Public Management Reform in the OECD countries Nick Manning Manager Sector PREM - Latin America and Caribbean – Public Sector unit September 10 th, 2008

2/26 Reforming Public Management in OECD countries General Government Expenditure as Percent of GDP in OECD, Source: : (World Bank: 1997), Figures 1 and 1.2; : OECD.Stat - National Accounts, and Clements, Faircloth, and Verhoeven: 2007, Figure 2; IMF, Governemnt Finalcial Statistics: Thailand: 19.78

3/26 Reforming Public Management in OECD countries Confidence in the Civil Service in OECD countries Confidence in the civil service (%) Source: CD-Rom; ICPSR 2790, World Values Surveys and European Values Surveys, , , and , 1st ICPSR version, February, 2000

4/26 Reforming Public Management in OECD countries GDP p.c. in US$ (purchasing-power-parity) in 28 OECD Countries, 2005 Source: World Bank data

5/26 Reforming Public Management in OECD countries The Deepening Basis for the Legitimacy of the Public Service Progress 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

6/26 Responsiveness 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

7/26 5 technical dimensions of reform Human Resources Management The structure of public sector Demand-side reforms Public expenditure management and financial accountability 5 technical dimensions of reform Alternative Service Delivery Source: Authors

8/26 Reform 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 Accounting 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 Audit 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 ReformReform Patterns Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

9/26 Reform 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 ReformReform Patterns Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

10/26 Reform Patterns in the OECD Source: OECD, 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

11/26 Reform Patterns in the OECD Source: National Accounts, OECD. General Government wage bill as % of GDP (1995 and 2004)

12/26 Reform Patterns in the OECD Regulatory management Regulatory 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 ReformReform Patterns Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

13/26 Reform Patterns in the OECD Source: (Malyshev: 2006, p.291) Increasing Numbers of Independent Regulatory Authorities in OECD Countries

14/26 Reform Patterns in the OECD Balanced decentralization Decentralized expenditures Centralization Expenditures Revenues Source: National Accounts, in (Blöchliger et al: 2006) Evolution of revenue and expenditure decentralization in OECD countries, (% age change)

15/26 Reform Patterns in the OECD Outsourcing Increased out-sourcing Public Private Partnerships Public Private Partnerships Greater use of "public private partnerships" 4. Alternative service delivery Area of ReformReform Patterns Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a.

16/26 Reform Patterns in the OECD Source: Joumard et al: 2004; OECD: 2005b, c, 2007b; Pollitt et al: 2004a. Market-type mechanisms Market-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 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 ReformReform Patterns E-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

17/26 Conclusion: some achievement and some risks 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