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1
PROGRESS IN GOVERNANCE REFORM: CONDITIONS FOR EVIDENCE,
CONSULTATION AND PARTNERING
Mr. Rolf Alter, Director, Public Governance and Territorial Development, OECD
Draft 15/05
2
Better governance is now recognised as a key to global recovery
The OECD Secretary General has called the global crisis a “wake up call” to
policymakers around the world. Market and governance failures led to the most pressing
financial, economic and employment crisis of our lifetimes. OECD Ministers of Finance have
been forced to recognize that the idea of a self-adjusting growth model with a single general
equilibrium has been tested and found wanting. In parallel, longer-term global trends – i.e.
globalisation and shifting wealth, population growth and ageing, natural resources constraints
and skill-biased technological change – put pressure on economies and restrict the margin for
manoeuvre of individual governments and increase the pressure for co-ordinated international
responses. The conclusion of the OECD at its most recent high-level meetings has been that
returning to business as usual is not an option. Going forward, OECD intends to “reflect,
revisit and to rethink” its fundamental assumptions and methods to try to develop a more
sustainable and inclusive economic model.1
Given the origins of the crisis in regulatory and governance failures, the issue of
institutional reform is prominent in the search for new ways to achieve better policy
outcomes. Indeed, the Secretary-General of the OECD underlined that institutions, the
political economy of reform, ineffective implementation, and individual behaviour “need to
be better reflected in the way we deal with policy challenges”. In other words, strengthening
and re-valuing the role and performance of governments, and addressing implementation gaps
must be an important element to improve the working of market economies.2
These are important assertions because they place good governance at the centre of a
new approach to economic policy. Economic thinking has often tended to ignore the
importance of government‟s capacity to design and implement, making too many overly
1 OECD 2012 Ministerial Meeting, 23-24 May; “Strategic Orientations by the Secretary-General”
C/MIN(2012)1, “New Approaches to Economic Challenges” C/MIN(2012)2. 2 Ibid.
2012 Strategic Orientations of the OECD Secretary General
“At this critical juncture, the OECD will need to reinforce its work
on public governance to drive real change in the public sector. Facing all
these challenges will require more strategic, effective and forward-looking
governments…”
3
optimistic assumptions about the evidence base for decision-making and translation of policy
into action. New economic thinking in response to the crisis must accept the central role of
governance in determining policy outcomes. It must recognize its importance but also the
challenges and limitations. This suggests re-evaluation of governance across many
dimensions -- from strengthening the strategic capacity of governments, all the way to
regional and local delivery of services and to communication with citizens.3
Consolidation and investment for growth are the main challenges; but both depend on
strategic capacity
The crisis has reopened debate about the role of government in society. To what extent is
government itself an effective steward of the public interest. To what extent are governments
really effective in shaping the framework for markets? It is undeniable that governments face
many new constraints, some related directly to the crisis but many resulting from longer-term
trends. Resources to deliver the level of services that people expect are increasingly scarce.
Civil society organizations demand action and inclusion in ever more vocal ways. Trust and
confidence in public authorities has been hit hard by the crisis. Countries are increasingly
exposed to risks from major global shocks and disruptive events. Internet and information and
communications technologies offer opportunities for networked governance, yet also create
many new challenges, for example those raised by social media. Although some countries
have proven themselves to be more resilient to the impact of economic crisis than others, the
range of pressures faced by all government remains daunting.4
In simple terms, the challenges for government have four dimensions that need to be
addressed simultaneously: (1) ensuring strategic capacity (i.e., reconciling short-term policy
choices with longer-term trends and pressures), (2) consolidating public finances, and (3)
investing for growth. These are clearly inter-dependent. Consolidating budgets could suggest
a reduced level of public investment. Addressing long-term consolidation needs could suggest
governments will be locked into mechanistic paths that allow little room for dynamic strategic
leadership. Both citizens and business, not to mention the media and international capital
markets, are watching closely to see how governments strike balances among complex
objectives.
3 For a thorough examination of the evolution of the international governance debate, see Leslie A Pal (2012),
Frontiers of Governance: The OECD and Global Public Management Reform.
4 The issue of the role of the public administration and the new challenges faced by public servants are
extensively examined in Jocelyne Bourgon (2011), Serving in the 21st Century: A New Synthesis of
Public Administration, and Christopher Pollitt and Geert Bouckaert (2011), Public Management
Reform: A Comparative Analysis.
4
Responding to the challenges of the crisis
CAPACITY
To steer, lead,
provide visibility
CONSOLIDATION
To balance
budgets
INVESTMENT
To respond,
innovate,
mobilise
TRANSPARENCY
To be accountable
CITIZENS,
MARKETS
Building
Trust!
The ability of government to make progress in these different spheres at once is more important
than ever. Recent events have underlined that public governance is a long-term project in need
of some renovation. If countries fail to invest in public governance systems, capacities and
structures, we should not be surprised if the public governance machinery seizes up –
resulting in delayed decisions, compromises that fail to tackle underlying problems, and
public policies that fail to deliver. The post-crisis period has provided many illustrations of
this – protracted budget negotiations in several major economies being the most obvious
examples.
To a large extent, the burden for ensuring that the right trade-offs are made rests with the centre
of government. The centre of government (prime minister‟s office, government office,
Chancellery, etc.) plays a key role in ensuring that this long-term investment happens and that
obstacles to effective decision-making are minimised or removed. Yet, the pressures on
decision-makers at the centre are intense, and the turnaround time for decisions has
accelerated. The rapidly evolving context tests the ability of the centre of government as an
institution to adapt and respond.
Centres of government remain indispensable pillars of effective strategic decision-
making for two reasons. First, they provide advice and guidance to the prime minister,
president or cabinet. As such, their strategic thinking feeds directly into decision-making at
the highest level and helping to counter-balance trends to short-termism – an extraordinary
privilege, but also a heavy responsibility (which assumes strong analytical capacity within the
central government office). Second, they are involved in translating decisions into actionable
“orders” for ministries and departments and monitoring implementation.5
5 OECD (2011), Meeting of Senior Officials from Centres of Government, Ottawa 2011, “Introduction and
Session Notes”.
5
Reviews of public governance in several OECD countries have concluded that an
effective centre of government is critical for strategic decision-making. But there have been
concerns that crisis decision-making processes tended to sideline strategic thinking and reduce
the capacity of the centre to ensure that longer-term considerations were adequately taken into
account. Moreover, the actual resources of the central agencies to carry out their tasks have
not always evolved to keep pace with new demands.
This leads back to the issue of how governments can deliver strategic policy. Senior
officials from centres of government underlined in recent OECD CoG meetings that the basis
for good policy must be the use of evidence to support decision-making. While being fully
aware that the ultimate responsibility for decision rests at the political level where many
different considerations are included in the equation, they stressed that being able to draw on
relevant and timely data remains primordial.
The evidence base for policy making remains the prerequisite for a strategic state
Supporting evidence-based policymaking with relevant and reliable data has been the
priority of the delegates to the OECD‟s Public Governance Committee for several years now.
This reflects their concern about the standard of governance indicators and the importance of
making progress in this area.
Nowadays it is hard to imagine a debate on government performance that would not
include quantification of the money spent (inputs), the quality of government processes, the
quality and quantity of government outputs, and the outcomes (or lack of them) eventually
achieved. Extensive academic and practitioner literature are devoted to the subject of these
aspects of government performance, literature which stretches back for at least a quarter of a
century. Yet the measurements of these dimensions (inputs, processes, outputs, outcomes) are
frequently crude or simply missing. This is true even at national level, but far more so for the
purpose of international comparisons. Some existing comparisons are based on surprisingly
weak and narrow data. A few specific areas stand out as beacons of what could, in principle,
be achieved (especially some in education and healthcare, such as the OECD Programme for
International Student Assessment (PISA). The challenges facing comparative measurement go
Why the Centre of Government is crucial for effective decision-making – key strategic roles
ensure that the government‟s deliberations on its strategic priorities take place with the benefit
of a broad assessment of the overall economic, political and social situation;
verify that strategic priorities are harmonised with other strategic documents of the government, such as economic and fiscal strategies, and other key policy and reform strategies;
make sure that the budget preparation process takes account of, and reflects, strategic priorities;
ensure that ministries‟ work plans reflect the government‟s strategic priorities;
brief the Prime Minister or President regularly on new developments affecting the strategic
priorities and annual work plan, and on possible responses or adjustments where relevant.
6
far beyond the issue of missing data. Before a single measure has been made, there are
significant difficulties to be tackled in the conceptualisation or categorisation of the “units”
under discussion. Frequently used terms such as “government”, “civil service” or “public
sector” turn out to have different meanings and different domains in different countries.6
These widely acknowledged data constraints have been one important factor prompting
the Government at a Glance initiative promoted by the delegates to the Public Governance
Committee. This programme aims at improving the general quality and comparability of
government activity data and, more specifically, presenting the data in an accessible form
(Government at a Glance, the third issue of which will appear in 2013). This publication has
already enabled more securely based benchmarking between countries, and should encourage
more effective OECD-wide lesson learning with respect to sector efficiency, process/output
relationships, issues of capacity change and a variety of other aspects.
One feature of this initiative has been an attempt to stabilise an agreed set of categories
for institutional domains (what do we mean by “government”, “the public sector”, etc.); for
stages in the process of producing public goods and service; and for specific aspects of those
stages (particularly “outputs” and “outcomes”). Although this sounds rather technical, it
quickly became clear to practitioners from the 30-plus countries that it is not possible to have
an effective international dialogue without a standardized vocabulary.
Measuring a moving target: from government to governance
While post-crisis public sector reform and fiscal consolidation have brought governance
indicators into the spotlight, radical changes in the way governments function have made the
task of measuring government activity and interpreting the results more difficult. For the last
quarter of a century governments across the OECD have been reconsidering and adjusting
their roles. Some governments have chosen widespread privatisation of public utilities. An
overlapping group of countries have significantly increased the role of the private sector
inside the public sector, through a variety of means including public-private partnerships,
franchising and contracting out. Elsewhere ideas of “co-production” have seen significant
involvement of citizen groups and civil society associations in public service planning,
delivery and evaluation.
A recent essay by Allen Schick in Government at a Glance 2011 defined the notion of
leveraged governance to describe the new modus operandi of government. The essay notes
that enlargement of the state has made it more dependent on others, both to mobilise support
for public policies and to satisfy the rising expectations of citizens. The spread of leveraged
government is result, not of a coherent ideology but rather the problem-solving acumen of
political leaders and public managers. Leveraging is a pragmatic response to limits on
government capacity. Governments leverage because they do not possess all the IT skills
required to run highly-developed economies, or because they do not want to operate complex
health care systems. Many governments have turned to partners to ease pressure on their
budgets or to improve the efficiency or quality of public services. Leveraging “upwards” via
international organizations has also become more common.
6 For a full presentation and discussion, see OECD (2009), Measuring Government Activity.
7
Although it has been driven principally by practical considerations, leveraging
government has drawn impetus from parallel developments in business management – from
Drucker onwards. In many places, while the government may have retreated from directly
providing services itself, it has increased its role as a regulator. In all these cases the boundary
between the public sector and the private sector has shifted and taken on new and sometimes
ambiguous meanings. A reconsideration of what government does, and how we classify and
measure this activity is therefore overdue.7
Focusing on outcomes: the need to measure performance
But measuring the size and shape of government is no longer enough in a context of
budgetary pressure and loss of public confidence. Governments need to be able to assess and
benchmark their performance. Measuring government performance has long been recognised
as necessary for improving the effectiveness and efficiency of the public sector. Following the
fiscal and economic crisis that began in 2008, however, accurate and timely data are needed
more than ever to help governments make informed decisions about how and where to
prioritise spending, reduce costs and promote innovation in the public administration. Indeed,
restoring public finances in the OECD has led many governments to pursue budget cuts,
freeze public sector wages or reduce the size of the government workforce in 2010. Good
decision-making in all of these fields depends on having the right data to make the correct
choices; and on being able to draw on data to show that the choices made are fair, equitable,
transparent, etc.
How government activities are measured matters. Given the size of government and its
role in the economy, the contribution of government to national economic growth is of great
significance, especially when looking at change rates over time. National governments are
still potent centres of public authority and vast repositories of financial and other resources.
By most standard measures, governments have significantly expanded their footprint during
the OECD's half century. In 1960, the OECD's first year, government expenditure in member
countries averaged less than 30% of GDP; excluding recently added members, the average
now is well in excess of 40%. In fact, no member country now has a lower outlay (or revenue)
to GDP ratio than 30 or 50 years ago. Although the pace of expansion has slowed in most
countries and a few have moved to reduce the relative size of government in response to the
recession, big government is here to stay. Most of the increase in public spending has been in
social security and other income transfers. In some countries, escalating health care
expenditures have accounted for approximately half of the total rise in relative spending.
One of the primary conclusions from OECD work on governance indicators has been that
the size of the public sector tells us little about the quality or scope of the service provided to
citizens in return for their taxes. The notion of performance is seen as fundamental to the
modern state, and therefore also underlies the OECD‟s approach to measurement (Schick,
2005).8 This has led to significant reforms within government – and to a deluge of managerial
7 See OECD (2011), Government at a Glance, Introduction
8 Schick, A. (2005). “The Performing State: Reflection on an Idea Whose Time Has Come But Whose Implementation Has
Not”. OECD Journal on Budgeting. 3(2). Paris: OECD.
8
and political rhetoric about the measurement of performance (Pollitt and Bouckaert, 2004).9
These developments are based around the idea that, as the state is responsible for such a large
and changing array of services and regulatory tasks, it must quantify its promises and measure
its actions in ways that allow citizens, managers and politicians to make meaningful decisions
about increasingly complex state activities.
What can we say so far: summarizing what we have learned
The indicators included in Government at a Glance 2011 test the concept of government
performance with new data. The success of this effort demonstrates the desire among a broad
policy community (including policymakers, civil society, the media and others) for this type
of metric for measuring progress with reform of the state. It also shows that we have
addressed the tip of a very large iceberg in terms of approaching a model of an agile,
resource-efficient and high quality public sector.
Data from Government at a Glance reveal the extent to which government expenditures
increased relative to GDP before and after the crisis. In the pre-crisis period between 2000
and 2007, OECD member countries decreased their share of government spending on average
by 0.6 percentage points of GDP. However, after the start of the crisis, the share of
government spending increased by 4.9 percentage points across the OECD during 2007-09.
Only part of this increase reflects declining GDP; another portion also reflects increased
government expenditures sparked by the need to ensure the stability of the financial system
and to stimulate the economy in response to the crisis.10
There is a general consensus in the OECD that public finances in many OECD countries
are on an unsustainable path. To better understand the implications for fiscal policy in the
years to come, the OECD has produced estimates of countries' fiscal consolidation needs.
According to these, on average an improvement of nearly 4% of potential GDP is needed
from the fiscal positions in 2010 just to stabilise the debt-to-GDP ratio by 2026. In addition,
offsets of 3 percentage points of GDP on average will have to be found over the coming 15
years to meet spending pressures due to ageing-related costs including health care and
pensions.11
9 Pollitt, C. and G. Bouckaert. 2004. Public Management Reform: A Comparative Analysis. Oxford, United Kingdom: Oxford
University Press. 10
OECD (2011), Government at a Glance, Chapters II and III.
11 For a full comparison of fiscal consolidation plans and progress, see OECD (2011), Restoring Public Finances
(next edition forthcoming July 2012)..
9
Public finances are in trouble…
Source: OECD Economic Outlook 89 Database.
General government gross debt as a percentage of GDP
(2007 and 2011)%
0
50
100
150
200
250
AU
S
LUX
KOR
CH
E
NZL
SWE
SVK
CZE
NO
R
DN
K
FIN
PO
L
NLD
AU
T
ESP
DEU
CA
N
GB
R
HU
N
FRA
USA
PR
T
BEL IR
L
ISL
ITA
GR
C
JPN
OEC
D a
vera
ge
EU a
vera
ge
2007 2011
0%
5%
10%
15%
20%
25%
Pe
rce
nta
ge o
f p
ote
nti
al G
DP
Ageing related spending 2010-2025
Remaining consolidation needed by 2025
Announced consolidation plans (2011-15)
Countries ranked in order of remaining consolidation needed and estimated ageing-related spending.
Announced measures may not be enough.
Source: OECD “Restoring Public Finances”. Note: Plans announced as of December 2010, currently being updated for summer of 2012.
Spending cuts agreed in 2010-11 are starting to have a visible impact. In most cases,
these cuts will not restore fiscal balance. Indeed, the impact of population aging alone will
make balancing the books a moving target over the next two decades. Nonetheless, the current
wave of public spending reductions will hit daily services to citizens. In order to make the
10
necessary savings, governments are naturally targeting the major spending programmes in
which the public footprint is largest, and hence in which the scope for reducing expenditure is
broadest. But, withdrawing public investment in these policy areas – social protection and
health, in particular -- is hugely unpopular (and, increasingly, contested as an economic policy
strategy).
Structure of general government expenditures by function (2008)
Source: OECD (2011), Government at a Glance.
Alongside cuts to programme budgets, OECD countries are committed to large-scale
staff reductions. Over three-quarters of OECD countries indicate that they are engaged in, or
are planning, reforms that will decrease the current size of their public service workforce in
more than half of the agencies and ministries within central government. None plan to
increase workforce levels. Additionally, fifteen OECD countries have established replacement
ratios to fill the gaps left by staff leaving through retirement. These ratios can range from
replacing 1 in 10 workers in countries such as Spain, to 8 of 10 in Israel or Korea. There is
usually some flexibility built into the regimes (for example, France), but they nonetheless
have an impact on the long-term capacity of the public sector to deliver quality services, a
point made in recent reports such as OECD (2012), Public Servants as Partners for Growth).
13.1 3.8
4.0
11.4
1.7
1.9 14.7
2.7
13.1
33.5
General public services
Defence
Public order and safety
Economic affairs
Environmental protection
Housing and communities
Health
Recreation, culture
Education
Social protection
11
Examples of staff reduction targets in selected OECD countries
Country Reduction
Canada 10% operational budget reductions for all
departments
France 97 000 public sector jobs (50% replacement
rate)
Germany 10 000 federal public sector jobs by 2014
Greece 20% replacement rate; cut in short-term
contracts
Ireland 24 750 public sector jobs by 2014
Portugal Complete recruitment freeze
Spain 10% replacement rate for public officials
between 2011-13
UK 330 000 public sector jobs by 2014 Source: OECD (2011), Restoring Public Finances
The first avenue explored by most OECD governments in reviewing options for spending
reductions has been to lower the overall public sector wage bill. There is a popular
assumption that public sector wages and benefits offer scope for cuts. However, looking at
pay scales and comparing with the private sector suggests that this is overestimated (assuming
that there is a commitment to attracting and retaining trained staff). For the first time, the
OECD has collected data on the compensation of central government employees in core
ministries, specifically for senior managers, middle managers, professionals and secretaries.
For these professions, the data show relative total remuneration across OECD countries,
including not only salaries and wages, but also social benefits and future pension earnings. On
average, senior managers‟ total compensation in responding countries amounted to just under
USD 235 000 PPP in 2009, while professionals such as economists or statisticians earned
approximately USD 90 000 PPP annually. Executive and administrative secretaries received
on average between USD 50 000 and 60 000 USD PPP. These data reveal a fairly egalitarian
pay structure in the public sector: senior managers in central government (which can be
equivalent to Deputy Ministers or Chief Executives) make 2 times the amount of policy
analysts and about 4.5 times that of the average secretary‟s compensation. Government at a
Glance 2011 also provides data on teachers‟, doctors‟ and nurses‟ wages or annual income in
relation to the average earnings of other university-educated professions in the labour market.
These suggest that lowering wages further would risk making key public sector occupations
highly uncompetitive.12
12
See OECD (2011), Government at a Glance, Chapter VI.
12
0
1
2
3
Top manager (D2) Middle manager (D3) Economist / Policy analyst
OECD14 OECD16 OECD19
Operational expenditure: not much slack in terms of compensation for civil servants...
OECD average annual wages for select positions in central/federal govt relative to average tertiary educated wage in the labour market
(2009)
Below University graduates’
average earnings
Above University graduates’
average earnings
0
1
2
Above University graduates’
average earnings
Below University graduates’
average earnings
Source: OECD (2010) Education at a Glance; Government at a Glance 2011.
In the majority of OECD countries, teachers make below the average tertiary graduate’s earnings, despite 15
years of teaching experience (2008)
Operational expenditure: not much slack in terms of compensation...
13
Relief on the horizon as baby-boomers retire
Percentage of civil servants aged 50 or over relative to labour force (2010)
Source: Government at a Glance 2011, OECD 2010 HRM Survey and ILO.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Ita
ly
Ice
lan
d
Swe
den
Be
lgiu
m
Ge
rman
y
Un
ite
d S
tate
s
De
nm
ark
Slo
vak
Re
pu
blic
Gre
ece
Isra
el
No
rway
Fin
lan
d
Ne
the
rla
nd
s
Ca
nad
a
Ire
lan
d
Au
stri
a
Hu
nga
ry
Po
rtu
gal
Swit
zerl
an
d
Un
ite
d K
ingd
om
Fra
nce
Ne
w Z
ea
lan
d
Slo
ven
ia
Po
lan
d
Mex
ico
Au
stra
lia
Jap
an
Esto
nia
Ch
ile
Ko
rea
OEC
D a
vg
EU a
vg
2000 2009
%
A key misconception that the data seems to disprove is that there is a „right size‟ of the
public service workforce. There are large differences in the share of government employment
among member countries, reflecting different choices with regard to the scope, level and
delivery of public services. The proportion varies from 6.7% in Japan and 7.9% in Greece to
nearly 30% in Norway and Denmark. While it would be perhaps expected that Nordic states
have large public sector workforces, both Japan and Greece would also be probably thought
of as countries with “heavy” bureaucracies. Public sector performance and service quality do
not seem to be determined by workforce size, with countries viewed as being at the forefront
of public management situated at both ends of the public employment spectrum.
Recent discussions at the OECD Public Employment Network have focused on how
governments should downsize in cases in which for fiscal reasons a large reduction in budgets
makes staff cuts inevitable. Based largely on past experience, the conclusion of practitioners
tends towards a cautious approach. If undertaken, downsizing should be part of the broader
strategy to improve efficiency and service delivery; that strategy should include measures to
safeguard morale, trust and capacity. In particular:
Large scale downsizing is the most problematic option for workforce adjustment.
Assessments have highlighted a variety of negative effects on the capacity of the workforce as
well as on trust and morale, and questioned the longer term sustainability of staff reductions
achieved in this way. Citizens could also lose trust if downsizing undermines the continuity of
services. Large scale reductions involve privatisation of government activities, outsourcing of
activities to the private sector, and corporatisation of activities and even the transfer of
responsibilities to sub-national levels of government and shifting activities into arm‟s-length
agencies of central government, principally in the 1990‟s in New Zealand and the United
Kingdom. All of these are likely to reduce staff performance, and place continuity of service
14
and the reputation of the public service in jeopardy. For example, in Australia in the 1990s,
large scale staff reductions were assessed to have had negative effects on the surviving labour
force in terms of morale and loss of expertise.
Recruitment freezes are the most detrimental approach to downsizing because they are
indiscriminate and limit the ability of organisations to restructure and reskill. Moreover, as
they tend to be protracted, the negative impact on the morale of staff and managers and on the
capacity to deliver services is likely to be significant. Some countries conducting partial or
total recruitment freezes are: Austria, France, Greece, Ireland, Italy, Japan, Spain and Portugal
(see previous slide for more concrete examples).
Redeployment arrangements in the context of staff reductions can help retain skills and
experience, and moreover help manage the industrial relations aspects of downsizing. More
needs to be done also to break down barriers to redeployment and mobility, in order to
support the restructuring of services and optimal use of skills. At the same time, the current
pressures offer the opportunity to renegotiate work practices in order to increase flexibility,
thereby laying the basis for improvements in efficiency and service delivery.
OECD countries appear to be continuing with reforms aimed at improving the
productivity and capacity of the public service even while implementing cutbacks, this is a
very difficult balance to achieve. The main risk is that the focus will shift to seeing staff as
costs rather than as assets. Compensation for public servants is often portrayed in the media
as the main source of inflated public budgets. However OECD data suggest that wage bills in
the public sector have grown rather slowly. Other budget items have grown much more
rapidly, among them outsourcing.
90
100
110
120
130
140
150
160
170
Ind
ex,
bas
e ye
ar
19
95
= 1
00
Outsourcing expenditures have grown at a faster rate than spending on compensation for
government employees.(OECD average)
Source: Government at a Glance 2011; OECD System of National Accounts.
Outsourcing
Compensation of employees
Data suggest other potential cost drivers
Source: Government at a Glance 2011, OECD National Accounts Statistics
15
Achieving a path to fiscal sustainability requires an agreement among citizens, businesses
and governments about what level of services the public wants governments to provide and to
what extent the public is willing to pay for those services. A Financial Times Op-Ed piece in
August 2011 described the fundamental challenge for Western governments as being to
convince citizens to accept less from government in terms of goods and services than they
have been used to. Governments have been quick to underline that spending cuts should aim
to improve supply-side efficiency in the economy, thereby generating growth, and enhance
the quality of service provision, thereby minimizing the negative impact of spending
reductions on citizens and businesses.
Identifying how policies and procedures could be improved, duplication and waste,
reduced, and other actors brought into the policy process is a huge task – a comprehensive
review of the way the public sector operates. The problem is that this effort is taking place in
parallel with cost cutting that inevitably withdraws front-line public services and personnel.
From a management perspective, it is challenging to promote an agenda of innovation and
reform to a workforce affected by wage freezes, enforced redundancies, workload increases
due to non-replacement of staff, and so on. Maintaining morale and providing incentives in
the public sector is crucial to the success of the overall reform project.
Finally, it is important to remind ourselves that surveys to explore the key attributes
expected of the public sector tend to find that citizens value integrity-related qualities more
highly than those relating to performance and efficiency.13
13
A full discussion of this issue can be found in Michiel S. De Vries and Pan Suk Kim (eds.) (2012), Value and
Virtue in Public Administration.
16
Public service values remain the underlying basis
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Per
cen
tage
of
the
29
co
un
trie
s th
at r
esp
on
ded
to
bo
th t
he
20
00
an
d
20
09
su
rvey
s
2000 2009
Source: OECD Government at a Glance 2009
Innovation in service delivery: improving impact while reducing the burden on the public
sector
Increased budgetary pressures and highly diversified demands from citizens and service
users have made innovation an imperative to maintain high quality public services. Innovative
approaches and solutions are the only way to foster public sector performance and enable
greater productivity at no additional cost.
Despite this increasing focus on innovation, knowledge of how countries have gone
about promoting and implementing innovative policies and practices is fragmented. Few
countries have defined comprehensive policies to foster innovation across the public sector.
Even fewer seem to have developed business case methodologies to examine the impact of
innovative practices on public organisation performance. A systemic approach to innovation,
looking at the enabling factors as well as the barriers, will be necessary to help lead change
processes in public policymaking.
Countries have begun to introduce innovative practices, however knowledge and analysis
remains limited and fragmented. Developing knowledge of what creates successful
innovations depends on a systematic approach where the mechanics of change and its
enabling factors are understood, alongside an understanding of the particular challenges faced
by the public sector, and the needs and preferences of its users. OECD is developing an
analytical tool for governments to assess new policies and instruments: the OECD
Observatory of Public Sector Innovation. This repository of new ideas and approaches will
collect and categorise innovations and help governments identify good practices for their
situation.
17
In the general area of public sector innovation, OECD work is highlighting the
accelerating trend towards new forms of public service delivery. While outsourcing and
public-private partnerships have been around for a long time, the emergence of co-production
is newer and is now an area of research and policy experimentation for many OECD
countries. Volunteer community groups partnering with local police to increase safety in their
neighbourhoods; patients with chronic illnesses taking control over their health with the
support of health-care professionals; young parents using online social networks supported by
social workers to get guidance and share advice regarding their children's upbringing. These
are all examples of user-centred collaborative approaches in service delivery (also referred to
as "co-production" ) where citizens or service users design, commission, deliver or evaluate a
public service in partnership with service professionals. In co-production, because at times
users may take responsibility over the initiative for service development, the line between
service delivery and policy making can be sometimes blurred.
In a time of increased budgetary pressure and growing demand for public services, these
approaches can be a source of innovation leading to greater individual and community
empowerment, increased user satisfaction and reduced production costs. The results of an
OECD survey on service delivery indicate that for the majority of OECD countries that have
adopted some forms of co-production, the objectives being primarily to increase the
involvement of citizens and achieve better quality service delivery (60%) rather than to reduce
costs (23%).14
However, despite an increased focus by OECD countries on user-centricity, co-
production as a form of service delivery remains developmental. Indeed, the majority of
member countries have some experiences of co-production in one or more public service
categories, but only a few (e.g. Canada, Norway, the United States, Finland, and the United
Kingdom) have gone beyond piloting this approach to embed these schemes in the delivery of
some public services.
Governments face several barriers to adopting co-production as a means of service
delivery. A shortage of resources (42%), organisational resistance to change (36%), and lack
of financial incentives (31%) are the most frequent obstacles identified by government
officials. Additionally, there is still limited understanding and measurement by governments
of the benefits and costs of co-production schemes, as also reflected by the scarce
development of standardised business cases; 29% of respondents from OECD countries
reported that they lacked evidence of the potential benefits of co-production.
Reasons for promoting co-production
14
For a full discussion of co-production initiatives in OECD countries, see OECD (2012) Together for Better
Public Services.
18
Source:
Monitoring new practices and innovations will help to demonstrate progress that
governments are making in trying to address the pressures brought by fiscal constraints and
low growth. Their ability to promote major reforms of the public sector and of the services it
provides will be crucial in helping to return countries to a path of more inclusive growth.
23% 35%
48% 55% 60%
71%
0% 10% 20% 30% 40% 50% 60% 70% 80%
To cut budget expenditures and
costs
To increase productivity
To build citizens' trust and
confidence in government
To improve effectiveness, outcomes and
achieve greater value for money
To improve service quality
To increase the involvement of users or citizens
% of all respondents for all service categories
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The next step: assessing quality of outputs
As discussed above, we have made significant progress in developing comparative data
to support analysis of the fiscal challenge facing OECD countries, the scope and nature of
efforts to reduce expenditures and increase revenues, the sectors that are being hardest hit by
budget cuts, and many other things. But what will be the affect of these cuts on the quality of
services? Will deteriorations impact trust in governments? Governments who are able to
reduce expenditures while maintaining quality in service delivery will be true examples to
follow; demonstrating gains in efficiency.
Indeed, the issue of the impact of the cuts on people‟s lives (and on the productive
capacity of nations) has not yet been fully explored. More educated, well-informed citizens
are judging governments on their performance – an important aspect of which is service
quality. In response to these demands, countries are focusing on making services as
accessible and responsive to as wide a range of citizens as possible. The quality of public
services is key to meeting government goals for effectiveness, equity and responsiveness to
citizen needs. It is also (one) key factor towards improving citizens‟ perceptions of
government (e.g. satisfaction with and confidence in).
Service quality can also be viewed as an important outcome measure of public
management practices. Achieving better quality (e.g. broader and more targeted service
coverage) while simultaneously reducing costs is particularly challenging in times of austerity
and a true test for public managers. Governments who succeed are those able of innovating
new ways of delivering services and implementing successful reforms. Indeed, tracking
improvements in quality over time can help identify the effects of those innovations and
reforms.
Lastly, indicators of quality complement international efforts to develop better measures
of public sector productivity and efficiency by adjusting outputs for quality.
There is no single definition of service quality, and countries and researchers have taken
different approaches to measurement. The main issue that first needed to be addressed was
whether there existed a common set of quality dimensions that could be applied universally
across different public services. After much discussion in working groups and research
projects, the following emerged as a framework on which there was a general consensus.
Potential framework for measuring service quality Dimensions of quality Description (“sub-dimensions”)
1. Access Geographic proximity to the service location to customer and/or
accessibility in terms of transport;
Accessibility of service/service location by those with disabilities/physical
or mental impairments;
Accessibility in terms of the distribution channels available (e.g. in person,
phone, mobile app, email, online portal, etc.)
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Accessibility in terms of time (e.g. operating hours are convenient to
customers);
Affordability- not only in terms of the cost of the service in relations to the
customers‟ economic means but also taking into consideration any
associated costs of accessing the service (travel costs, advisory costs, etc.).
Accessibility for additional kinds of divides (e.g. gender, language, socio-
economic, etc.)
Frequency with which a user must apply/re-apply to receive service and/or
demonstrate eligibility.
2. Responsiveness “Match” of service to users‟ specific needs and flexibility of
goods/services;
Speed and timeliness of delivery (e.g. response/waiting time);
Customer service in terms of empathy and courtesy;
Convenience (e.g. pre-filling of information when possible, reduction of
paperwork and procedures);
Recovery options available (e.g. for complaints, suggestions, appeals).
3. Reliability Competence of staff providing service;
Accuracy (Size of improper payments, incidences of mistakes, etc.)
Functionality- service does what is intended in a complete way; “tangibles”
(e.g. facilities, and other distribution channels work as expected);
Consistency across users (fairness);
Security (confidential information is kept secure, personal safety of
customer);
4. Communication Availability of information (also in terms of different languages..);
Number of communication channels available/used;
Clarity and completeness of information provided;
Opportunities for 2-way feedback between service providers and customers.
This framework has been reflected in the draft table of contents for Government at a
Glance 2013, where, rather than presenting indicators according to sectors as in the 2011
edition, indicators for different sectors could be organised around the different dimensions of
quality identified. It is thought also that this approach could lend itself better to the (future)
development of composite indicators for each of these dimensions, with the ultimate long-
term goal of developing a single composite indicator on “Serving Citizens” which combines
dimensions of quality from several sectors. The development of composites however, rests
first on both (i) attaining data for a greater sample of services/sectors; as well as (ii) attaining
broader set of indicators for each of the dimensions (e.g. for example with the case of access,
focusing not solely on financial access but also geographical access, etc.).
Another important element of these emerging directions in measuring govt performance
is a focus on citizen‟s views/satisfaction. Looking at perception data has been neglected
before now, riddled with methodological problems, but experienced a revival now as evident
in Stiglitz Report and the OECD”s Better Life Index (How‟s life publication). Even so these
are not a substitute but rather should complement other indicators.
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The success of this initiative will make an important contribution to understand whether
countries are emerging from the crisis stronger and more efficient.
Conclusions
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