Public Management Public Management Reform in the OECD Reform in the OECD

countriescountries

Nick Manning Manager Sector

PREM - Latin America and Caribbean – Public Sector unit

September 10th, 2008

22/26/26Reforming Public Management in OECD Reforming Public Management in OECD countriescountries

General Government Expenditure as Percent of GDP in OECD, 1870-2005

Source: 1870-1990: (World Bank: 1997), Figures 1 and 1.2; 1995-2005: OECD.Stat - National Accounts, and Clements, Faircloth, and Verhoeven: 2007, Figure 2; IMF, Governemnt Finalcial

Statistics: 2008.

0

5

10

15

20

25

30

35

40

45

50

1870 1913 1920 1937 1960 1970 1980 1990 1995 2000 2005

Thailand:

19.78

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Reforming Public Management in OECD Reforming Public Management in OECD countriescountries

Confidence in the Civil Service in OECD countries

0

10

20

30

40

50

60

70

80

90

100

1981 1990 1995-1997 1999-2000

Confidence

in th

e

civil se

rvice

(%)

Source: CD-Rom; ICPSR 2790, World Values Surveys and European Values Surveys, 1981-1984, 1990-1993, and 1995-1997, 1st ICPSR version, February, 2000

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Reforming Public Management in OECD Reforming Public Management in OECD countriescountries

GDP p.c. in US$ (purchasing-power-parity) in 28 OECD Countries, 2005

Source: World Bank data

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Thai

land

Turk

ey

Pola

nd

Hung

ary

Slov

ak

Port

ugal

Czech

South

New

Ital

y

Spai

n

Gre

ece

Aust

ralia

Fran

ce

Germ

any

Unit

ed

Japan

Belg

ium

Finl

and

Canad

a

Swed

en

Denm

ark

Irela

nd

Swit

zerl

and

Aust

ria

Neth

erla

nds

Unit

ed

Nor

way

Luxe

mbo

urg

OECD

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Reforming Public Management in OECD Reforming Public Management in OECD countriescountries

The Deepening Basis for the Legitimacy of the Public ServiceProgress Tensions

1990s – Performance

1970s - Responsiveness to elected officials and political priorities

1950s - Equal access and equal treatment

19th century - Due process and institutional continuity

• Concern to make promises and deliver on them• Measurement of results and the use of measurements for planning or accountability purposes

• Frustration with political neutrality• Concern that the public service is an obstacle to political objectives

• Impartiality• Concern that employment in the public sector should be representative of society

• Driven by the law• Administration as a "separate world"

Source: Authors

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Responsiveness and PerformanceResponsiveness and Performance

A responsive public sector is one that reduces the time lag between political priorities and public policy actions.

A performance orientation in the public sector is one

that establishes explicit linkages between measured results and planning for

future services or accountability for past deliverables.

Source: Authors

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5 technical dimensions of reform5 technical dimensions of reform

Human Resources Management

The structure of public sector

Demand-sidereforms

Public expenditure management and financial accountability

5technical

dimensions of reform

Alternative Service Delivery

Source: Authors

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Reform Patterns in the OECDReform Patterns in the OECD

Budget rules

Budget rules

• Input-oriented line item budget, incrementalist• Input-oriented line item budget, non-incrementalist • Input-oriented line item budget, plus some performance information • Budget procedures and timing based around performance reporting• Some accruals budgeting

• Input-oriented line item budget, incrementalist• Input-oriented line item budget, non-incrementalist • Input-oriented line item budget, plus some performance information • Budget procedures and timing based around performance reporting• Some accruals budgeting

AccountingAccounting

• Cash-based• Double-entry bookkeeping• Accruals accounting with extended cost calculation supported by performance measurement system

• Cash-based• Double-entry bookkeeping• Accruals accounting with extended cost calculation supported by performance measurement system

AuditAudit• Traditional financial and compliance audit• Compliance focus with elements of performance and evaluation• Institutionalized financial, compliance and performance auditing

• Traditional financial and compliance audit• Compliance focus with elements of performance and evaluation• Institutionalized financial, compliance and performance auditing

1. Public expenditure and financial accountability reforms

Area of Reform Reform Patterns

Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

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Reform Patterns in the OECDReform Patterns in the OECD

Workforce size and

composition

Workforce size and

composition

• Incentives for workforce reduction• Greater use of lateral entry – particularly for senior staff• Incentives for workforce reduction• Greater use of lateral entry – particularly for senior staff

Compensation and

careers

Compensation and

careers

• Moves towards position-based system (or even towards use of general labor law)• Promotion by performance• Decentralization of the employer function • Limited introduction of performance-related pay – associated with targets or quasi-contracts for agencies• Moves towards defined contribution pension schemes

• Moves towards position-based system (or even towards use of general labor law)• Promotion by performance• Decentralization of the employer function • Limited introduction of performance-related pay – associated with targets or quasi-contracts for agencies• Moves towards defined contribution pension schemes

2. Human resource management reforms

Area of Reform Reform Patterns

Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

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Reform Patterns in the OECDReform Patterns in the OECD

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Finland

Belgium

Portugal

New Zealand

Australia

United States

Ireland

United Kingdom

Spain

Netherlands

FTC (fixed-term contract) OTC (open-term contract) or lifelong guaranteed

Source: OECD, 2006.

Proportion of Fixed-Term and Open-Term Contracts or Lifelong Guaranteed Employment in the Civil Service at the

National/Federal Level in 2004/05 in Selected OECD Countries

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Reform Patterns in the OECDReform Patterns in the OECD

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

004

199

52

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199

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199

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199

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199

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199

52

004

DK SWE ICE FIN FRA NOR BLG CAN UK ITA NL USA PL ESP IRL SWT SK GER LUX CZ KOR

Sources: National Accounts, OECD

Source: National Accounts, OECD.

General Government wage bill as % of GDP (1995 and 2004)

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Reform Patterns in the OECDReform Patterns in the OECD

Regulatory managementRegulatory

management• Growth in independent regulators• Creation of central bodies for regulatory management• Growth in independent regulators• Creation of central bodies for regulatory management

Inter-governmental

decentralization

Inter-governmental

decentralization

• Some functional and fiscal decentralization to sub-national governments• Some functional and fiscal decentralization to sub-national governments

Organizational diversification

Organizational diversification

• Unbundling – (possible) creation of more "arms-length" agencies• Delegation of managerial authority within central ministries and departments

• Unbundling – (possible) creation of more "arms-length" agencies• Delegation of managerial authority within central ministries and departments

3. Structure of the public sector reforms

Area of Reform Reform Patterns

Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

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Reform Patterns in the OECDReform Patterns in the OECD

Chart 1. Trends in independent regulatory Authorities in OECD Countries

0

5

10

15

20

25

30

35

40

1926

1929

1932

1935

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

Financial regulators

Energy

Telecommunications

Source: (Malyshev: 2006, p.291)

Increasing Numbers of Independent Regulatory Authorities in OECD Countries

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Reform Patterns in the OECDReform Patterns in the OECD

Gbr Swe

Esp

Prt

Nor

NldLuxJpn

Ita

Cze

GrcFraFin

DnkUSA

DeuCan

Bel

Aut

-10

-5

0

5

10

15

20

-10 -5 0 5 10 15 20 25

Balanced decentralization

Decentralized expenditures

Centralization

Expenditures

Reven

ues

Source: National Accounts, in (Blöchliger et al: 2006)

Evolution of revenue and expenditure decentralization in OECD countries, 1995-2003 (% age change)

1515/26/26

Reform Patterns in the OECDReform Patterns in the OECD

OutsourcingOutsourcing • Increased out-sourcing• Increased out-sourcing

Public Private

Partnerships

Public Private

Partnerships• Greater use of "public private partnerships"• Greater use of "public private partnerships"

4. Alternative service delivery

Area of Reform Reform Patterns

Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

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Reform Patterns in the OECDReform Patterns in the OECD

Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

Market-type mechanismsMarket-type mechanisms

• Market-based approaches to delivering public services (including the introduction of user charges and some use of vouchers)• Market-based approaches to delivering internal government services• Market-based approaches to setting regulatory standards or prices

• Market-based approaches to delivering public services (including the introduction of user charges and some use of vouchers)• Market-based approaches to delivering internal government services• Market-based approaches to setting regulatory standards or prices

Participation Participation • Diverse pilot activities of increasing user participation in management and planning. • Diverse pilot activities of increasing user participation in management and planning.

Open government

Open government

• Provision of information about services and entitlements through charters • Freedom of Information legislation• Extension of offices of ombudsman

• Provision of information about services and entitlements through charters • Freedom of Information legislation• Extension of offices of ombudsman

5. Demand side reforms

Area of Reform Reform Patterns

E-governmentE-government• Provision of information about services and entitlements through e-government• E-government infrastructure and legal framework

• Provision of information about services and entitlements through e-government• E-government infrastructure and legal framework

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Conclusion: some achievement and some Conclusion: some achievement and some risksrisks

• Productivity and quality improvements the public sectors of OECD countries in the last three decades. These improvements are due:

o measure to the quantum leap in human capacity within the public sector; o ICT investments;o managerial reforms.

• The contribution of performance-based approaches has undoubtedly been significant.

• Productivity and quality improvements the public sectors of OECD countries in the last three decades. These improvements are due:

o measure to the quantum leap in human capacity within the public sector; o ICT investments;o managerial reforms.

• The contribution of performance-based approaches has undoubtedly been significant.

Achievements

• Reforms may have been more costly than anticipated - and they may also have had unintended consequences. • Unintended consequences:

o The erosion of value in the public service; o Managing the political-administrative boundary;o Emerging risks (Could there be too many reforms?);o Performance approaches bring with them a significant risk of "gaming“.

• Reforms may have been more costly than anticipated - and they may also have had unintended consequences. • Unintended consequences:

o The erosion of value in the public service; o Managing the political-administrative boundary;o Emerging risks (Could there be too many reforms?);o Performance approaches bring with them a significant risk of "gaming“.

Risks and Unintended consequences

Source: Authors