Public Management Innovations and Administrative Capacity Tony Verheijen Senior Public Sector Management Specialist The World Bank

Context New Member States move to a next phase in their membership with the financing framework New Member States move to a next phase in their membership with the financing framework Three further CEECs in an advanced stage of preparation for membership Three further CEECs in an advanced stage of preparation for membership Administrative capacity is a key issue in determining the quality of fiscal management, competitiveness and ability to use the benefits of EU membership Administrative capacity is a key issue in determining the quality of fiscal management, competitiveness and ability to use the benefits of EU membership Key question: how to improve administrative quality beyond core EI functions (transposition etc.)?

Context ctd. Two years after accession some doubts remain on administrative quality in CEECs: Low fund absorption capacity does not bode well for the period Low fund absorption capacity does not bode well for the period Fiscal management issues remain in several states Fiscal management issues remain in several states Also: Competitiveness issues (and their linkage with administrative quality) will gain importance as economic development parameters continue to converge

The Bank Study Follow-up to the 1999 ‘Ready for Europe’ Study Follow-up to the 1999 ‘Ready for Europe’ Study Focus on innovations and best practice combine with review of basic parameters of administrative capacity Focus on innovations and best practice combine with review of basic parameters of administrative capacity Using a benchmarking approach based on accepted indicators of administrative capacity Using a benchmarking approach based on accepted indicators of administrative capacity Combining in-depth studies with desk review Combining in-depth studies with desk review

Main Findings Some interesting and advanced innovations, in particular on performance management and e- governance Some interesting and advanced innovations, in particular on performance management and e- governance Reversals of earlier progress in several states on basic aspects of civil service development Reversals of earlier progress in several states on basic aspects of civil service development Concerns on policy coordination capacity Concerns on policy coordination capacity

Benchmarks Strategic planning and performance: OECD and CAF best practice indicators rated according to the CAF scale Strategic planning and performance: OECD and CAF best practice indicators rated according to the CAF scale Policy coordination: Metcalfe Scale Policy coordination: Metcalfe Scale Civil Service: SIGMA baselines Civil Service: SIGMA baselines E-Governance: advancement in terms of phase of development E-Governance: advancement in terms of phase of development

Benchmarking: performance management and strategic planning Systems in Latvia and Lithuania are advanced, and would rate above EU average, though individual appraisal is a weak link Systems in Latvia and Lithuania are advanced, and would rate above EU average, though individual appraisal is a weak link Other states (especially SK) show some agency based innovations, but no systemic approach Other states (especially SK) show some agency based innovations, but no systemic approach Introducing an overall strategic planning and performance agenda is crucial for successful structural fund implementation

Benchmarking on strategic planning

Performance Management

Policy Coordination Most states would meet ‘healthy’ minimum levels on specialized EI coordination (levels 4-5 on the Metcalfe scale) Most states would meet ‘healthy’ minimum levels on specialized EI coordination (levels 4-5 on the Metcalfe scale) Most states would rate with the weakest among the ‘old’ member states on overall coordination Most states would rate with the weakest among the ‘old’ member states on overall coordination

Overall Coordination

EI coordination

Civil Service Focus on four aspects: Focus on four aspects: 1. Legislation 2. Horizontal Management 3. Politicization 4. Incentives

A Case of General Backsliding? A SIGMA assessment now would show reversals on key issues: Legislation in many cases revoked or ‘dressed down’ Legislation in many cases revoked or ‘dressed down’ Horizontal management remains weak, and in many cases is being eliminated Horizontal management remains weak, and in many cases is being eliminated Politicization continues to be an issue Politicization continues to be an issue Limited progress in reform of incentive systems Limited progress in reform of incentive systems The scope for the establishment a ‘classical’ civil service model is questionable for a number of states

Key Issues How to create a high quality administration if political will to create a ‘classical’ civil service is low? How to create a high quality administration if political will to create a ‘classical’ civil service is low? Incentive systems: how to go beyond seniority and opaque and ad hoc bonus systems? Incentive systems: how to go beyond seniority and opaque and ad hoc bonus systems? Can politicization be managed?? Can politicization be managed?? Are horizontal management structures at all viable? If not, what is the alternative? Are horizontal management structures at all viable? If not, what is the alternative?

Service delivery E-Governance innovations in Estonia continue to be a best practice E-Governance innovations in Estonia continue to be a best practice However, for fiscal and other reasons replicability would be difficult However, for fiscal and other reasons replicability would be difficult Less comprehensive and incremental approaches need more encouragement Less comprehensive and incremental approaches need more encouragement

Can best practices provide inspiration for reform? Review of replicability: systemic and agency specific innovations: Performance management and strategic planning systems are generally home- grown and can be adapted Performance management and strategic planning systems are generally home- grown and can be adapted Linkage to individual performance and rewards needs to be established Linkage to individual performance and rewards needs to be established Investment in such systems will pay off in terms of improved fiscal management, improved structural fund absorption and a more attractive investment climate Investment in such systems will pay off in terms of improved fiscal management, improved structural fund absorption and a more attractive investment climate

Service delivery Estonia as an exception or a model? More scattered innovations in other states show the potential of e- services More scattered innovations in other states show the potential of e- services Investment and infrastructure considerations may make full replication very difficult Investment and infrastructure considerations may make full replication very difficult

Agency specific reforms Problem of roll out, seen in both Latvia (late 1990s) and Slovakia (recent years) Problem of roll out, seen in both Latvia (late 1990s) and Slovakia (recent years) Could provide thoughts on how to move from institutional performance to individual level Could provide thoughts on how to move from institutional performance to individual level

Lessons and Agenda Interesting best practices have ‘grown up’, and should inspire other states Interesting best practices have ‘grown up’, and should inspire other states Foundation issues remain and will affect state performance on crucial aspects of public management if not addressed Foundation issues remain and will affect state performance on crucial aspects of public management if not addressed Classical approaches to civil service development may not ‘stick’ and alternatives may need to be found to address stability and incentive issues Classical approaches to civil service development may not ‘stick’ and alternatives may need to be found to address stability and incentive issues