Civil service reform in developing countries: why is it going badly

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Civil service reform in developing countries
why is it going badly?

• Geoffrey Shepherd
• Joint World Bank European Commission
• Core Course on Governance
• Tuesday, April 20, 2004

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Outline of the argument

• The merit model (the universal model) promotes
  competence and protects the civil service from
  political interference.
  
• But it largely fails in developing countries
• Civil services are large, underpaid, and
  politicized and service delivery is inefficient
  and corrupt.
  
• The evidence of history shows the conditions
  under which merit reforms come about and
  subsequently develop.
  
• Merit-based reform in developing countries is
  stymied by politics and by large government.
  
• What can be done?
• We need to bring politics back into the debate.
• We should look for selective reform opportunities
  that are politically realistic.
  
• Brazil (Appendix 1) and Bolivia (Appendix 2) a
  working system and a proposal.

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The universal model of merit-based reform the
basics

• The merit model is one of several options for
  organizing the civil service, including patronage
  models and New Public Management options (Table
  1).
• The merit model the basics
• Entrance to the service based on competitive
  exams.
  
• Protection of civil servants from arbitrary
  removal.
  
• Protection of their political neutrality.
• Policing of these rules by an independent body
  (not always).

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The universal model of merit-based reform other
features

• Common features
• Positions are established centrally and
  classified according to rank.
  
• Bureaucrats are paid a salary and pension that is
  determined by their rank, rather than the work
  that they do.
  
• There are often impediments to external lateral
  entry at senior grades.
  
• There are few points of entry, with most entering
  at a young age and most senior positions filled
  by promotion.
  
• Divergent features
• The amount and depth of political, as opposed to
  merit, appointments some countries (the US,
  Brazil) allow large numbers of more senior
  political appointments.
• Profession-based (e.g. U.S.) versus
  organizational-based (e.g. France) civil
  services.
  
• Segmented (e.g. France, Brazil, UK) versus
  unified (e.g. Japan) civil services.

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Merit reform in developing countries

• Merit principles are often written into
  constitutions and laws.
  
• But these principles are not respected in
  practice.
  
• Civil-service reform has proven among the most
  difficult of developmental reforms to sustain,
  and there is little evidence that nationally- or
  donor-inspired reform efforts have met with much
  success.
• The example of World Bank projects the Banks
  own analyses have admitted that success has been
  limited (c.f. the OED evidence lack of capacity
  building and institutional reform).
• Brazil and Chile Latin Americas only
  exceptions?

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Civil-service reform six propositions from
history (1)

• Patronage systems are not a universal evil they
  fund political competition, promote
  accountability
  
• Bolivia and Honduras in the 20th century.
• the US in the early 19th Century.
• Merit reforms only come to fruition when they are
  moved by powerful external forces.
  
• Overwhelming political demands for more
  efficiency and less corruption in the US and UK
  in the 19th Century democratization and
  industrialization.
• The French revolution and the demand for
  protection against the state in the 19th Century
  legitimizing non-democratic government.
  
• In spite of different paths and conditions,
  reforms have closely converged on a similar,
  durable merit model.
  
• Helping solve the problem of credible commitment
  in advanced pluralist societies.
  

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Civil-service reform six propositions from
history (2)

• Reforms took a long time to be fully implemented.
  
  
• 70 years in the UK, 40 years in the US, 70 years
  in Brazil (so far).
  
• Merit reforms have also made the civil service
  into a powerful public-sector institution and
  interest group in its own right.
  
• Merit reforms solve old problems and create new
  ones
  
• They alleviate problems of political interference
  and of hierarchical control.
  
• But they create incentives that reduce the
  efficiency and political responsiveness of civil
  servants.
  
• As a result, there is a continuing tension
  between merit-based principles and NPM-style
  principles that lead to greater flexibility, but
  can also open the way to greater politicization.

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Why reform is difficult in developing countries
three propositions (1)

• I. New interests with the need and the power
  to promote a more efficient and honest public
  administration are weak in many countries.
  
• Some countries are characterized by spoils
  systems that provide the currency of political
  competition
  
• 19th-century US, 20th century Bolivia and
  Honduras).
  
• Others are characterized by the continuing vigor
  of traditional systems (kinship and loyalty ties,
  for instance) which frustrate reform movements
  
• Tribal/kinship loyalties in Africa and Middle
  East.
  
• Private patron-client loyalties in Latin America.

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Why reform is difficult in developing countries
three propositions (2)

• II. Governments are significantly larger than
  in the past.
  
• This is the result of ideological trends, as well
  as the improved capacity of populations to
  articulate political demands
  
• The statist development model.
• The government as employer-of-last-resort (the
  welfare state).
  
• This has led to large civil services, often
  characterized by public welfare employment,
  whereby public jobs are provided to a large part
  of the population as a means of ensuring their
  political support.
• It has proven very difficult to reduce such high
  levels of employment, while these have led to
  fiscal crisis and personnel performance
  problems.
• III. Many of these large civil services have
  emerged as strong interest groups capable of
  challenging reform efforts.

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What next? 1. Changing the mindset

• Recognize reform failures more openly.
• Develop a more balanced view of the relative
  advantages and disadvantages of merit and
  patronage systems.
  
• Incorporate politics into analysis and
  solutions.
  
• Patronage funds politics and promotes
  responsiveness.
  
• Mix patronage and merit.
• Avoid the merit trap half-finished merit
  reforms create a political and fiscal burden, but
  do little for performance.
  
• Rethink the issue of lifetime tenure for civil
  servants
  
• Tenure for senior (not junior), core (not
  periphery) appointments?
  
• Assemble better evidence history, politics, and
  contemporary cases of successful reform.

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What next? 2. Alternative reform approaches
outside the public administration

• The long-term solution economic and political
  development.
  
• Treat excess employment (public welfare
  employment) as a social-security problem?
  
• Move redundant civil servants into a holding
  pool?
  
• Find alternative methods of funding politics?
• Support to developing political parties?
• Campaign-financing reform?

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What next? 3. Selective reform approaches inside
the public administration

• Hybrid senior appointments enlarge the scope for
  patronage employment at senior levels, but apply
  merit rules and controls.
  
• Brazil as an example.
• Selectivity
• Agency graduation key agencies graduate within
  a universal set of merit and modernization
  rules.
  
• Enclaves agency-by-agency reforms with
  tailor-made merit and modernization rules (WDR
  2004).
  
• Segmenting the civil service (differentiated
  careers, core vs. periphery).

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Brazils federal civil service some lessons from
success
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Brazil mixing civil service and political
appointments

• The Career system
• Has rigorous merit entry, strong esprit de corps.
  
  
• Favors elite careers in key ministries. (e.g.
  tax administration, public finances, audit,
  trade).
  
• Has weak performance/efficiency incentives.
• Political appointments (DAS)
• System has legislated ceiling on numbers and
  covers six levels below Minister.
  
• Ministries propose and Presidency vets.
• No tenure, no pension.
• Permanent civil servants can become DAS, then
  return to old jobs.
  
• At top 3 levels half of DAS are civil service,
  half are private.
  
• Patronage politics at the Federal level is
  limited.

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Brazilian reform a long and painful process

• Civil-service regime created as a rigid Weberian
  system in 1930s.
  
• Dilution of rigid hierarchy from 1967 onwards
  (military government) in favor of
  decentralization to autonomous agencies for
  greater managerial flexibility.
• This led to perceived abuses, loss of central
  control.
  
• Hence new rigidities in 1988 Constitution (return
  to civilian rule)
  
• Extension of tenure and pension obligations.
• 1995 onwards Cardoso government rebuilds the
  civil service
  
• selective development of specific careers
• measures to ensure a strong regime of political
  appointments.
  
• 1995-98 Cardoso governments attempt to
  introduce executive agencies
  
• Proposal to remove tenure from public employees
  in Executive Agencies.
  
• Limited results due to perceptions of loss of
  central fiscal control, public unions resistance
  to proposed changes in labor regime.

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Brazil some conclusions

• Brazil is well served today by competent, honest,
  and accountable public servants.
  
• Professionalization (capacity building
  attaining political independence) has been a long
  process (70 years), and is still not yet over.
  
• Brazil has a large reservoir of capable people
• Changing rules was not enough - continuity and
  competence are important
  
• 1930s to 1980s the authoritarian developmental
  state pushed professionalization.
  
• Since 1988 growth of popular demand for honest
  and effective civil servants.
  
• The importance of competent public organizations.
  
  
• A sensible approach to mixing merit and
  politics
  
• A hybrid and deep system of political
  appointments.
  
• Selective approach to Careers.
• There is a constant, never-fully-resolved tension
  of political protection versus efficiency.
  
• The bad rigidities (the merit trap) tenure
  combined with the pay/pension trap.
  
• The more bearable rigidities weak incentives for
  efficiency.

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Table 1 Comparing Civil-Service Systems
Management Principles
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Table 2 Comparing Civil-Service Systems the
External Environment