Pay and employment reform has been adopted, usually within a wider programme of microeconomic reform, throughout the world. Has it succeeded in meeting its targets, and what are the consequences of pay and employment reform? A paper published by the United Nations Research Institute for Social Development (UNRISD) examines these and other questions.
Written in preparation for the UN General Assembly Special Session, Geneva 2000, ‘Taking Responsibility for Social Development’, the paper examines the background and analyses how they have been manifested. It uses a wide variety of examples from the developing world and the so-called transitional countries of Central and Eastern Europe, and brings to bear comparative material from the reform experience of the Organisation of Economic Development and Cooperation (OECD) countries.
Pay and employment reform, also known as civil service reform, is one of the most important human resource initiatives taken by developing country governments in recent years. It refers in the wider sense to the ‘Washington model’ of employment reform in which the private sector is intended to be the engine of economic growth.
- The main donor involved in the reform has been the World Bank. Between 1981-1991 44 developing countries received assistance with civil service reform from the World Bank.
- Reform has usually had the aim of saving money. It has sometimes, however, been very expensive (meeting the cost of voluntary redundancy, for example).
- It is not mentioned explicitly in the Copenhagen Declaration or Programme of Action. It is an implication of the Copenhagen documents that the impact of reform on poverty should be examined.
- Early employment reform policies took little account of their potential for causing hardship but more recently some governments have addressed that possibility.
- Actual fiscal benefits of reforms are likely to be experienced in the medium to long-term at best.
The success of reform has depended on the degree of political support for it, and also on social factors such as the popularity of public employment. It is very difficult to make generalisations about its success as this varies from region to region and between countries. On the whole, however, the number of civil service employees has levelled off.
- There is evidence of a negative impact of reforms on women. Gender bias in reform in developing countries requires more study.
- Similarly there is evidence of a negative regional and ethnic bias. This also requires more study.
- The differential impact of reform has sometimes been discounted, even where it has been observed.
- Some governments have endeavoured to offset the effects of redundancies and employment reform but there are not many examples of governments who have successfully harnessed reform to poverty alleviation.
- A strategic approach to reform in which it is carried out incrementally and on a case-by-case basis is advocated.
- The pressure to extend the private sector at the expense of the public sector is likely to continue in the future.
