoiding large claims and major announcements, to make progress through legal changes to codify and enforce the accountability of civil servants. Also, modest train- ing initiatives have been used to encourage a positive approach to career development. Seizing Opportunities in Reforming the Organizational Structure of the Executive Changing the basic structure of the executive is particularly hard for low- traction countries. Of the eight low-traction reformers, just three had reform activities in this area. All six of the high-traction reformers had intensive reform activities addressing this issue. Low-traction Poland took advantage of a radical program of decen- tralization to restructure government. Finland achieved a 43 percent reduction in the number of employees funded from the central govern- ment budget and implemented extensive micro-level changes to the structure of government. This was accompanied by delegation of deci- sionmaking powers from line ministries to local government. However, this did not lead to the expected reduction in staff numbers at the line ministry level. Finland has also moved toward increased use of contracts and some use of user fees and market testing. The Netherlands set up semiautonomous, self-standing managed organizations and transformed many key government departments into semipublic agencies. However, the consequences of this action have been uncertain and marked by con- tinuing controversy. THE CHALLENGE FOR LOW-TRACTION REFORMERS 51 Again, the low-traction countries seeking to achieve basic reforms have avoided dramatic announcements about sweeping reforms. They have advanced incrementally, and often unevenly, taking advantage of opportunities as they arose ministry by ministry, to consolidate ministry structures and convey nonbinding performance targets. Seizing Opportunities in Changing the Role and Policy Load Carried by Government All the low-traction countries focusing on getting the basics in place were able to achieve some reallocation of responsibilities between levels of government and shed some responsibilities for service provision. They were also able to contract out the more easily specified support tasks. Hungary and Poland both gave considerable reform weight to decen- tralization. In Poland, this involved a major recasting of the structure of subnational government with the restoration of gminas (basic level of public administration), voivoids (largest administrative unit in the subna- tional organization of the state), and poviats (county level of public administration designed to maintain many of the everyday institutions of public life) (see box 10). In Hungary, the emphasis was rather on service and fiscal decentralization, with the granting of more autonomy for local governments leading, it is claimed, to improvements in service delivery. In the Republic of Korea, there was a recent move to transfer some ser- vice delivery responsibilities to the private sector and local government; 10 arm's-length executive agencies have also been established, and a major deregulation program undertaken. Finland pursued significant delegation of responsibilities from line ministries and also undertook some privatization. The Netherlands sought to achieve significant political and fiscal decentralization and completed some significant privatizations (post, telecommunications, the port authority). The New Steering Model approach in Germany empha- sized outsourcing, contracting out, and privatization, with use of perfor- mance contracts and more flexible resource allocation. Local authorities, particularly large cities, have moved furthest forward in implementing these reforms. In the United States, the National Partnership for Reinventing Government claimed many successes in streamlining gov- ernment and eliminating obsolete programs and agencies. Lessons from Low-Traction Countries Needing Basic Reforms Given that many governments were driven by very similar sets of con- cerns, there seem to be several reasons why they often followed very dif- 52 INTERNATIONAL PUBLIC ADMINISTRATION REFORM ferent reform paths. First, as has been noted, the leverage available to reformers--the points of entry to comprehensive reform programs--and the malleability of basic public sector institutions varied significantly between countries. As section 5 noted, the level of reform activity is sig- nificantly determined by the resulting traction available to reformers. Low-traction countries simply do not have the same room to maneuver. Second, some low-traction countries have a distinctive problem in that they need to ingrain a discipline in the behavior of civil servants and in the organizational culture of public sector agencies. Discipline means, in essence, formality: Actual behavior follows the written rules, and the budget on paper that parliament agreed to bears a close relationship to the budget that is executed. Again, their choices are limited by compari- son with the high-traction, advanced reformers. This latter group can draw from a menu of options, very particularly deciding how far to go in basing public administration on contractual relationships. Thus, low-traction countries faced with the need for basic reforms find themselves heavily constrained in their actions. Such reformers grap- pling with basic reforms had to be distinctly opportunistic, taking advan- tage of idiosyncratic developments as they emerged. This opportunism has shaped their tactics. · To take advantage of opportunities as they arise, they have been more concerned with building alliances, partnerships, and coalitions at the national level (for example, with political parties and interest groups to tackle patronage and politicization) and with regional and local governments and key stakeholder groups. · To exploit opportunities, they have also had to be more willing to tol- erate diversity in approaches taken in reform areas, including a greater use of pilot and experimental reform activities, user fees, and market testing. · To create opportunities, they have also found themselves strengthen- ing central agencies such as the ministry of finance and the human resource management agency of the central civil service so that these in turn can demand greater discipline and formality from all other units within the system and are able to develop and apply sanctions. · To lessen opposition, they have had to emphasize internal and exter- nal communications, training and change management, and participa- tion and involvement on the part of a wide range of stakeholders. Low-traction countries have also managed expectations. It is unrealis- tic for low-traction reformers to pursue major managerial decentraliza- tion and flexibility until basic discipline and formality within the system is in place. It is equally unrealistic to expect to be able to achieve major THE CHALLENGE FOR LOW-TRACTION REFORMERS 53 outcomes from personnel management reform in the civil service simply through passing legislation and setting up bodies such as a civil service commission: Securing outcomes from reform activities in this area requires specific alliance building with political parties and interest groups to align incentives sufficiently to be able to tackle patronage and politicization. It is also unrealistic to expect to be able to move quickly toward contractualization and extensive use of executive agencies. However, some expectations can and should be raised. It is realistic to seek to strengthen basic discipline and formality in the budget area through use of approaches such as moving to a multiyear budget frame- work and strengthening management information systems and report- ing. It is also realistic to seek to strengthen audit requirements and begin requiring the production and publication of ministry, agency, and service annual performance reports (to strengthen performance orientation, dis- cipline, transparency, and accountability). In addition, it is realistic to consider approaches such as setting up a senior executive service to seek to accelerate the development of merit and depoliticization for the core group of senior civil service managers. Finally, it is realistic to seek to reorient the focus and role of line ministries on policy analysis and devel- opment and strip out remaining commercial functions and activities from line ministries. 7 Implications for the Russian Federation Realism and Managed Expectations In considering public administration reform, Russia is undoubtedly a low-traction country. The leverage available to reformers is very limited. Since 1991, there has been no single, strong central agency within the fed- eral government. Senior civil service and ministerial careers are not strongly interlinked, and there is little tradition of integrated man- darin/ministerial careers. Institutional malleability is also limited. It is a highly decentralized system, with few politically neutral, permanent senior administrative positions. All the evidence from this analysis of 14 reform cases suggests that rapid and comprehensive reform progress is unlikely. First Things First Any assessment of the current functioning of the public administration in the Russian Federation points toward the need for a basic set of reforms that provide an underpinning of discipline and formality. Developing a strong, legally defined civil service is perhaps the most pressing. The nearest approximation to civil servant status in the Russian Federation is afforded to the state service positions in the federal execu- tive branch, covered under Federal Law on the Civil Service (No. 119-FZ of July 31, 1995).1 A minority of federal state service officials is located in Moscow-based ministries and other federal executive bodies. The major- ity are deconcentrated and, although employed by the federal govern- ment, are physically located in "subjects of the Russian Federation," rayons (districts), and municipalities. The rewards structure for these staff does not provide motivation. Total rewards for officials in the state service include monetary payments and in-kind benefits such as housing, use of a car and driver, payment of utilities, access to subsidized and premium medical and educational facilities, per diems for foreign travel, and subsidized meals. However, 54 IMPLICATIONS FOR THE RUSSIAN FEDERATION 55 these in-kind benefits are increasingly restricted to a very small number of senior officials.2 Overall, remuneration is inadequate. There are few sound comparators for senior state servant salaries, but it seems probable that official monetary rewards are significantly below those that might be obtained in the private sector. Russian experts estimate that at the level of deputy ministers, official monetary rewards are between 10 and 15 times below those in the private sector in Moscow. Pay increases for the state service would have a relatively modest impact on the total wage bill.3 However, it is not clear what the impact of such increases would be on other groups of staff, and any race toward maintaining parity could prove fiscally unsustainable. Merit is not protected in the Russian Federation. There is no merit pro- tection body to protect and ensure competence and guarantee and safe- guard political neutrality.4 Some review of the ethics infrastructure and mechanisms to manage conflicts of interest will support these basic steps. It will be necessary to establish a credible, independent merit protection body to ensure competence and political neutrality. In this and other reform possibilities, the challenge is to focus on these few basic changes and not to be distracted by the possibility of more advanced reforms. Create More Traction In the face of so many difficulties, it is a priority to develop some con- vincing, even inspirational, principles that can provide guidance to staff when doubts set in. Waiting for theoreticians and practitioners to reach a consensus reform strategy might perhaps take second place to a prag- matic set of principles that will demonstrate government's conviction regarding the appropriate direction in which to move. The Russian Federation government does not have a single, powerful central agency. Perhaps some steps can be taken in this direction. New Zealand provides a distinctive example of a very powerful central agency (the Treasury) that was uniquely prepared for the reform program with a remarkably coherent set of proposals. This contrasts with others, notably Canada, where reform manage- ment is considerably more diffuse. The question for Russia concerns the investment that will need to be found to create the central agency capacity (for example, in the Administration of the President, the Apparatus of the Government, the Ministry for Economic Development and Trade, the Ministry of Finance, and the Ministry of Labor and Social Development) that will be necessary to lead the reforms. Development, implementation, and review of the reforms are a major and complex set of activities that must be separately 56 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 18. Reform Management in New Zealand and the Republic of Korea The reform program in New Zealand was very unusual in that it was dri- ven by a coherent theoretical model (embodying new institutional eco- nomics, public choice, and transaction costs theories, as well as a strong dose of managerialism). The model was shared by a core group of trea- sury officials and Labour Party parliamentarians. The treasury played a central role in many aspects of the reforms, supported by the State Services Commission in the decentralization of management functions. Overall, the program was designed and implemented by elite group of politicians and central agency officials in a top-down fashion. There was no great pressure for change from citizens, and the 1984­90 reforms were particularly unpopular with people displaced from the public sector and with the left wing of the Labour Party. Extensive use was made of man- agement consultants and other external experts for specialized advice on areas such as privatization and restructuring. In response to the East Asian economic crisis, President-elect Kim Dae Jung of the Republic of Korea formed the Government Administration Reform Committee on January 7, 1998. The committee consisted of 22 members. After public hearings and consultations with each government branch, the committee finalized the government restructuring program on February 18, 1998. The revised Government Organization Act was approved by the national assembly and took effect on February 28, 1998. The act aims at producing a small but efficient and powerful government, with decentralized authority and a consumer orientation that are flexible in response to social change. and explicitly resourced, and that can represent a significant real cost of reform. Change management, capacity building, training, consultation, and communications (both internal and external) are all of major impor- tance throughout development and implementation of the reform pro- gram. Each is a major exercise that has itself to be managed and resourced. Seize Opportunities We commented in section 6 that low-traction countries generally do not have the opportunities for pursuing many radical cross-cutting reforms. This is particularly true in federal states with considerable decentraliza- tion of powers and responsibilities. For these states, top-down pressure from the political and civil service elite will need to be backed up by a willingness and ability on the part of the central reform team to build net- IMPLICATIONS FOR THE RUSSIAN FEDERATION 57 Box 19. Dispersed Reform Management in Canada There is no single ministry or central agency responsible for public administration reform. The key central organizations and personnel are as follows: · The Clerk of the Privy Council Office (Government Apparat) is the head of the public service. La Relève is headed by the Clerk. In the fed- eral public service, all deputy ministers (the senior official of each department) have a dual accountability to the prime minister (through the Clerk) and to their minister. Performance contracts are negotiated between deputy ministers and the Clerk of the Privy Council. · The Treasury Board is the employer of public servants. · The Treasury Board Secretariat coordinates the business planning process and issues directives on human resources management across government. Business plans contain a public accountability dimension, annually reporting results against objectives and providing the reports to the public. · The Public Service Commission is responsible for safeguarding the merit principle. · The Canadian Centre for Management Development (CCMD) is responsible for leadership development. works of complex partnerships and coalitions with subnational units of government. In the case of the Russian Federation, this will be at the level of the 89 subjects of the federation. The key point is that low-traction countries such as Brazil, Germany, and the Netherlands made few promises at the start of the reform process about what the results of the reforms would be. They initiated a compre- hensive internal discussion within the public sector and then watched to see which agencies took up the challenge. The challenge for Russia will be to spot promising developments as they emerge. This will involve being prepared to devote considerable time and attention to building a national consensus on reform objectives and priorities; forging effective partnerships with regional administrations, cities, municipalities, and districts; and creating effective coalitions with nongovernmental organi- zations (NGOs) and private sector and business associations. Encouraging pilot reform schemes and experiments at the agency or sub- national level is more likely to generate the dynamism needed than wait- ing for comprehensive cross-cutting reforms. This will require a tolerance among the central reform team to what in practice may turn out to be a wide diversity in reform ambitions and 58 INTERNATIONAL PUBLIC ADMINISTRATION REFORM activities pursued by different subnational units of government. This is likely to require that the central reform team be willing and able to gen- erate incentives within the system for subnational units of government to participate actively and willingly in a broad range of pilot reform activi- ties and experiments. Likewise, this will require ability of the central- level reform team to build coalitions to disseminate the results of and lessons learned from such pilots across the Russian Federation and stim- ulate reform activities. Create Opportunities The logic of low traction for reformers in the Russian Federation is oppor- tunism and asymmetry--seizing chances as they occur. But opportunities can be created as well as seized. One approach would be the setting up of a performance improvement fund to provide incentives for participation in pilot activities by subnational units of government, while also providing concrete resources to support and enable achievement of the reform ambi- tions of a particular subnational unit of government through an appropri- ate mix of coherently and cohesively implemented reform activities. Another pragmatic, opportunity-creating approach could be the judi- cious use of functional reviews--an examination of the functions and structures of state agencies or budget entities that asks whether the func- tions need to be done at all, whether other agencies or actors could do them more efficiently or effectively, and what the consequences are for structure. Certainly, any significant savings at the federal level will be found only through a reduction in the program expenditure. It is clear that there are relatively few opportunities for securing significant savings through implementing efficiency improvements in the Moscow offices of the federal ministries and other executive bodies. Indeed, a reduction in the numbers of state civil servants may even be unwise and somewhat unproductive, given their relatively small number; although some, per- haps many, could perhaps more appropriately be redeployed to support higher-priority objectives of the government work program. In settings where uniform, symmetric reforms are feasible, functional reviews have been difficult to justify because of their focus on single agencies or ministries. However, given the de facto diversity and auton- omy of public bodies in the Russian Federation, functional reviews are likely to represent a pragmatic way forward. This would respond to the realities of an overhang of unfunded legal mandates, and force agencies to prioritize functions, using clearly defined criteria for this purpose that have been established by the administrative reform program managers. Opportunities will also be created through stimulating external pressure on the executive. The cautious introduction at different levels of govern- IMPLICATIONS FOR THE RUSSIAN FEDERATION 59 ment of some freedom of information legislation (being mindful of the potential costs) and the development of an ombudsman's office could assist. In Looking for Useful Experiences, Look for the Like-Minded Structurally, looking at the traction that reformers in the Russian Federation will possess, the natural comparators are the low-traction countries, particularly the low-traction countries that are recent reform- ers. Like Russia, these countries did not have the reformers' levers of a single, strong central agency; a traditional single-party majority; or inte- grated mandarin/ministerial careers. As a low-traction country, the Russian Federation will also share with these countries the reform chal- lenges that arise from having a public sector that is less intrinsically mal- leable. Russia has complex intergovernmental relationships and no Anglo-Saxon administrative tradition, and it does not have politically neutral senior staff. It is reasonable to assert that the Russian Federation is also concerned to achieve the basic reforms that introduce discipline and formality into the public sector. As section 6 noted, this places it in the company of Brazil, Hungary, Poland, and the Republic of Korea. There is also anoth- er reason for looking in more detail at the experiences of these countries: they also have very broad reform concerns. Finally, an ongoing key issue for the reform team is how to generate external pressures on the system to change and how to raise citizens' expectations of, and demand for, better services. In this respect, it will be important that the reform team be able to publicize widely and effective- ly the best-practice performance and service levels and standards achieved in the most successful experiments and pilots. Figure 7. Russia's Reformers in Context High Canada , Chile United Kingdom, New Zealand, Australia, China Reformers' traction Finland, United States, Hungary, Rep. of Korea, Low Netherlands, Brazil, Poland, Germany Russia Narrow Broad Reformers' concerns 60 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Notes 1. In essence, these are staff funded from the functional category of the federal budget for public administration and local government. At the most senior levels of government in Moscow, this function covers the complete apparatuses of the legislative, executive, and judicial branches. With a total of some 519,000 employ- ees, the state service is a relatively modest proportion of total public employment in Russia. Excluding employment in state-owned enterprises, for which there are no current data, total public employment in Russia is approximately 6.4 million. 2. Salaries and allowances are governed by two scales for headquarters offices (for ministries and other executive bodies) and four scales for deconcentrated staff, classified according to the size of the federation subject, rayon (district), or municipality in which they are located. The resulting pattern of rewards is high- ly complex and unlikely to motivate. Article 17 of the Federal Law on the Civil Service (119-FZ of July 31, 1995) states that the upkeep of state servants consists of the official salary, increases in the salary for skill grades and for special condi- tions of the civil service, and seniority and bonuses for the results of this work. The heads of federal authorities are authorized to vary conditions for payment of bonuses and monthly supplements for special working conditions. However, lim- its on payments are provided in Presidential Decree No. 310 of April 9, 1997, "Financial Conditions for Federal Public Servants." These state the maximum that may be paid in a single year for each of these additional payments and are calculated on multiples of monthly fixed pay as follows: 4 times for qualification grade, 2.5 times for special working conditions, 3 times for seniority, and 3 times for performance. This decree also acknowledges authority of other legislation, for example, 2 times fixed pay for employees working with state secrets under the Law on State Secrets. An analysis of 1999 civil servant salaries by Goskomstat (the statistics min- istry) showed that the average monthly amount (net of social benefits) was 3,089 rubles. Of this, 38 percent was fixed pay; 25 percent was for additions such as seniority, special working conditions, and qualification grade; 26 percent was for performance bonuses and financial aid; and 11 percent was for other payments (primarily vacation payments). There were, however, variances between min- istries: for example, 60 percent of ministries had an average range of Rub 2,500­4,000, 30 percent had Rub 3,100­4,000, and 10 percent had more than Rub 4,100. The consequence is probably that bonuses and premiums are manipulated to compensate for low basic wages (premiums are ostensibly for performance, but bonuses are for a number of factors, such as conditions of work, qualifying requirements, and length of service). Under these circumstances, bonuses and premiums do not provide an incentive to employees because they are considered part of the fixed salary, and there may be "daylighting" by civil servants during government time to make up for low salaries. IMPLICATIONS FOR THE RUSSIAN FEDERATION 61 3. As an extreme illustration of this, providing higher-ranking managerial cadres in the top and chief grades with rapid and cumulative wage increases over a five-year period, in a drastic effort to improve management of the state service and alleviate problems in retention and recruitment of senior staff, would have a very modest impact on the total wage bill. Specifically, if each year for five years, increases over the previous year of 50 percent were awarded to ministers and of 45 percent to all top and chief staff, with no increases awarded to other grades, then the cumulative impact will be an increase of 0.02 percent of GDP to 0.33 per- cent of GDP, with the nominal wage bill for the state service 15.5 percent higher. It is also possible that such increases could be offset against savings in nonmone- tary rewards. 4. The only federal civil service body is the Council for the Civil Service (Article 26 of the Civil Service Law), although as of early 2003 this council was no longer operational. It had representation from the three branches of government but was under the direction of the president. It appears to have had the dual roles of estab- lishing the recruitment process and setting the framework for the management of human resources. This is inappropriate because of the lack of independence from government. The law itself does not provide specific provisions for ensuring the fairness of the merit process. Appendix A Summaries of Individual Country Reform Experiences Australia Brazil Canada Chile China Finland Germany Hungary The Netherlands New Zealand Poland Republic of Korea United Kingdom United States The full case studies from which these summaries are extracted are pro- vided at http://www1.worldbank.org/publicsector/civilservice/design implementing.htm. 62 SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 63 Australia Context and problems Approaches Outcomes and concerns Context: ·Focus on increasing efficiency, Outcomes: ·Federal state, with strong federal achieving expenditure reductions, ·Streamlined structure of government government streamlining government ·Number of public service employees ·Majoritarian electoral system ·Centralized implementation of reduced from 180,893 in 1986 to 143,305 in ·Adversarial reforms driven by federal 1996 ·Anglo-Saxon administrative tradition government ·Substantial state assets privatized ·Mixture of radical and ·Substantial reprioritization of government Problems: pragmatic approaches expenditure ·Fiscal pressures, mid-1980s ·Early focus on managerialism ·Overall significant efficiency gains ·Some public resistance to poor- ·Mid-1990s emphasis on privatiza- ·Culture of public service altered: less tenure quality public services, but little tion and the introduction of for civil servants, more managerialist, closer demand from the public for market mechanisms to private sector, less distinctive management reforms ·Early step was creation in 1984 ·Policy advice to ministers diversified ·Employment rigidities in the of Senior Executive Service civil service ·Focus on open and competitive Concerns: recruitment ·Morale problems at middle-management ·Early moves to results-oriented and lower levels of the public administra- management and program tion budgeting ·Weakening of public service ethos ·Government structure streamlined ·Some difficulties in contract management and number of ministries reduced from 27 to 16 departments in 1987 64 INTERNATIONAL PUBLIC ADMINISTRATION REFORM fed- the other cent to lead of , the deliv- dam- or per in may 60 ganiza- under know number municipal or intended esponsiver service constitutional or than and flexibility to autonomous seriously concerns the enchments e social was and pay embedded better in and for or early was administration and etrr state state, mor ganizations amendment olls agile es the and eater or performance ogram e too gr payr pr is Collor for mor eformsr eformr service eductionr equirr federal, expend on agencies social it, framework the Outcomes employees, ficiency the between allow pay and eformr state ef civil now if initial legal of public may the however during evenuesr doso managerial eater new gr -- Outcomes: Some· eral former actions governments of Contracts· autonomous tions including A· agencies Car make The· administrative to ery Concerns: Quality· aged the for of as its Ministry and that not and on e egionalr indi- with focus series the oving flexibility civil serve oposed a adminis-s' wer pr agencies by oposed and executive educingr services of the servants to focused of asserted although pr impr the e ough -- managers, contracts oaches doso agenda 1995 civil thr (MARE) state servants ous, easing have sectoral dinator ppr in of ministerial-level flexibility performance into performance developing A Car Administration a a eas the ovider incr sector of eformr between autonomous ar pr diagnosis civil included coor legislatur of Reform on numer allocated ofessionalism built of eformsr as pr the achieved esident Federal public budget, eation be ogram Pr· trative formulated of State Focus· oler liaison eation MARE· federal overly poorly changes the servants, of facilitating distribution Cr· political a and Managerial· to measurable cators heads Later· cr the pr evious the 1985, pr power to ongly in the esultr civil esignr str States government by a the by experienced to cise as of over governments employees, Collor exer ust ol experienced most and eservedr ess United civilian drafted governments the the tradition not the government distr congr constitution contr 1986 aggravated servants public of oblems states district. new of e state of pr eas municipal by civil during state ar or exited by level central government deficit, many and governments military befor federal constitution of morale skilled posts those high onic esponsible Brazil Context Context: Federal· wenty-sixT· one State· in federal Administrative· influenced Military· followed 1988· constitutional of (1967) oblems: Pr Lack· service Federal· chr irr Low· leading and their administration SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 65 in 17.4 (first or to under (half last sys- cuts for 98­ of eformsr 93)­ further the and, ficiently meeting delivery a 1997 parts uneven the suf position not in 23 (1984 by over es concerns to employees governments omfr not pay departments 35 other delivery management and to measur lose innovative eformsr achieved omfr 15,000 declined agencies ovincial it lost employees) service employees) and gap: government pr ministerial contract Outcomes and servants comparative budget years) to (transfers 30 educedr oney ed e), service (39,000 omfr defense about performance civil operating flexible in Mulr years alternative cent of ent eer fer expectations Outcomes: Balanced· time Cabinet· Public· the transferr elsewher per four tem, civilian Concerns: Use· Car· (worsening many) Special· dif support Implementation· all Concern· driven veè experi- of uals not much center evita-r service Rel statements parliament alignment evenuesr private with down- La accr to agency but Zealand Agency govern- wide the and years and for United limited forms by and public full sultser oaches es new and diversification ough emental, ovinces of after to ppr ence the New oaches, 1994 thr A long-term central for and ebuildr and incr or pr eportingr efer (1989): than Operating attempt partnerships eviewr to on pr appr bodies since departments ganizational oved expenditur ideology elements ogram or build all ogram Focus· of Dispersed· authority Reforms· by Some· sector weaker Kingdom Special· Pr autonomy mental mentation in Explicit· to individual Pr· sizing Attempt· lize management downsizing (1997) Commitment· accounting for Impr· (1996) agency 1980s 1984 with service local in cent and system public central per spending of eater system much and central ge oss- 6 lar cr 1993 e billion gr and overall in performance, levels for deficit in oblems federal ovincial cultur levels dominant pr pr ovinces at government lativelyer within discipline: achieved Can$168 billion mandarin owth and pr single not economic fiscal gr omfr budget demands no ong eak gets ge Can$508 1994 Canada Context Context: Majoritarian· str delivery government Federal· agencies influential but Cohesive· departmental oblems: Pr W· Poor· tar Lar· debt: to Federal· in Citizen· accountability 66 INTERNATIONAL PUBLIC ADMINISTRATION REFORM pri- cut- in and and employees; employment concerns clear governments succeeded activities etainedr performance- and yet of public public delivery of of not cut sector democratic to service success Outcomes number government a in number need private and budgeting the no of Outcomes: Pinochet· vatizing ting subsequent had further Role· extended Concerns: Impact· based over pol- hous- and wages 1985 initia- markets in ement handed substantial oviders olonged sector pr policy ocur private education, government pr a pr budgeting to by between public oaches security wage ficiency; ministries ppr health, service began A ef turning in sector social easing unified on distinction incr a government and enhance private of launched Focus· to activities ing, to Legal· autonomous policymaking Government· icy under Online· launched Performance-based· tive e by 51 the ther ead Pinochet, legisla- 13 into be adminis- and elections into flexible, e dictatorship, may eefr America, state widespr mor Augusto e a esident divided military pr ough subdivided sector Latin for fective become government a oblems 1990 a thr 1990 in ef pr by General to by ch legislatur need had by epublic,r public further a and and apparatus 1973 chosen Mar capable still e onage expanded mid-1970s ovinces ficient, Chile Context Context: Governed· headed omfr Governed· tur since Unitary· egions,r pr Bicameral· oblems: Pr Although· most was ef trative Patr· the Over· SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 67 e of in num- omfr sub- center uctur radeT Council the the ectly str number dir 19 emittancesr orld State 30,000 generation administrative W and of to to concerns 61 educedr 22 between over the commissions to and duceder to 51,000 1988 and number omfr skilled e government 100 in publishing 1982 the eaus mor in decisions accede to Outcomes in omfr omfr negotiations and bur governments and ministries weak ucturing 41 accountable of to eased local judicial e dinate ganization Outcomes: Reforms· agencies employees Restr· ber 45 or Incr· and oungerY· government Concerns: China· and Mor· necessary Or in e- agricul- to tirer to adminis- invest- state- of eater adminis- govern- ough led economy to gr thr eign decentraliza- conducted government govern- for consumers determine eceded for 1998 government pr given and local given mandatory personnel) to evampedr market and 1990s service examinations, a and eformsr and government to personnel allocations oaches with used of of their established service the salaries' ppr eformsr 1993, early e labor training A oducers, into eforms,r autonomy decollectivization decentralize needs enterprises pr over ficials, (civil of encouraged and 1988, to tenur competitive than markets 1980s, governments of ages es uited servants the eater e ganizational eamlining age Economic· trative ment Gr· owned tion tur Or· 1982, str agencies Late· began decisionmaking ments, Local· power tration Fixed· ment ment Cadr· ecrr open, rather W· civil Content· meet ge neces- lar posi- a in quali- service municipali- within ough in not five thr e civil (Communist) four economy eformsr placed es for was wer overlapping esultingr uctur ovinces, influential fing pr market beingf they str oblems majority egions,r se ficient staf pr ee espectr and d staf of inef government/Communist ge which and system essur of administrative public lar pr towar allocations, for China Context Context: Single-party· wenty-thrT· autonomous ties Low· Central· party overall oblems: Pr Fiscal· endrT· sitated raditionT· labor number tions fied Complex,· administrative 68 INTERNATIONAL PUBLIC ADMINISTRATION REFORM to omfr of and gov- the duc-er million cent central eas by cent (moves employ- 60 per adminis- ar per 8 central omfr 78,000 of humans' 40 companies by government to state at commensurate 130,000 the of some government by concerns financed and ency to service in numbersf of about educedr cent central much local and staf e by per the civil so eased at (equivalent transpar in fell 213,000 34,000 43 not followed incr esponsibilitiesr their personnel enterprises for and eased by omfr ess of not in Outcomes of 1995: marks ogr management level expenditur budget to GDP)s' incr levels; pr ce movement funded eaucracy f-budget Outcomes: Number· state 1989 of accounted tion) Public· Finnish 1999 Openness· tration Reduction· ees budget Concerns: Little· esourr Bur· Most· agency ernment Delegation· ministries eductionsr not or o- omfr omfr in of onic pr and manage- small of state expendi- weight use multiyear 1994) training eas initia- electr ideology ar to servants, set the (pilots of eformr consensual, consultants fairly a transfers and a of mechanisms move overall of civil eaucratic decentralization by a esults-basedr politicians estrainingr block bur of delivery oaches ong use eamlining to e management senior and of market ppr budgetary with and budgets str str pragmatic, driven with formation government implementation experimentation; of development A of municipalities service on by shift for and to full measur dissemination, delivery use intensive se central Focus· estraint,r planning ment Reforms· driven No· outsiders Reforms· number together Gradual· posals apparatus tur Lightening· of Parallel· center 1987, Some· Extensive· pilots, Some· selected Performance· tives Extensive· service the to cent was consti- coali- in 1994 the of 1990 per change Soviet deficit and by 18.4 past for e the omfr 1993 conditions of fiscal cent ni ecentr eachedr supported demand per oblems the public GDP legislatur service pr collapse 12 in of state economic by and civil government governments general (and fell cent eer significant 1994 per Finland Context Context: Unitary· tution raditionT· tion Unicameral· Car· No· omfr oblems: Pr Adverse· 1990s Union) GDP· 1993 Unemployment· in Central· 11 SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 69 in and 1998 gov- exe- not in in public 1989 local concepts in new flexibility 315,000 the budget eformsr defeated to to at in -- eater concerns 300,000 gr system and of governance educedr eformsr elationr flexibility in eformersr new oduce pay of 1992 early " intr parliament Outcomes apparatus in level eased fatigue ging to service incr club" ead emer civil German Outcomes: Federal· 381,000 Significant· ernment Some· cution Concerns: Reform· management; just Small· widespr Attempt· the the of oler mili- and of the marke- system of at up as on wholesale e German form central ough service, ideology emulate behavior to tradition model at East thr separation government, legalistic, minimalist focus existing any civil import of to and of elsewher and the eneurship political tightening ong or e of oving trying leor e vertical epr oaches by modernization str view a to omfr against top-down initiatives uctur the cultur and entr ppr to A or impr system str in merit-based transition on ongly administration to driven emental oaches state str eformr level opposed Not· Administrative· incr opposed for tization Focus· as another appr Federal· tate centralized, eformsr Few· level ransformationT· omoting public changes move horizontal powers, ules-basedr Pr· local tra- 14,915 public better nderäL counties, state service mainly for 329, civil complex oler German citizens nderäL law-based and governments East municipalities, federal omfr oblems (16 ong, of e the local pr str varied lawmaking of politicized to state essur and levels administrative omfr pr noncounty emely emely emely Germany Context Context: Federal· 151 municipalities Extr· dition Extr· administration Upper· extr Federal· confined oblems: Pr Some· service Unification· 70 INTERNATIONAL PUBLIC ADMINISTRATION REFORM deci- per- high legis- eased 1994 and 15 in as the in granted make and incr by e to in GDP seen uction Senior " wer government of the concerns emovedr educedr ge cent lar of local Reconstr and authorities engthened esultingr autonomy str to per 1997 fectiveness for local matters 8.8 in ef [EBRD]) and capabilities emainsr governments legislation Service Outcomes local delivery eamlined, employment transfers omfr Bank cent den politicization 1990s, power on str per e opean bur the 4.6 Outcomes: In· municipal mor sions Service· Excessive· lation governance Ministry· cent Budget· educedr to Government (Eur Development ·" Concerns: Debt· Possible· Executive e- of of of o- pub- pr as pub- private was intr ocess ser- dless on in the System and the pr ed. system system govern- well Civil system as civil for councils a cing of 1992, egarr chic by in of fice emphasis Finance of enfor administer onment of finance Governments hierar municipal Status in changes performance oaches decentralization Public departmental of of adopted employees, necessity ppr eamlining 1994, task A on envir means public at Local Legal str the development in of Committee levels the on on was performance-based political for by by administration management a emainingr Act ovement or omoting sector ed Act pr administration Emphasis· Favorable· sector lic Reform· par Reform erritorialT· established egionalr Replacement· public public The· amended impr ment The· Servants ducing of outlining vants party rainingT· lic a for govern- e tools ar local concerns branch governing of of positions developing democracy system den oblems legislative on onage system pr bur employment service patr and focus debt civil on egate ong ge Hungary Context Context: Parliamentary· Unicameral· Str· democratic Decentralized· ments oblems: Pr Lar· Aggr· Senior· based SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 71 oved pow- nonmin- imped- impr achieved for spending lose to and oversight eatly ea cautious gr concerns center: ar savings political the and eluctantr this at e in accountability bodies eased ficiency wer excessively ef decentralization ess incr management uggles ogr Outcomes public public str ough pr of of servants thr ealr Outcomes: Financial· Significant· Concerns: Loss· isterial Power· departments ers ed Civil· because o- and with 20 to the tight the and imbal- (post, per- sector in of indica- omfr private compr 90 semiau- on port closer the political agencies: ficiency initiatives with new private es the mint, cutbacks ideas Kingdom, omfr ef based budgetary ed imposition consensus 1998 became the omfr to privatizations fer many to in of performance oaches of sharp and eformr United ideas easing oaches elite of ppr 1991 A expenditur of the incr savings building departmental conditions 1980s, sector of States funding ol use eformr appr for and attention significant decentralization omfr pertaining of the eaucratic up and In· public contr Some· Sweden, United Some· sector Drive· achieving Reform· mise Much· bur ances Some· telecommunications, authority) Some· esponsibilitiesr cent Establishment· tonomous set Pay· those Development· tors es 500 of late uctur state range str less general the ovinces, uption a coalitions; pr but omfr immune wide for asonableer corr 12 not in is advisory oach, 1980s with held deficits about e oblems decentralized multiparty and demand appr early service pr but uctur ministries, budget the onage and str public to concerns civil Netherlands patr eaucratic The Context Context: Unitary· Consensual· quasi-corporatist Open· consultative Fourteen· municipalities Some· bur administration esteem oblems: Pr Sizable· 1970s Public· Senior· omfr 72 INTERNATIONAL PUBLIC ADMINISTRATION REFORM to sys- mem- avail- enti- the omfr (many state- informa- in new eas or genuinely ar service own fell 1994 advice cr into ficiency managers in ef savings for complete concerns wield some institutional public entities to built and cost policy outcomes e and performance in of momentum 37,000 of domain and on own of ea costs employment to cr and operational powers failur ar and to range managers advice of gy for public focus this 1988 Outcomes ed oductivity sector in enterprises) pr ministers amount weakening accountabilities in the continuity ener policy ovements to in of and ficient because of transaction oadened eater eak Outcomes: Public· 88,000 transferr owned Major· impr Br· able Flexibility· manage Operational· decentralized Gr· tion Concerns: W· Loss· ory ethos Insuf· Unclear· ties eformsr Loss· mid-1990s High· tem (not of omfr per- out- coher- of to transac- line on consul- base oup elite ests manage- and gr ce contracts move elements management inter focus etical on contracting agency small explicit a eaucratic to and esourr of (1989): and implementation public 1990 theor experts by based by bur use management oaches to managerialism, decentralization Act and harsh of ppr and values human performance A 1984 driven driven ed by accounting outcomes and use external ehensive choice, shar service extensive management Finance ideology costs ous and political uals and Compr· eforms,r Reforms· ent party-political) public tion Reforms· the with Civil· ment: arrangements, sonnel managers Public· accr puts igorV· eformsr of Extensive· tants e 76 but mor the at 5 oduc- on and aver- the ge in majority intr service 1985 with lar, cent under esentation in OECD devaluation per economy country ecentr eprr civil 13 omfr cent 90 governments cent per the constraints with the elationsr economy per was ew 10 island single-party was ed gr to about oblems a but 20 pr trade service 1984 mote,er government oportional coalition power depoliticized pr eformsr capita (compar stagnant debt, inflation in civil Zealand and in 100) Kingdom concern of made constitutional of per of 93­ 1992 1984, 1985, cent the New Context Context: Small,· Unitary· raditionallyT· government, tion has likely Few· party Unified,· start oblems: Pr GNP· in age Dwindling· United In· national In· Unemployment· per 1992 Public· not SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 73 ser- helped levels esponsibili-r employ- civil e senior mor decisions at concerns and given government government delivery political central central politicization Outcomes service of authorities weakened for educer Outcomes: Local· ties Decentralizing· to ment Concerns: Morale· vants Significant· in pub- in all unit the be of 1999 began main- of various public to to of gminas level institutions would strategy at of complicated government the es unifying into administration), of and the servants system ed ganization (county designed Commission ocedur administrative passed, oaches or everyday ministers civil policy within uctur public pr employment the Administration eliminating Act State ppr of gest A poviats for estrr of Branches that life) branches of (lar on government eformingr level and clear of on potential quality subnational many e Act ocess Service administration public pr employedf Service Country· (basic voivoids the state), lic tain of The· Government made esponsibler particular In· administrative levels Focus· finance Civil· staf Civil· testing ensur gov- eformr e power power local accession of of at concerns befor EU e for balance delivery den gets delivery oblems pr legislatur and bur tar employment levels and decentralization service debt egate service ge ong ge eak Poland Context Context: Bicameral· Separation· Lar· Str· ernment oblems: Pr Lar· Aggr· W· Demanding· 74 INTERNATIONAL PUBLIC ADMINISTRATION REFORM 17, to suc- of to 33 136 the the be 21 fice of omfr existing open of high-level and scrapped 1999, cent the govern- will quality 1999 omfr the 16 egulationsr the in 230 of per the in ficials ectors, concerns of 7.4 senior on dir cent adopted whether and cent educedr Committee for ministers, operation, per per included eau of 22 egulations;r egulationsr being impact bur administrative 10.2 ectors) discern system 74 year Reform of eliminated 6,820 to have Outcomes ew ministers assistant dir oved service gr abolished (4 first or cent positions ministerial-level impr early ectors, the per uitment civil Outcomes: GDP· Cabinet· and 24 Posts· posts dir division In· Regulatory 48 and administrative committee emainingr Concerns: ooT· ecrr ment cessful the as in the 1998, in to 1998 other agenda in 1997, operty to in for system plan to to ograms estab- in pr pr Advisory eated access of established fiscal cr 1999 e Administration the Government service linked pay central political adopted high-ranking Act gain personnel oduced ced; the e to established esponsibler civil and uption Committee oaches the eformsr formser intr disclosur enhanced enfor fairs ppr system Commission overalls' budgeting medium-term ficials adopted rights' A Government and Disclosur information Af agency Anticorr Reform of former Kim a into of system as for servants people Home central service Service to e esident well elected Ministry· and the civil Civil· 1999 Administrative· democratizing Pr Multiannual· as Performance-oriented· appraisal expanded Registration· for public Council 1999 Government· Information ensur government Regulatory· lished e a up- befor and branch corr powers minority and with esident pr e with executive employment the onyism Korea ong parties cr oblems epublic,r of legislatur str of pr of crisis and between political government ed esidential ceptions Republic Context Context: Pr· shar unicameral aditionrT· eak W· administrations oblems: Pr Economic· High· eformr Per· tion SUMMARIES OF INDIVIDUAL COUNTRY REFORM EXPERIENCES 75 a by focus and ethos senior then 1983 schools new to adds 1990s at to customer of life halfway possible eliminated and a managerial policy cent, public drive service late and not education of and 1979 to which, the concerns per eased eased ealr' es in only e ficient civil in 14 and omfr incr incr led ar system quality of by hospitals general limitations suf citizens failur politicization overload for the not flexibility users of on oduced cut cent, orientation eatly with moralef pr service agenda gr ficiency of on is e and for per ef staf agencies easing Outcomes 6 tables management delivery impact civil -led ther being initiative service popular undermining incr of Outcomes: Civil· further Performance· orientation echnicalT· ovider League· very Recognition· public government Concerns: Service· Collapsed· health Executive· house; delegation complexity Fragmentation· adverse advice Some· Some· levels Reform· Pr· 140 ser- 83­ the 1991 influ- in oduc- and schools) civil 1979 in in local mone- manage- of tendering intr govern- consultants spending in sector and agencies: split management implementa- systems (including cent Charter educed,r central 1990s per management of ideology: private ong ovider ehensive initiative eformr ement hospitals 70 late competitive oaches by str performance executive mechanisms, -pr and of of management Citizens following the ppr indicators for than of numbers compr lueaV in A e financial driven emely use measur use 1992 use market chaser 1987 mor in Best top-down extr tables government pur downsizing and in testing; First, compulsory service on oving ministries of up, local Reforms· tarism Managerialist· ences Extensive· ment performance league Extensive· set vice; in Massive· Civil· Impr· 1980s Focus· tion health Market· Further· ment eviewsr Service· eviews,r government Insistent· tion ser- and disci- legisla- the even top civil GDP system in party on of interven- adversarial the owing government tight impose borr privileged and highly to omfr generalist educer centage be big centralized to consistently constraints and sector to per too oblems and as felt pr executive; ced few eformsr need e be Kingdom and highly, system abilitys' inflation to public enfor ol ement service felt emely e ceived United Context Context: Unitary· Majoritarian· political Powerful· pline tur Extr· executive unpopular down Depoliticized· vice oblems: Pr Contr· Reduce· equirr Per· expenditur Civil· complacent State· tionist 76 INTERNATIONAL PUBLIC ADMINISTRATION REFORM o- micr per- the customer 17 99­ omfr servants under 1999 many by 1993 civil disappoint- in eased in government points concerns incr patchy: educedr federal oduced mainly e and e federal centage of pr achieved ar gains, esponsivenessr 1980s the per wer service employees) 9 and in the plans by morale of Outcomes surplus outcomes ficiency civil usttr 1998 ef (377,000 oved to end legislation the Outcomes: Budget· Many· level orientation Federal· cent Public· impr 1994 Concerns: Collapsed· at Performance· 1993 ing on cul- pri- a in fees on by not not (1992) (bud- user man- civil Service e varied behind eer planning ement) performance out, mostly enterprise of sector car e eas Review Performance eformsr emphasis Grace Executive eefr techniques, legislatur ar e the not servants) coalition measur in eformsr oaches oaches measur (strategic service, private and uctur many contracting of the ppr Senior penetration Act str under A civil appr build of of elite in to eformr Performance Government changes use appointees, (8,000 quick on customer, administration: sector (12,000 1993 Results performance eation es; ficult eement Cr· 1983 Business-oriented,· tur vate Dif· specific Executive· agr National· and and and Focus· government getary management) Reagan· privatization, Extensive· agers Commission) Leadership· political servants and the ser- levels e o- politi- inter- on the states division and legisla- micr to of civil indepen- in the e for powerful eaucracy ong in private ar legislatur str bur specter government: federal enched by the change disenchantment: in 1980s deficit branches on government citizens with entr edilection with of of late oblems budget discipline pr among committees lobbying powerful; comparatively prs'e federal public ust part morale the the fragmented States system system in and is " distr party and and gridlock of during federal powers government e appointments Spoils Significant ong United Context Context: Federal· constitutionally of of Little· tur Extensive· ests Legislative· dent overall Legislatur· managing cal administration ·" Open· risk oblems: str Pr · Collapse· vice High· 1980s Appendix B Reformers' Concerns: Methodological Note Reducing Public Expenditure, Aggregate Employment, and Wage Bill Concerns There are no hard and fast metrics for deciding when to reform public sector pay and employment, and overstaffing is a relative concept; thus aggregate employment and wage bill concerns arise when there are grounds for concern that a country cannot afford to pay the existing num- bers of public employees and support the operation of a motivated, pro- fessional public service on a sustained financing basis. Comparisons with GDP and population are useful only as guides to judgment. This problem tends to be identified when: · The central government wage bill is a large percentage of GDP. This ratio can vary between 10 percent and 25 percent, with many countries around the 15 percent mark. The ratio depends on the relative involve- ment of the state in the economy. Developing countries tend to have smaller governments relative to GDP and consequently a lower ratio. · The number of public sector employees is a large percentage of total popula- tion. Reformers are interested not only in the size of the wage bill but also in the number of public servants. Governments acting as an "employer of last resort" have often hired large numbers of public ser- vants on meager wages in the lowest grades. These are often the most unproductive government employees, but the extent of such a prob- lem will not be immediately apparent from examination of the wage bill alone. · The number of government employees is a large percentage of total employment. This metric is similar to the preceding one, but it corrects for developing countries that have a relatively high proportion of children in the popu- lation, leading to a relatively low ratio of public servants to population. · The public sector wage bill is a large percentage of total public sector spend- ing. To deliver quality public services, governments will need to spend money on goods and services as well as wages and salaries. As a rule 77 78 INTERNATIONAL PUBLIC ADMINISTRATION REFORM of thumb, when this ratio rises over 25 percent, governments risk reducing their effectiveness by squeezing nonwage expenditure such as goods and services, maintenance, and capital expenditure. In prac- tice, this means that hospitals will lack medicines, schools will go with- out textbooks, and so forth. · Average government wages are low compared with per capita GDP. To recruit quality staff, encourage productivity, and avoid corruption (or the excuse for it), governments in developing countries must pay their employees at least a living wage. This ratio provides an important, if crude, indicator of whether government employees are under- or over- paid in comparison with the prevailing standard of living. A larger number of dependants, the relative scarcity of trained labor, and low standards of living imply that this ratio will tend to be larger in devel- oping than industrial countries. However, this does not mean that gov- ernment employees are overpaid. · Recruitment growth rate is faster than GDP. When government recruit- ment grows faster than GDP, revenue, or population growth, it is clear that either financial stability (growing deficits) or future performance (through reduced wages or reduced nonwage expenditure) will be jeopardized. · Military spending is large. Governments that spend an inappropriate proportion of their total budget on the military sector are likely to be jeopardizing future development objectives. In such situations, a coun- try's budget might show that development-related spending (on health, education, social safety nets, basic infrastructure, and so on) is being crowded out by high and growing defense spending that has lit- tle justification. Countries that employ more soldiers than health and education personnel could perhaps improve their development out- comes through a reduction in military personnel expenditure. There are no hard and fast rules, however, and the key is not to assess mili- tary expenditure, but to assess the accountability of its overall public expenditure allocations. Improving Government Ability to Implement Legitimate Policies Patronage The distinction between policymaking and implementation holds that politicians and their immediate appointees should make decisions con- cerning political priorities and neutral, professional staffs use their skills and experience to implement those policies. Optimally, such an arrange- ment allows public administration to remain sensitive to political goals yet REFORMERS' CONCERNS: METHODOLOGICAL NOTE 79 protected from political meddling in its day-to-day functioning. Merit and competition are undermined (and, arguably, civil service performance, as well) when unqualified individuals are hired or promoted. Morale is harmed as rank-and-file staff observe others disregarding rules or receiv- ing special treatment, while their own prospects for advancement based on merit and competition appear dim. Finally, widespread staffing changes in response to shifts in political power have a crippling effect on institutional memory, which in turn is likely to be detrimental to performance. Although the dangers of pervasive patronage are generally known, it is much less clear where the line between political and regular posts should be drawn. Some rough-and-ready measures can be found. The most common is the ratio of political appointees to the size of the civil service. Another measure that could facilitate the assessment and control of patronage is regular (monthly) data on turnover rates, provided by a personnel information system. Still, there is no clear cutoff point beyond which patronage is plainly illegitimate. When transparent mechanisms to define the extent and conditions of political versus nonpolitical appointments are lacking, the risk is that every position de facto becomes subject to political influence. This is par- ticularly the case in countries where the public administration experi- enced extended periods of intense politicization, such as the former socialist states of Central and Eastern Europe. This is, of course, a nuanced point, because political appointments are often an essential and legitimate instrument to craft and maintain a mul- tiparty governing coalition. Many countries have a significant number of hybrid appointments in which merit ( defined by meeting explicit and contestable criteria) is accompanied by subjective political judgments. By contrast with "pure" political appointments, in which serving members of the government make hiring and firing decisions, merit is a necessary but insufficient condition for appointment in hybrid appointments, which require careful management. Many reforms seek to restrain political patronage appointments to a level similar to that observed in OECD countries. This is a rather broad target: In the United States, the proportion of political appointees is around 1:400, and in Sweden, it is around 1:2,000. The percentage of change in budget-funded public sector staff in core central government ministries following elections can be informative. Employment Contracts and Tenure In many cases, the target of reform has been the nature of the employ- ment contract between the civil servant and the state, but the direction of reform sought has been distinctly varied. 80 INTERNATIONAL PUBLIC ADMINISTRATION REFORM For countries without a well-entrenched legal and customary view of civil service employment, access to civil service positions and the respon- sibilities of civil servants have been legally defined with greater preci- sion. The intention of these reforms has been to place checks and balances around the employment contract of civil servants so that they form a dis- tinct and unified corps, with security of tenure and objective bases for promotion used as protections against capricious political action. In most settings, reforms in employment contracts have either consol- idated or extended prohibitions against patronage and nepotism in career appointments and promotions, with some requiring that appointments and promotions to career positions be made through merit-based compe- tition. Unity of the civil service with common organizational structures and career classification systems has been achieved with reporting frame- works consistently applied across all management units. In some other countries that already have a secure legal and custom- ary regime for civil service employment, employment reforms have run counter to this general movement. For these, primarily anglophone OECD countries, the direction of reform has been to reduce (although not abandon) security of tenure and the significance of seniority in decisions concerning promotion and career advancement. In these settings, the unity of the civil service has also been reduced somewhat as individual agencies become more akin to separate private sector employers with divergent terms and conditions for their staff. Improving Government as an Employer-- Ineffective Monetary Incentives The extent of salary decline in some settings has forced employees to find additional sources of income, and the quality of public services and human resource management in the civil service has been undermined as a result. Employees resorted to other income-generating activities while retaining their public sector jobs with relative impunity. Outright corrup- tion may be the most pernicious effect (although the empirical evidence on whether low civil service wages foster corruption is inconclusive). Absenteeism and "daylighting" are also deleterious to public sector effi- ciency. These are all serious problems in countries where civil service wages are below a living income. Real wage erosion within the public sector has resulted in pay levels in some countries that are well below what would seem to be the reserva- tion wage of the individuals employed. Yet the particular mix of lax man- agement standards that tolerate additional income-earning activities among civil servants, on the one hand, and the allowances, in-kind ben- efits, and intangible incentives such as prestige and job security, on the REFORMERS' CONCERNS: METHODOLOGICAL NOTE 81 other hand, has ensured lower than expected attrition rates. This has meant that in such settings, the "best and brightest" were not necessarily lost from the public sector, but there was little motivation for them to apply their talents. Low public sector pay relative to the private sector1 can, of course, be associated with skill shortages. However, overcompensation can create excessive pressure for public sector employment. Key points are that vertical compression2 can make low-skilled jobs relatively more attractive to job seekers while recruiting and retaining staff for high-skilled posts tend to become more difficult. Likewise, high vertical compression reduces civil servants' incentives to pursue a long and successful career in the civil service by reducing the appeal of pro- motions. Monetary incentives other than through base pay can have adverse effects on civil service productivity. Excessive horizontal decompression3 can be unmanageable and foster patronage, and extreme horizontal com- pression can indicate that pay progression is overdependent on length of service, creating rigidity. Improving Service Delivery and Building Public and Private Sector Confidence Perceived Corruption and Low Public Respect When businesses consider government rules and policies to be unpre- dictable, investment and growth are weak. Poorer persons attempting to establish small businesses may be particularly harmed, because with few assets other than their labor, it is far more difficult for them to diversify across sectors of the economy--which is otherwise a rational response to unpredictable policies--than it is for the wealthy. Government can prepare such chaotic and fast-changing budgets that they lose their impact as signals of government policy intentions. A bud- get that varies tremendously from year to year in its intersectoral alloca- tions is signaling to the business community that government has no coherent policy stance. Businesses that perceive this are less likely to heed the rules and regulations that governments issue because they believe that all are unstable and unlikely to be enforced. Expectations concerning the future flow of budgetary and other resources are also significant determinants of civil servant behavior. Officials who doubt that the budget will be implemented as planned may have few reasons to implement policies vigorously and every reason to overstaff, because salaries will ultimately be paid even if program funds are reduced. 82 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Public concern about corruption is a significant driver of low public respect. A common definition of corruption is "the abuse of public office for private gain." Clearly, corruption (both political and bureaucratic) can have a devastating social and economic impact. The World Bank report Anticorruption in Transition (2000) has usefully distinguished between state capture and administrative corruption. State capture refers to the actions of individuals, groups, or firms in both the public and private sec- tors to influence the formation of laws, regulations, decrees, and other government policies to their own advantage as a result of the illegal transfer or concentration of private benefits to public officials. By con- trast, administrative corruption refers to the intentional imposition of dis- tortions in the prescribed implementation of existing laws, rules, and reg- ulations to provide advantages to either state or nonstate actors as a result of the illegal transfer or concentration of private gains to public officials. Operational Inefficiency and Poor Service Delivery In terms of performance, it is often asserted that efficiency is low within the public sector and quality of service is poor. These are two related but separate considerations, and both are distinctly hard to substantiate or refute. Assessing organizational performance in the public sector is quite dif- ficult. First, unlike private organizations, public organizations have no single performance indicator--such as profits or market share--that can be used to compare across different types of organization or product. Few organizations in the public sector work for profit, and the outputs of organizations such as an audit body or the planning division of the min- istry of finance are used only by other organizations within the public sector. Second, public sector organizations are often responsible for goods with low contestability and measurability. In such circumstances, it is generally impossible to find performance measures that satisfy the ideal qualities of consistency, comparability, clarity, controllability, comprehen- siveness, boundedness, relevance, and feasibility. The current debate on performance in the public sector provides illustrations of benchmarks that can be applied over time, but this has done little to solve the problem of comparability between diverse agencies and sectors. When public agencies' performance is measured, the metrics are distinctly organiza- tion or service specific: The waiting time for a patient to see a doctor is not readily comparable to primary school enrollment rates. One popular approach in local government is to benchmark performance in a similar functional area across different, but comparable, governments. REFORMERS' CONCERNS: METHODOLOGICAL NOTE 83 Notes 1. Public-private wage comparisons must be considered with care, because it is frequently unclear who or what the comparators should be. In industrial coun- tries, the usual comparators are clerical jobs in private companies. But this com- parison may not be relevant in many developing countries, where the true employment alternatives of many public sector workers are in the informal sec- tor of the economy. Public sector jobs may be undercompensated with respect to jobs in the top formal sector companies of a developing country, but still be over- compensated with respect to the "average" job. For instance, public sector jobs may pay a low salary, but offer health coverage, annual leave, old-age pension, and other benefits. Choosing elite private sector companies as comparators has been at the root of serious fiscal problems in some countries. These comparisons have convinced government officials, trade unions, and public opinion that public sector workers are dramatically underpaid. Through policy choices, strikes, or arbitration awards, their salaries often have been increased dramatically across the board, making the wage bill unsustainable. It is thus important to supplement any com- parator study with a careful analysis of earnings in and out of the public sector, using individual (or household) surveys. 2. Vertical compression reflects the proportionate difference between the top and bottom salaries and refers to the multiplier between the total salary package of an official in the highest echelon or rank and that of an official in the lowest echelon or rank in the same agency classification. There are different ways of measuring it. One is to divide the salary at the midpoint of the highest public employee pay category by the salary at the midpoint of the lowest category. Another, more rigorous, approach is to take the median of the ninth decile of dis- posable monetary compensation divided by the median of the first decile of dis- posable monetary compensation. This calculation is made on a single-year basis and excludes any net present value of future pension entitlements and any esti- mated value of in-kind benefits. 3. Horizontal compression reflects the degree to which earnings differ for offi- cials at the same grade or level in the same or different agencies. It is the ratio by which the total remuneration of a civil servant can differ from that of a colleague at the same level of seniority as a consequence of discretionary allowances. It is measured by dividing total monetary compensation, including all discretionary allowances, by base compensation without any discretionary allowances. Appendix C Points of Leverage for Reformers: Methodological Note1 Tradition of a Single, Strong Central Agency2 Governments with control over a single central agency that by tradition has been able to drive through major changes are better placed to initiate comprehensive reforms than others are. These powerful central agencies do not arise through some single historical accident. They are generally the symptom of a tight system of horizontal coordination within govern- ment. The UK and New Zealand Treasuries place these countries in a very different starting position from the United States or France, where no single central agency holds sway. The United States provides an indi- cation of the degree to which formal constitutional arrangements can influence this. The active involvement of the U.S. Congress in many man- agerial details of line departments, in a manner that would be unthink- able in much of Europe, provides a system in which departments report to multiple principals. No single central agency within the executive can drive through change under such circumstances. France and Germany are often cited as public sectors with multiple competing central agencies, which reduce the prospects for rapid reforms. Box 20. Stronger Central Agency in Finland The new Finnish Constitution (March 2000) will strengthen the position of the prime minister as a political leader in government. The role of the prime minister has traditionally been quite a weak one, overshadowed by the strong role of the president. Recent steps taken toward a parliamen- tary system of government, away from the semipresidential system, have raised the position of the prime minister's office to that of a central coor- dinating body in the government. The prime minister's office now active- ly coordinates political work in both government and EU matters. EU matters were transferred from the ministry of foreign affairs to the prime minister's office in July 2000. 84 POINTS OF LEVERAGE FOR REFORMERS: METHODOLOGICAL NOTE 85 Box 21. Cabinet Office in Australia The Expenditure Review Committee of Cabinet (ERC) is responsible for budget preparation. It reviews new spending and savings proposals by individual ministers in considerable detail. In the case of savings propos- als, it fine-tunes the proposals to minimize adverse political fallout. The principle of collective cabinet responsibility ensures a high level of con- testability of new spending proposals--ministers have every incentive to test the spending proposals of their colleagues to maximize the pool of uncommitted budget funds available for their own proposals. There is also pressure on individual ministers to come up with savings options in their portfolio. In the first phase of the reforms, the cabinet office played a key role in enforcing the rule that portfolios could not lodge new spending proposals for ERC consideration unless they also lodged portfolio savings propos- als. In enforcing this, the cabinet office received strong backing from the prime minister's office to overrule special pleading by ministers that there were no savings options available in their portfolio. Tradition of a Single-Party Majority3 Majoritarian governments have a form of representation that affords political power on the basis of a bare majority. By contrast, consensual arrangements see the simple majority as only a minimum requirement and allow or even require many people to take part in governing. In this way, they provide broad participation in government and facilitate broad agreement on the policies that the government should pursue. This distinction can be made in two dimensions--within central or federal government and between levels of government. At the central or federal level, when the majority party in government holds more than 50 percent of the seats in the legislature, it is in a distinctly stronger position to drive reforms than in settings where two parties between them hold 50 percent of the seats in the legislature or when parties making up the gov- ernment between them hold less than 50 percent of the seats. In highly centralized states such as the United Kingdom or New Zealand (prior to the introduction of proportional representation), the simple majority achieved by the national government gives it relative supremacy over all levels of government. By contrast, Canada has a majoritarian government at the federal level, but that government must be very mindful of the con- stitutional privileges and sensibilities of the provincial governments and so could not exercise that power casually. Switzerland has both a highly consensual form of central government and a highly decentralized set of 86 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 22. Majority Government in Canada With a constituency-based electoral system, most elections result in major- ity governments. Although minority governments occasionally exist, coalitions are extremely rare. Compared with countries that use a propor- tional representation system, Canada has relatively few political parties represented in parliament. Currently, there are five (Liberal, Alliance, Bloc Québecois, Progressive Conservatives, and New Democratic). Each of the provinces has its own legislature and a constituency-based electoral sys- tem. There is not a direct relationship between federal and provincial political parties. arrangements between levels of government. Partly in consequence, the United Kingdom and New Zealand were able to drive through reforms rapidly. The public sector in Switzerland has shown remarkable resis- tance to change. Tradition of Integrated Mandarin/Ministerial Careers When senior civil servants frequently become ministers at some point in their careers, and vice versa, ownership of reforms is likely to be deeper at senior levels (although it might also cause some alienation at lower lev- els). The overlapping careers of civil servants and ministers in France might provide potential reforming politicians with a clearer understand- ing of the realities of the civil service and consequently a greater willing- ness to "own" proposals made by the civil service. Arguably, however, this opportunity might be undermined somewhat by the resistance born of resentment that lower-grade civil servants feel concerning reform pro- posals they see originating in the privileged intertwined ranks of the grand cours and the political elite.4 Tradition of Heterogeneity in the Public Sector A body of sociological work on the nature of organizational change has suggested that external pressures, such as those from strong professional associations, tend to encourage homogeneity and this inhibits change.5 Public sector environments that allow a large number of different organi- zational forms to emerge will probably best support evolutionary and revolutionary developments--with new organizational forms emerging from local experimentation. More uniform systems are more resistant to experimentation. Countries with a tradition of establishing public bodies POINTS OF LEVERAGE FOR REFORMERS: METHODOLOGICAL NOTE 87 with diverse and heterogeneous management and accountability arrangements offer the opportunity for innovative one-off pilots that can be the point of entry for larger reforms. Limited cross-cutting consisten- cy in legal employment arrangements and weak mechanisms for enforc- ing consistency in financial or audit systems provide opportunities for experimentation. Horizontally, this heterogeneity is more likely in presidential regimes where large numbers of special-purpose bodies have been created by leg- islatures. Vertically, significant decentralization is often considered to produce provincial and state governments that act as test laboratories for larger public sector reforms. Box 23. Organizational Heterogeneity in Brazil Brazil's federal ministries are widely seen as effective relative to their equivalents in many other countries of the region. However, large differ- ences in culture, institutional history, and the characteristics of their pro- fessional corps make them very different organizational environments in which to work. Fragmented parties, coalition government, and the strong constitutional role of congress and state governors all add to the pressures for organizational diversity. Notes 1. Some of the insights in this appendix draw from Pollitt and Bouckaert (2000). The authors of this paper have altered some interpretations. 2. See http://www1.worldbank.org/publicsector/civilservice/center.htm#2a. 3. This section borrows from Lijphart (1999). 4. See Pollitt and Bouckaert (2000, p. 51). 5. See, for example, DiMaggio and Powell (1983). Appendix D Institutional Malleability: Methodological Note1 Degree of Centralization2 Governments in states with authority constitutionally divided between levels of government are less able to drive through comprehensive and uniform reform programs. Thus, Germany and the United States have more restrictions than the United Kingdom or New Zealand, for example. Unitary but decentralized states (France since the 1980s and the Nordic states) fall in between. However, as noted above, decentralization can provide local "laboratories" for testing reforms before launching them on a larger scale. There are various rough indicators of the degree of centralization: the percentage of shares of total public employment at the national or feder- al level, the proportion of total government spending undertaken by cen- tral government, and the degree of autonomy of subnational govern- ment. Box 24. Federalism in Canada Currently, Canada is one of world's most decentralized countries. Most public services are provided through provincial or municipal govern- ments, including health, education, social assistance, transportation, nat- ural resources, and police. Key federal responsibilities include defense, foreign affairs, trade, regional development, and setting national policy standards. Judicial interpretation of the constitution has traditionally tended to favor the provinces. However, the federal government significantly increased its powers during the 1960s by establishing and funding nation- al social programs. The trend since then has been an expansion of provin- cial powers. One of the outcomes of the 1994 Program Review was the reduction in federal fiscal transfers to the provinces, with the consequence that federal influence over the provinces was significantly reduced. 88 INSTITUTIONAL MALLEABILITY: METHODOLOGICAL NOTE 89 Politically Neutral, Permanent, Senior Administrative Positions 3 When the majority of senior public official positions are politicized, with consequent high levels of turnover after a change of government, it is arguably harder to sustain a reform effort. It is also probable that politi- cized senior post holders have less legitimacy in the eyes of their junior colleagues and consequently would find it more difficult to lead change. Anglo-Saxon Administrative Tradition4 States with a Rechtsstaat (legal state) tradition imbue their civil servants with a profound sense of the importance of preparing and enforcing laws to maintain the integrity and continuity of the state. This is in distinct contrast to the Anglo-Saxon "public interest" tradition, which sees civil servants as employees more or less like any other, except that their employer happens to be the state. The consequence of this distinction is that civil servants in the Rechtsstaat-tradition states are justified in resist- ing rapid changes, because preserving the existing procedures and insti- tutions is a key (and legitimate) concern. The position of civil servants in the Germanic state tradition confers upon them an additional sense that service to the state, rather than spe- cific levels of efficient management, is the basis of their rewards. In con- sequence, performance-related pay and many other outputs-based aspects of the new public management do not fit well with this tradition. The equivalence between citizens and consumers is a particularly diffi- cult concept in the Germanic tradition. However, this position may be changing, given the recent strong focus on staff motivation and citizen orientation in recent reforms to modernize public agencies in Germany. Decentralization is compatible with this tradition, however. Even nominally centralized countries with a Germanic tradition, such as the Netherlands, have engaged in significant efforts at decentralization. The traditional Scandinavian state tradition is less concerned with for- mal legal processes, but the strong bias in favor of state action runs counter to privatization and deregulation policies. Even when there has been a retreat of the state and some apparent privatization, the support- ing rhetoric was primarily that of modernization rather than the terms more common in other settings. Scandinavian governments have adopt- ed individualized pay systems quite widely. Again, decentralization is fully compatible with the Scandinavian state tradition. There is a strong history of local autonomy that is being rein- forced by political changes of the 1980s and 1990s. Additionally, within the central administration, the Scandinavian pattern has been deconcen- 90 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Box 25. The Civil Service and the German Administrative Tradition In Germany, there is a very clear and formal distinction between civil ser- vants (Beamte), who exercise public authority or state powers (about 40 percent of public employees), and the remaining state employees (Angestellte), who are subject to private sector labor laws. Civil servants are regarded as agents of the state and are accountable under public law. Non­civil servants are regarded as simply performing a profession in the public sector of the economy or within the public services funded by the state budget. The core elements of the German civil service are relatively uniform for public servants at all levels of government, with the term public servant (Verwaltungsmitarbeiter) being used as a generic term to include Beamte as well as Angestellte and public workers (Arbeiter). Unlike other federal states, such as Canada and the United States, Germany has a single civil service. This is justified by the need to avoid destructive competition between vertical administrative levels as well as between Länder or local authorities. The prevailing philosophy of the civil service is enshrined in the German Constitution, which "reserv[es] to civil servants the right to act on behalf of the state" (article 33, paragraph 4, Basic Law) and emphasizes the traditional principles of the professional civil service (article 33, para- graph 5, Basic Law). Although there is no clearly defined specification of the traditional characteristics of the professional civil service, some fea- tures are widely seen as typical, such as lifetime occupation, an appropri- ate salary according to the "maintenance" principle (Alimentationsprinzip), impartiality, political neutrality and moderation, dedication to public ser- vice, no right to strike, and acceptance of special disciplinary regulations. trated, using boards and agencies as quasi-autonomous implementing organizations--a pattern copied, at least in part, by "Next Steps" reforms in other countries. In addition, empowerment of the lower echelons of the public service (and of their clients) is compatible with the democratic and participatory ethos embedded in this tradition. There is great variation among countries with a Napoleonic tradition. France has displayed a keen interest in administrative reform, and this has been accepted by bureaucratic elites--provided they remain in con- trol of it. La réforme administrative is now a major theme of French public administration, as is la gestion publique/le management public. This tradition appears, on paper, hostile to political decentralization. However, there have been significant and successful decentralization efforts in many countries within this tradition. Greece is a prominent exception. INSTITUTIONAL MALLEABILITY: METHODOLOGICAL NOTE 91 Several types of reform that were antithetical to the Germanic tradition appear to be acceptable within the Napoleonic tradition. For example, performance-related pay is compatible with the established pattern of differential rewards for public employees in France and Belgium. The Anglo-Saxon state tradition is peculiarly compatible with recent reform efforts. There are just two areas where there is some resistance to change. First, notions of citizen empowerment sit a little awkwardly within this culture. Second, because this state tradition is the most suspi- cious of government and of its own civil service, attempts to grant greater power to lower-level civil servants are likely to be unpopular. Governments in this tradition are regarded as something of a necessary evil that must be held to account at all times. Enforcing the law is implic- it rather than explicit as a principle in the work of civil servants. Limited trade union membership in the public sector5 Extensive trade union membership in the public sector makes substantial resistance to reform more probable. This is not to argue that trade unions are intrinsically obstructive or could not (or should not) be fundamental- ly involved in reform design. Reforming governments in the United Kingdom and New Zealand have signed quality partnership agreements with large public sector trade unions. These partnerships commit both sides to continuing innovation in management and service delivery. This kind of partnership has a long history in the Nordic countries, Germany, the Netherlands, Ireland, Australia, and, since the election of a democra- tic government, South Africa. Notes 1. Some of the insights in this appendix draw from Pollitt and Bouckaert (2000). The authors of this paper have altered some interpretations. 2. See http://www1.worldbank.org/publicsector/civilservice/subnational.htm for discussion of this issue in relation to the civil service. 3. See http://www1.worldbank.org/publicsector/civilservice/patronage.htm. 4. See http://www1.worldbank.org/publicsector/civilservice/traditions.htm. 5. See http://www1.worldbank.org/publicsector/civilservice/psunions.htm. Appendix E Glossary (Italicized words or phrases are further defined elsewhere in the glossary.) Administrative corruption The intentional imposition of distortions in the implementation of existing laws, rules, and regulations to provide advantages to either state or nonstate actors as a result of illegal transfers or redirection of private funds to public officials. Administrative decentralization Redistribution of any or all of authority, responsibility, and financial resources for providing public ser- vices. It is the transfer of responsibility for planning, financing, and man- aging certain public functions from the central government and its agen- cies to field units, subordinate units, or lower levels of government, semi- autonomous public authorities or corporations, or regional or functional authorities. Administrative decentralization has three major forms: decon- centration, delegation, and devolution. (See http://www1.worldbank.org/publicsector/decentralization/.) Allowances Current rewards other than base pay. These can be provid- ed as part of the employment contract (for example, transportation, hous- ing, meals, telephone, travel, cost of living), or on a noncontractual basis, or as intangible rewards (for example, trips abroad or training). (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Armed forces (as employment category) All enlisted personnel (including conscripts) and professional military. Administrative employ- ees of the ministry of defense are generally excluded from this category and accounted for as civilian central government employees. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#1.) Base pay The salary or wages that every civil servant receives regular- ly (usually fortnightly or monthly) from the government by virtue of 92 GLOSSARY 93 being on the payroll. Base pay is usually linked to the employee's posi- tion and is uniform across similar positions. The base wage is often cited to compare wages in the public and private sectors. It is, however, only one component of civil servants' total rewards. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Central agencies Those organizations in the executive branch that coordinate the activities of, and provide guidance to, the operating min- istries and agencies. Terminology varies widely from country to country, but central agencies are generally regarded as including · The ministry of finance · The cabinet office/chancellery/apparat or the ministry assisting the prime minister or the council of ministers in the development and coordination of policy · The ministry or agency responsible for developing and coordinating policies in relation to human resource management within the public sector · The ministry of foreign affairs, in certain areas of work such as policy on European integration. (See http://www1.worldbank.org/publicsector/civilservice/center.htm#2a.) Central government wage bill The sum of base wages and salaries paid to civilian central government and the armed forces. Wages and salaries consist of most payments in cash, but not in kind, to employees in return for ser- vices rendered, before any deductions for taxes and employee pension con- tributions. Monetary allowances (for example, for housing or transportation) are included in the wage bill. Countries vary as to whether state contribu- tions to pensions or all monetary allowances are included within this total. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#3.) Charters Statements of service targets published by service-providing agencies that set standards for the agency and can define compensation to be provided to the public if they are not achieved. These are known by such names as Citizens' Charters (United Kingdom) or Public Service Charters (Republic of Korea). Civil service (as employment category) Distinctive employment sta- tus for some public servants, generally defined by law and usually with four characteristics: 1. Civil servants are appointed by decision of an authorized public insti- tution in accordance with the civil service law. A decision by a repre- sentative of the state to appoint a civil servant must conform to estab- lished rules that structure the hiring process. 94 INTERNATIONAL PUBLIC ADMINISTRATION REFORM 2. Once a civil servant has been appointed, there are many constraints on dismissal, because civil servants are not simply employees of the state, they also have a constitutional role. The intent of civil service legisla- tion is to balance the requirement that these employees be responsive to the government of the day, with the parallel requirement that they respect and maintain state institutions over time. In other words, addi- tional job security is provided to prevent short-term political pressures from leading to inappropriate personnel changes. 3. There are more constraints on the actions of civil servants than on other groups. Again, this is because of the strategic and constitutional role of civil servants. 4. Civil servants are part of the employment categories of civilian central government or subnational government. There are other employment arrangements in the public sector that provide something akin to civil servant status. For example, the judiciary can often be employed under arrangements that provide constitutionally based constraints on dismissal, yet members of the judiciary are rarely known as civil servants. (See http://www1.worldbank.org/publicsector/civilservice/civilservice law.htm.) Civilian central government (excluding education, health, and police) (as employment category) Employees in the central executive and leg- islative administration, in departments directly dependent on the head of state or the parliament, together with all other ministries and adminis- trative departments of central government, including autonomous agen- cies paid by central government. The exceptions are education, health, and police employees, who are accounted for in other employment cate- gories. Note: Accounting for these employees within one employment cate- gory, for the purposes of measuring the size and cost of the public sector, does not remove the need for some institutional separation of powers between the legislature, executive, and judiciary. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#3.) Closed career systems In closed career systems in the civil service, the recruitment arrangements ensure that initial entry to the civil service is generally based on a relevant university degree or academic credentials. Closed career systems allow subsequent mobility and promotion within the civil service. Overall, they are characterized by limited possibilities for lateral entry and a strong emphasis on career development. They are sometimes referred to as "mandarin" systems. GLOSSARY 95 This is in contrast to position-based systems, where the emphasis is on selecting the best-suited candidate for each position to be filled, whether by external recruitment or via internal promotion or mobility. (See http://www1.worldbank.org/publicsector/civilservice/civilservice law.htm.) Compression ratio See vertical compression ratio. Contract-intensive money Contract-intensive money is the propor- tion of the money supply that is not held in the form of currency, that is, the proportion that is held in bank accounts and as other financial assets. The percentage of contract-intensive money indicates in part how much faith investors have in the government's ability and willingness to enforce financial contracts and refrain from expropriating financial assets. It is a measure of trust in banks and in the government. Contract- intensive money is calculated as one minus the ratio of currency outside banks to the sum of money and quasi-money (one minus line 14a divid- ed by the sum of lines 34 and 35 in the International Financial Statistics published by the IMF). Currency outside banks CIM = 1 ­ ------------------------- Money + quasi-money Contracting out Government transfers supply or operation of a func- tion to a contractor for a specified period of time, but without relinquish- ing program responsibility or accountability. Decentralization The transfer of authority and responsibility for pub- lic functions from the central government to subordinate or quasi-inde- pendent government organizations or the private sector. This covers a broad range of concepts relating to the type of decentralization--politi- cal, administrative, fiscal, or market. (See http://www1.worldbank.org/publicsector/decentralization/.) Deconcentration A form of administrative decentralization. The redistri- bution of decisionmaking, financial, and management responsibilities among different levels of the central government is often considered the weakest form of administrative decentralization, and it is used most fre- quently in unitary states. Within this category, however, policies and opportunities for local input vary: Deconcentration can merely shift responsibilities from central government officials in the capital city to 96 INTERNATIONAL PUBLIC ADMINISTRATION REFORM those working in regions, provinces, or districts, or it can create strong field administration or local administrative capacity under the supervi- sion of central government ministries. (See http://www1.worldbank.org/publicsector/decentralization/.) Degree of centralization The percentage of total public employment accounted for at the national or federal level, the proportion of total gov- ernment spending that is undertaken by central government, and the degree of autonomy of subnational government. (See http://www1.worldbank.org/publicsector/decentralization/.) Delegation (as administrative decentralization) Transfer of responsibility for decisionmaking and administration of public functions to semiau- tonomous organizations. (See http://www1.worldbank.org/publicsector/decentralization/.) Devolution The transfer of authority for decisionmaking, finance, and management to local government. Devolution usually transfers responsi- bilities for services to municipalities that elect their own mayors and coun- cils, raise their own revenues, and have independent authority to make investment decisions. In a devolved system, local governments have clear and legally recognized geographic boundaries over which they exercise authority and within which they perform public functions. (See http://www1.worldbank.org/publicsector/decentralization/.) Education employees (as employment category) Primary and sec- ondary public school teachers. Administrative employees of the ministry of education and local school administrators are generally excluded from this category and accounted for as civilian central government employees. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#1.) Efficiency and effectiveness review A discrete approach for develop- ing recommendations for change outside the usual budget and planning cycle. Fiscal decentralization Fiscal decentralization can take many forms, including · Self-financing or cost recovery through user charges · Cofinancing or coproduction, in which users or suppliers participate in providing services and infrastructure through monetary or labor contributions · Expansion of local revenues through property or sales taxes or indirect charges GLOSSARY 97 · Intergovernmental transfers of general revenues from taxes collected by the central government to local governments for general or specif- ic uses · Authorization of municipal borrowing and mobilization of national or local government resources through loan guarantees. (See http://www1.worldbank.org/publicsector/decentralization/.) Fiscal weight of public employment The public sector wage bill as a percentage of GDP. Functional review A form of efficiency and effectiveness review that examines the functions and structures of state agencies or budget entities and asks whether the functions need to be done at all, whether other agencies or actors could do them more efficiently or effectively, and what the consequences are for structure. GDP per capita based on purchasing power parity (PPP) (current inter- national $) GDP converted to international dollars using PPP rates. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated with- out making deductions for depreciation of fabricated assets or depletion and degradation of natural resources. Data are in current international dollars. For more information, see World Development Indicators, table 1.1. General government (as an employment category) Employment in "all government departments offices, organizations and other bodies which are agencies or instruments of the central or local authorities whether accounted for or financed in, ordinary or extraordinary budgets or extra-budgetary funds. They are not solely engaged in administration but also in defense and public order, in the promotion of economic growth and in the provision of education, health, cultural and social ser- vices" (International Standard of Industrial Classification (ISIC) of All Economic Activities, Series M, No. 4, Rev. 3, 1990). There are six mutually exclusive categories of employment within general government: 1. Armed forces 2. Civilian central government (excluding education, health, and police) 3. Subnational government (excluding education, health, and police) 4. Health employees 5. Education employees 6. Police. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#1.) 98 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Government In most parliamentary and semipresidential systems, this term refers to the entire executive branch of the state, or to the mem- bers of governments (usually termed "ministers" but occasionally called "secretaries") selected by the legislature or appointed by the head of gov- ernment to run the executive branch. In the United States, the term "government" is used in a variety of ways. It can refer to the entire executive branch of the federal govern- ment, to the federal government generally, and sometimes to federal, state, and local governments combined. Health employees (as employment category) Medical and paramed- ical staff (doctors, nurses, and midwives) and laboratory technicians employed in government hospitals and other government health institu- tions at all levels of government. Administrative employees working in the health sector are generally excluded from this category and account- ed for as civilian central government employees. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#1.) Heterogeneous public sector environments Public sector environ- ments that allow a large number of different organizational forms to emerge. Horizontally, this heterogeneity is more likely in presidential regimes where large numbers of special-purpose bodies have been creat- ed by legislatures. Vertically, significant decentralization is often consid- ered to produce provincial and state governments that act as test labora- tories for larger public sector reforms. Horizontal compression The degree to which earnings differ for offi- cials at the same grade or level in the same or in different agencies. It is the ratio by which the total remuneration of a civil servant can differ from that of a colleague at the same level of seniority, as a consequence of dis- cretionary allowances. Horizontal compression is measured by dividing total monetary compensation, including all discretionary allowances, by base compensation. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Hybrid appointments Appointments made subject to merit, defined by meeting explicit and contestable criteria, as well as by subjective polit- ical judgments. (See http://www1.worldbank.org/publicsector/civilservice/recruit ment.htm#7.) Information-intensive reform activities Reforms that require a stronger and more developed information systems infrastructure. GLOSSARY 99 In-kind benefits Nonmonetary rewards such as health insurance, transportation, housing, meals, and travel. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Institutional malleability The ease with which the state institutions can be changed, as reflected in the following four factors: 1. High degree of political centralization 2. Politically neutral, permanent senior administrative positions 3. Anglo-Saxon administrative tradition 4. Limited trade union membership in the public sector. It is important to emphasize that these are not "virtues." They are sim- ply distinctive arrangements that give reformers a stronger grip on the public sector. Integrated mandarin/ministerial careers Career paths in which senior civil servants frequently become ministers at some point in their careers. Labor force The total labor force comprises people who meet the International Labour Organisation definition of the economically active population: all people who supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed. Although national practices vary in the treatment of such groups as the armed forces and seasonal or part-time workers, in gener- al, the labor force includes the armed forces, the unemployed, and first- time job seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector. For more information, see World Development Indicators, table 2.2. Lateral entry Entrance to the civil service by external recruitment or otherwise than through promotion or transfer from within the service. Arrangements for lateral entry are generally most widespread in position- based systems, where the emphasis is on selecting the best-suited candi- date for each position to be filled, whether by external recruitment or via internal promotion or mobility. (See http://www1.worldbank.org/publicsector/civilservice/civilservice law.htm.) Locally initiated reforms Locally initiated reforms start from the premise that participation at the local community level can be a powerful point of entry to broader reforms. These reforms assume that without some purposeful destabilization of existing dysfunctional public sector equilibria (for example, by providing local communities with a greater voice in the production of local public services), there will be no change. 100 INTERNATIONAL PUBLIC ADMINISTRATION REFORM This approach to reform notes that many donor-supported "whole of gov- ernment" reforms have been unsuccessful in many countries. Locally initiated reforms can be seen in distinction from "whole of gov- ernment" reforms, but often reform programs contain elements of both. (See http://www1.worldbank.org/publicsector/civilservice/strategies.htm.) Machinery of government Primarily an Anglo-Commonwealth phrase, though it also has some resonance in other settings. It gener- ally refers to the organizational structure of the executive (including the reporting lines and accountability arrangements for departments, ministries, and other organizational units) and the allocation of func- tions to those organizations. In the United States, its meaning is more political. (See http://www1.worldbank.org/publicsector/civilservice/machinery.htm.) Majoritarian governments Governments that have a form of repre- sentation that affords political power on the basis of a simple majority. New public management (NPM) This is a slippery label. Generally, it is used to describe a management culture that emphasizes the centrality of the citizen or customer, as well as accountability for results. It also suggests structural or organizational choices that promote decentralized control through a wide variety of alternative service delivery mecha- nisms, including quasi-markets with public and private service providers competing for resources from policymakers and donors. NPM tends to include a greater reliance on contracts and contracting out, and it places more emphasis on managerialism than formal rules and proce- dural standards, while de-emphasizing a career civil service. NPM does not claim that government should stop performing certain tasks, although it often is associated with this policy perspective. NPM is not about whether tasks should be undertaken or not--it is about getting things done better. (See http://www1.worldbank.org/publicsector/civilservice/debate1.htm.) Performance budgeting This is a widely used, but poorly defined, term. There are few examples of mechanical connections between mea- sures of performance and budget allocations. A performance orientation is generally achieved by the greater dissemination of performance moni- toring data alongside the published budget. Performance management Generally understood to be the manage- ment of the performance of government organizations as a whole, their chief executives, and their staff. GLOSSARY 101 Personal disposable income Personal emoluments minus any employer deductions such as those for income tax, provident fund or pension con- tributions, and so forth. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Personal emoluments Base pay plus monetary allowances such as trans- portation, housing, meals, telephone, travel, and cost of living. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Police (as employment category) All personnel--whether military, paramilitary, or civilian--that exercise police functions, including such corps as gendarmerie and carabinieri. Political decentralization Political decentralization aims to give citizens and their elected representatives more power in local public decisionmak- ing. It is often associated with pluralistic politics and representative gov- ernment, and it can also support democratization by giving citizens or their representatives more influence in formulating and implementing policies. Advocates of political decentralization assume that decisions made with greater participation will be better informed and more relevant to diverse interests in society than those made by only national political authorities. The concept implies that the selection of representatives from local electoral jurisdictions allows citizens to better know their political representatives and allows elected officials to better know the needs and desires of their constituents. Political decentralization often requires constitutional or statutory reforms, development of pluralistic political parties, strengthening of leg- islatures, creation of local political units, and encouragement of effective public interest groups. (See http://www1.worldbank.org/publicsector/decentralization/.) Position-based systems Position-based career systems in the civil ser- vice place emphasize selecting the best-suited candidate for each position to be filled, whether by external recruitment or via internal promotion or mobility. Position-based systems are characterized by relatively open access to positions at all levels, with lateral entry relatively common. This is in contrast to closed career systems in the civil service, where the recruitment arrangements ensure that initial entry to the civil service is usually based on a relevant university degree or academic credentials. In those systems, appointments tend to be from promotion within the civil service. These are sometimes referred to as "mandarin" systems. (See http://www1.worldbank.org/publicsector/civilservice/civilservice law.htm.) 102 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Privatization Shifting functions, in whole or part, from government to the private sector when there is no continuing public policy reason to retain responsibility within government, or when that responsibility can be discharged through regulation. Program review An efficiency and effectiveness review that envisages comprehensive policy reforms, shifting from low- to high-priority pro- grams, including large-scale restructuring of the machinery of govern- ment. Public interest civil service tradition See Rechtsstaat civil service tradi- tion. Public servants A wider group of employees than civil servants. For example, teachers and doctors in publicly owned schools and health facil- ities may or may not be legally civil servants, but they are always public servants if employed by budget-funded organizations. Rechtsstaat civil service tradition A civil service ethos that provides civil servants with a profound sense of the importance of preparing and enforcing laws to maintain the integrity and continuity of the state. This is in distinct contrast to the Anglo-Saxon "public interest" tradition that sees civil servants as restraining the partisan actions of politicians on behalf of the public. Reform leverage The arrangements that provide central agencies and reform drivers with a distinctive capability to introduce changes in the public sector: · Tradition of a single, strong central agency · Tradition of single-party majority · Tradition of integrated mandarin/ministerial careers · Tradition of heterogeneity in the public sector. It is important to emphasize that these are not "virtues. They are sim- ply distinctive arrangements that give reformers a stronger grip on the public sector. Reform outcomes The eventual impact of a reform on service delivery, accountability improvements, and aggregate expenditure. Reformer's traction The combination of leverage and institutional malleability available to reformers. It is important to emphasize that this is not a "virtue." It is simply a distinctive arrangement that gives reform- ers a stronger grip on the public sector. GLOSSARY 103 Semiautonomous agencies Semiautonomous agencies can be organi- zations responsible for executing government programs, reporting to ministries or to members of government under the day-to-day supervi- sion of a ministry. The relevant minister or secretary generally defines their objectives, and their funding sources can include some revenue earnings. They are given some form of managerial autonomy and are often staffed with public employees whose status, employment condi- tions, or both differ from general employment rules. Most function under public law (when relevant). Semiautonomous agencies can also be statutory commissions, indepen- dent regulators, or other bodies with a separate legislative existence. Their objectives are often enshrined in a charter, and their functions are defined by legislation in addition to any powers of direction held by the minister or secretary. They may be non­asset owning (legally distinct but unable to own assets) or asset owning. They can be budget dependent (subvent- ed) or collect significant revenue earnings. They also may have legal competence to enter into contractual relationships. Such bodies tend to be established for regulatory purposes, although in some presidential sys- tems, they can also be service providers. (See http://www1.worldbank.org/publicsector/civilservice/ autonomous.htm.) Senior civil service See senior executive service. Senior executive service In many countries, a group of senior public servants is identified as a senior executive service. This is a mobile cadre of senior executives with broad management expertise and an overview of public sector values and responsibilities. The purpose of the senior executive service is to prevent the management of individual depart- ments from becoming "ingrown" and to promote policy coordination between departments. Examples include Australia, the United States, the Netherlands, and the Republic of Korea, and it was attempted in New Zealand. In the United Kingdom and Hungary, it is known as the senior civil service. State capture The actions of individuals, groups, or firms, in both the public and private sectors, to influence the formation of laws, regulations, decrees, and other government policies to their own advantage as a result of the illegal transfer or concentration of private benefits to public offi- cials. State-owned enterprise employees Employees of enterprises that are majority owned by government. 104 INTERNATIONAL PUBLIC ADMINISTRATION REFORM Statutory commissions and independent regulators Semiautonomous agencies can be statutory commissions or independent regulators when they have a well-defined separate legislative existence. Their objectives are often enshrined in a charter, and their functions are defined by legis- lation in addition to any powers of direction held by the relevant minis- ter. They may also be non­asset owning (legally distinct but unable to own assets) or asset owning. They can be budget dependent (subvented) or collect significant revenue earnings. They can also have legal compe- tence to enter into contractual relationships. (See http://www1.worldbank.org/publicsector/civilservice/ autonomous.htm.) Subnational government (excluding education, health, and police) (as employment category) All general government employees who are not members of the armed forces or directly funded by the central government. This includes municipalities, as well as regional, provincial, or state (in federal systems) employment. The distinction between central and sub- national government employment categories is budgetary, not geograph- ic. If central government agencies are geographically dispersed, without changing their ultimate sources of finance, then the staff in those agencies are included in the employment category civilian central government. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#1.) Subsidiarity Decentralizing the provision of public service to the low- est level of government where it can be properly carried out. (See http://www1.worldbank.org/publicsector/decentralization/.) Supervised bodies or executing agencies A form of semiautonomous body that is responsible for executing government programs, reporting to ministries (or reporting to members of government--ministers or secre- taries--under the day-to-day supervision of a ministry). The relevant minister or secretary generally defines their objectives, and their funding sources can include some revenue earnings. They are given some form of managerial autonomy and are most often staffed with public servants whose status, employment conditions, or both differ from general employment rules. Most function under public law (when relevant). (See http://www1.worldbank.org/publicsector/civilservice/autonomous.htm.) Total civilian central government (as employment category) All gen- eral government employees who are not members of the armed forces or directly funded by subnational government. The distinction between cen- tral and subnational government employment categories is budgetary, not geographic. GLOSSARY 105 Total compensation Personal emoluments plus in-kind benefits and allowances such as health insurance, transportation, meals, or travel. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Total public employment State-owned enterprise employees plus general government. (See http://www1.worldbank.org/publicsector/civilservice/cross.htm#1.) Total rewards Total compensation plus noncontractual or intangible rewards and allowances such as job security, prestige, social privileges, and future expectations (for example, pension or anticipated housing or land grants). (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) Vertical compression ratio The ratio of the highest salary to the low- est on the central government's main salary scale. The OECD measures wage compression in its member countries as the mean of ninth decile salaries divided by the mean of first decile salaries. The OECD's approach ensures that only a few salaries will not dramatically skew the compression ratio. However, all compression ratio approaches can be misleading if there are significant monetary allowances not captured in the calculations, or if the perceived value of nonmonetary rewards represents a significant proportion of total rewards. (See http://www1.worldbank.org/publicsector/civilservice/agency.htm.) "Whole of government" reforms The design of "whole of govern- ment" reforms focuses on civil service restructuring and budget reforms, emphasizing the vertical integration of public bureaucracies (with central controls and the overarching discipline of a unified budget) that prevents local elites from capturing policy and discouraging patronage or public salaries in excess of the market rate. These reforms are also concerned with the risk that public bodies will start quasi-fiscal activities (for exam- ple, fee-based services, special concessions to certain groups) that serve the same role as taxes and subsidies and exceed the original policy inten- tion of the national government. "Whole of government" reforms can be seen in distinction from local- ly initiated reforms, but often reform programs contain elements of both. (See http://www1.worldbank.org/publicsector/civilservice/strategies.htm.) References Boston, Jonathan. 2000. "The Challenge of Evaluating Systemic Change: The Case of Public Management Reform." Paper prepared for the International Public Management Network conference on Learning from Experiences with New Public Management, Macquarie Graduate School of Management, March 4­6, Sydney, Australia,. Davis, Glyn, Barbara Sullivan, and Barbara Yeatman, eds. 1997. The State under Contract. South Melbourne: Macmillan. DiMaggio, P. J., and W. W. Powell. 1983. "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields." American Sociological Review 48:147­6060. Duhamel, Ronald J. 1995, June 7. "Statement to Parliament of the Parliamentary Secretary to President of the Treasury Board." Available at http://www.parl.gc.ca/english/hansard/previous/213_95-06- 07/213GO1E.html#13387. Flynn, N., and S. Pickard. 1996. Markets and Networks: Contracting in Community Health Services. Buckingham, U.K.: Open University Press. International Monetary Fund. 2001. International Financial Statistics. Washington, D.C. Lijphart, Arend. 1999. Patterns of Democracy. New Haven, Conn.: Yale University Press. Miller, P. 1996. "Dilemmas of Accountability: The Limits of Accounting." In P. Hirst and S. Khilnani, eds., Reinventing Democracy. Oxford: Blackwell. 106 REFERENCES 107 Petrie, Murray, and David Webber. 2001. "Review of Evidence on Broad Outcome of Public Sector Management Regime." The Treasury, Wellington, New Zealand. Available at http://www.treasury.govt.nz/workingpapers/2001/01-6.asp. Pollitt, Christopher, Jonathan Birchall, and Keith Putnam. 1998. Decentralising Public Service Management. Hampshire, U.K.: Macmillan. Pollitt, Christopher, and Geert Bouckaert. 2000. Public Management Reform: A Comparative Analysis. Oxford, U.K.: Oxford University Press. Schick, Allen. 1996. "The Spirit of Reform: Managing the New Zealand State Sector in a Time of Change." State Services Commission and the Treasury, Wellington, New Zealand. Schick, Allen. 1998. "Why Most Developing Countries Should Not Try New Zealand's Reforms." World Bank Research Observer (International) 13:23­31. Scott, Graham, and Irene Taylor. 2000. "Autonomous Public Organizations in Thailand." Paper prepared after a World Bank semi- nar on Agency Creation for Improving Service Delivery, March 29­30, 1999, Bangkok, Thailand. World Bank. 2000. Anticorruption in Transition: A Contribution to the Policy Debate. Washington, D.C.: World Bank. World Bank. Various years. World Development Indicators. Washington, D.C. Index accountability, 36 Brazil accounting reforms, 20 civil service reform, 49 Netherlands, 20 decentralization, 3, 4 administrative corruption, 82, 92 discipline, 47 administrative decentralization, 92 employment, government vs administrative reforms, 12n.9 total, 3 advanced reforms, 19­25 governance, measures of, 3, 4 choices, 25­28 organizational heterogeneity, 87 elements of, 26 population and economy, 2 allowances, 92 reform activities, 24 Anglo-Saxon administrative tradi- reform experiences, 64 tion, 44, 45, 46n.2, 89­91 reformers' concerns, 11, 12 armed forces. See military traction, 44­46 Australia budget, 52 budgeting system, 49 block or frame, 20 cabinet office, 85 constraint, 32n.2 decentralization, 3, 4 management, 16 efficiency improvements, 36 performance information and, employment, government vs 18 total, 3 reform, Finland, 21 governance, measures of, 3, 4 population and economy, 2 cabinet office, Australia, 85 reform activities, 30 Canada reform concerns, 11, 12, 7 budgeting system, 49 reform experiences, 63 decentralization, 3, 4 senior executive services, 19 employment, government vs traction, 44­46 total, 3 federalism, 88 base pay, 92­93 governance, measures of, 3, 4 basic reforms, 16­19 majority government, 86 basic reforms, elements of, 26 population and economy, 2 108 INDEX 109 reform activities, 15 personnel management, 17­18, reform experiences, 65 20­22, 49­50 reform management, 57 civilian central government, 94 reformers' concerns, 11, 12 closed career systems, 94­95 traction, 44­46 coherence of reforms, 28­29 Canadian Program Review, 34, 35 compression ratio, 95 central agency, 84, 93 confidence, public and private, capacity, Russian Federation, 9­10 55­56 contracts and contracting out, 95 Finland, 84 core functions, 24 central government wage bill, 93 enforcement, 37 centralization, 43­44, 88 public sector, United Kingdom, degree of, 96 27 charters, 93 contract-intensive money, 95 checks and balances, 28 contractualization, 28 cheese slicing, 32n.2 corruption, 9­10, 80 Chile perceived, 81, 82 decentralization, 3, 4 country comparisons employment, government vs decentralization, 3, 4 total, 3 employment, government vs governance, measures of, 3, 4 total, 3 population and economy, 2 governance, measures of, 3, 4 reform activities, 29 population and economy, 2 reform experiences, 66 reformers' concerns, 11, 12 reformers' concerns, 11, 12 traction, 44­46 traction, 44­46 country reform experiences, 62­76 China decentralization, 3, 4 daylighting, 60n.2, 80 employment, government vs decentralization, 3, 4, 50, 95 total, 3 Poland, 25 governance, measures of, 3, 4 Scandinavia, 89 population and economy, 2 deconcentration, 95­96 reform activities, 14 delegation, 96 reform experiences, 67 deregulation, 24 reformers' concerns, 11, 12 devolution, 96 traction, 44­46 discipline, 16­19, 47 civil servants, 86 Russian Federation, 54, 60n.1, education employees, 96 60n.2, 61n.3, 61n.4 efficiency and effectiveness civil service, 8­9, 36, 93­94 review, 96 legislation, 32n.3 efficiency improvements, 36 managers, 52 Australia, 36 New Zealand, 22 elderly population, 7 110 INTERNATIONAL PUBLIC ADMINISTRATION REFORM employment employment, government vs aggregate, 77 total, 3 contracts and tenure, 79­80 governance, measures of, 3, 4 government vs total, 3 government role, 51 executive agencies, 38, 104 population and economy, 2 organizational structure, 23, reformers' concerns, 11, 12 50­51 reform experiences, 69 senior service, 52 traction, 44­46 expectations, 81 glossary, 92­106 governance, dimensions of, 3, 4 federalism, Canada, 88 government, 98 Finland employees, 77 budget reform, 21 employer, 8­9, 80­81 budgeting system, 48­49 role and policy load, 23, 51 civil service reform, 50 GPRA, 18, 49 contracts, 50 decentralization, 3, 4 health employees, 98 employment, government vs heterogeneous public sector envi- total, 3 ronments, 98 governance, measures of, 3, 4 high-traction countries, 47 government role, 51 horizontal compression, 83n.3, 98 population and economy, 2 Hungary reform experiences, 68 civil service reform, 49 reformers' concerns, 11, 12 decentralization, 3, 4 strong central agency, 84 decentralization, 51 traction, 44­46 employment, government vs fiscal decentralization, 96­97 total, 3 fiscal weight of public employ- governance, measures of, 3, 4 ment, 97 population and economy, 2 France, administrative tradition, reformers' concerns, 11, 12 90 reform experiences, 70 freedom of information, 28 senior executive services, 19 functional reviews, 58, 97 traction, 44­46 hybrid appointments, 98 GDP per capita based on purchas- ing power parity (PPP), 97 independent regulators, 104 general government, 97 information-intensive reform Germany activities, 98 administrative tradition, in-kind benefits, 99 89­91 institutional malleability, 43­44, budgeting system, 49 88­89, 99 civil service, 90 integrated mandarin/ministerial decentralization, 3, 4 careers, 86, 99 INDEX 111 Korea, Republic of, 74 Netherlands, 71 civil service reform, 49­50 accounting reforms, 20 decentralization, 3, 4 budgeting system, 49 discipline, 47 civil service reform, 50 employment, government vs decentralization, 3, 4 total, 3 employment, government vs governance, measures of, 3, 4 total, 3 government role, 51 executive reform, 50 population and economy, 2 governance, measures of, 3, 4 reform management, 56 population and economy, 2 reformers' concerns, 11, 12 reformers' concerns, 11, 12 traction, 44­46 traction, 44­46 unintended consequences, 40 labor force, 99 new public management (NPM), lateral entry, 99 13, 27, 38 , 100 law-making, and implementation, New Zealand, 72 10 budgeting system, 49 lean state exercise, Germany, 34 civil service, 22 leverage, 59, 84­87, 102 decentralization, 3, 4 points of, 42­43 employment, government vs locally initiated reforms, 99­100 total, 3 losses, unintended, 33­34 governance, measures of, 3, 4 low-traction reformers, 47­53 population and economy, 2 basic reforms, 51­53 reformers' concerns, 11, 12 countries, 47 reform management, 56 reforms, 34 machinery of government, 15, senior executive services, 19 32n.1, 100 traction, 44­46 majoritarian governments, 85, 100 operational inefficiency, 82 majority government, Canada, 86 opportunism, 52 malleability, 43 opportunities, 52 managed expectations, Russian creating, 58­59 Federation, 54­55 Russian Federation, 56­58 mandarin/ministerial careers, 86, organizational heterogeneity, 99 Brazil, 87 merit, 8 outcomes, 33­34, 39, 102 principle, 17­18 output-based budgeting, 17 protection, Russian Federation, 55 patronage, 8, 78­79 military, 39, 64, 78, 92 patterns of reform, 44­46 spending, 78 performance-based budgeting, 17, ministries, number of, 25, 27 100 112 INTERNATIONAL PUBLIC ADMINISTRATION REFORM performance-based pay, 36 public sector performance improvement fund, confidence, 81 58 contractual arrangements, performance information, and United Kingdom, 27 budget, 18 employees, 77 performance management, 100 heterogeneity, 86­87 performance-related pay, 23 reform, 13­15 personal disposable income, 101 trade unions, 91 personal emoluments, 101 wages bill, 77­78 personnel management, 16 public servants, 102 Poland, 73 public service, 9­10 civil service reform, 49 decentralization, 3, 4, 25, 50, 51 realism, Russian Federation, 54­55 discipline, 47 Rechtsstaat civil service tradition, employment, government vs 89, 102 total, 3 recruitment growth, 78 governance, measures of, 3, 4 reform activities government role, 51 Australia, 30 population and economy, 2 Chile, 29 reformers' concerns, 11, 12 explaining, 41­46 traction, 44­46 level of, 29­31 police, 3, 22, 88, 101, 104 model, 42 policies, implementation, 7­8, reform leverage. See leverage 78­81 reform management policy responsiveness and flexibil- Canada, 57 ity, 7­8, 36 Korea, 56 political appointees, 23 New Zealand, 56 political decentralization, 101 reformer's traction. See traction political economy, country-specif- reform outcomes, 33­34, 102 ic, 41 United Kingdom, 39 population, economy and, 2 reformers' concerns, 6, 10­12, 77­83 position-based systems, 101 remuneration, Russian Federation, private sector confidence, 81 55, 60n.2, 61n.3 privatization, 23­24, 102 respect, 81 program review, 102 reviews, functional, 58, 97 Canada, 34, 35 rewards structure, Russian promises, 57 Federation, 54­55, 60n.2 public expenditure Russia, reformers in context, 59 management reforms, 48­49 Russian Federation, implications reduction, 6­7, 77, 34­35 for, 54­61 public goods, users of, 38­39 public interest civil service tradi- Scandinavia, administrative tradi- tion, 102 tion, 89 INDEX 113 semiautonomous agencies, 27­28, reform outcomes, 39 34, 103 traction, 44­46 senior administrative positions, 89 United States, 76 senior civil service, 103 budgeting system, 49 senior executive service, 19, 103 decentralization, 3, 4 seniority, 22 employment, government vs service delivery, 9­10, 81­82 total, 3 poor, 82 governance, measures of, 3, 4 single-party majority, 85­86 government role, 51 sociodemographics, 7 performance information, and standards of conduct, 40n.4 budget, 18 state capture, 10, 82, 103 population and economy, 2 state-owned enterprise employees, reformers' concerns, 11, 12 103 traction, 44­46 statutory commissions, 104 subnational government, 22, 104 vertical compression, 83n.2, 105 subsidiarity, 23, 104 supervised bodies, 104 wages, 77­78, 80­81, 83n.1, 83n.2, 83n.3 tenure, 22 whole of government reforms, tolerance, 57­58 105­106 total civilian central government, 104 total compensation, 105 total public employment, 105 total rewards, 105 traction, 44­46, 102 Russian Federation, 55­56 trade unions, 44 public sector, 91 unintended consequences, 37­40 Netherlands, 40 United Kingdom, 75 budgeting system, 49 contractual arrangements in the public sector, 27 decentralization, 3, 4 employment, government vs total, 3 governance, measures of, 3, 4 population and economy, 2 reformers' concerns, 11, 12 International Public Administration Reform examines public administration reform experiences and outcomes in a range of countries over the past 10 to 15 years and offers commentary and analysis that are particularly relevant to the Russian Federation. The result of a request from the Russian Federation authorities for comparable experiences and best practices, this book analyzes the public administration reform experiences of 14 countries: Australia, Brazil, Canada, Chile, China, Finland, Germany, Hungary, the Netherlands, New Zealand, Poland, the Republic of Korea, the United Kingdom, and the United States. For each country, the case study starts with "what was broken" and moves on to assess what reformers actually did, what they achieved, and why reformers faced with similar problems in different countries did very different things. The authors discover that the level and type of reform activity was determined primarily by the degree of "traction"--or leverage--available to reformers in each country and the malleability of basic public sector institutions. In some countries reformers with considerable leverage were able to launch comprehensive reform programs relatively quickly. In countries with low traction and comparatively complex constitutional arrangements for the structure of the public sector, implementing public administration reform was particularly difficult. Finally, the authors identify a number of practical suggestions for implementing public administration reform. These will be helpful particularly for policymakers and reformers in low-traction countries, such as those in the Russian Federation, but also for reformers in other countries engaged in public administration reform. TMxHSKIMBy355725zv,:&:&:=:# THE W O R L D B A N K ISBN 0-8213-5572-4