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ON THE RIGHT: Strong public sector helps growth


ALISTER SMITH

ON THE RIGHT: Strong public sector helps growth

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PUBLIC SERVICE REFORM in my view should be on the agenda for most governments, not just in the Caribbean. There are several reasons for this. First, public sectors have a tendency to grow too large and become entrenched.

They should not be viewed as a means of creating jobs, they need to be reduced to a size that a country could sustain without having to continually run deficits and increased debt to protect jobs.

Second, many activities being undertaken by governments can be more efficiently undertaken in the private sector. This is particularly the case with state-owned enterprises, which effectively squeeze out the private sector.

Conditions need to be right to privatise state-owned enterprises and governments rightly are wary of having to take on additional costs to turn them over to the private sector but this should be a longer term objective.

Third, with new information and communication technologies and lean management techniques, it is possible nowadays to achieve considerable efficiencies in back office and administrative functions while improving productivity.

Fourth, connected with information and communication technologies it may be possible to reduce the per capita burden of public service by splitting some functions across the CARICOM region and reducing duplication.

Some functions could perhaps be consolidated and provided on a fee for service basis by one jurisdiction to other jurisdictions, for example. That is now possible with technology.

Finally, public sector reform is essential for freeing up fiscal space to permit critical growth, creating infrastructure and investment, not just to reduce debt levels.

The public sector should therefore be lean, modern and efficient with an orientation towards creating a better business environment for domestic and foreign private sectors.

There is a tendency over time, for example, for departments to want to have their own data centres, and you end up with a plethora of data centres, you end up with competing information technology systems, email networks and so on, which over time become harder and harder to manage from the centre of government.

And consolidation not only cuts costs it also can improve productivity. It’s not easy, and it requires very, very careful management to make them work well.

But the technology has improved by leaps and bounds over the last 20 years and there are greater opportunities for the provision of far more government services.

Make changes in a very humane way, in a way where you take advantage of the fact that there is more opportunity for people who want to leave to take advantage of early departure and to capitalise on that in these types of reforms.

It’s very important at the same time to ensure that the right people stay and that you maintain productivity and you maintain morale.

So a lot of consultation is required, a lot of discussion within public sector. It should not be done abruptly, it should be done very carefully and it should be done with a view to the long-term health of the public service that remains.

Alister Smith is the World Bank’s executive director responsible for the Caribbean and Canada.

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