What civil service pay and employment reforms have been implemented in developing countries, and what have been the outcomes? What lessons can be learned for future civil service reforms? This article from the World Bank provides an overview of World Bank experience in support of such reforms in various countries and assesses the progress made.
The main reason for the inclusion of civil service reform in the World Bank structural adjustment operations was the recognition of the heavy fiscal burden posed by large government wage bills. Another rationale was the low effectiveness and efficiency of government administrations, often reflected in the breakdown of basic public functions. The magnitude and intensity of fiscal problems meant that short-term cost containment steps were given the highest priority in these reforms.
The World Bank has supported a range of reform approaches. The record suggests that civil service reforms to date have been insufficiently ambitious in scope to bring about the degree of change that is needed. Reductions in wage bills and employment have been of a small or negligible magnitude. The specific lessons from World Bank experience are:
- Middle-range employment reduction mechanisms such as voluntary departure and early retirement have not yet proved effective in reducing employment to any significant degree.
- The main contribution of technical analysis and support activities has been the symbolic assurance that the reform process has been undertaken with fair and equitable intentions.
- From a financial and technical perspective, retraining, redeployment, credit and public works programmes for redundant employees have had a limited impact and have been difficult to administer.
- Salary supplement methods do not provide enduring answers to the fundamental problems of civil service incentives and ultimately undermine the likelihood of devising a durable solution.
- Attempts to correct distortions in the structure of pay and employment through the decompression of wages and the rationalisation of the remuneration system have had limited success.
Meaningful change in civil services is going to require more forceful reforms. The lack of regime destabilisation and social upheaval as a result of reforms so far suggests that regimes can (for political reasons) and should (for economic reasons) make deeper cuts. The policy implications are:
- The relatively mild consequences of the minimal reforms undertaken so far should influence governments’ perceptions of political risk and encourage them to take bolder actions in the future.
- Considerably more emphasis will have to be given to longer-term management issues if sustained improvement in government administrative capacity is to take place.
- More attention needs to be paid to devising a coherent, overarching strategy for civil service reform, and detailing the set of tactics by which the strategic goals will be achieved.
- Rather than retreating from what might seem like a difficult set of activities, donors should work to improve civil service reform programmes through a trial-and-error process.
