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Why Civil Service Reforms Do Not Work

Listed author(s):
  • Nadeem Ul Haque

    (Pakistan Institute of Development Economics, Islamabad.)

Registered author(s):

    Public sector reform (PSR) efforts in developing countries have been less than successful in the past. Motivated by budgetary considerations, they have focused on downsizing and procedural changes without radically altering the outmoded incentive system, which, in many countries, is now characterised by declining real wages, wage compression, and a non-merit promotion and reward system. Using results from the incentives literature, this paper argues that, for a reform effort to succeed, public sector human resource management (HRM) will have to be reformed at an early stage to establish productivity incentives in the public sector. These will include introducing substantial autonomy to organisations in their work, incentive schemes, and HRM along the lines of the now well-accepted concept of central bank independence. Past PSR efforts have also attempted to conduct a unified reform effort led centrally by the ministry of finance. A continuous process like PSR—spread out over a considerable period and involving many different people and organisations—might need to build in decentralisation, local leadership and local incentives, and HRM. PSR must be based on the recognition that people are at the heart of public service. As a result, managing human resources must be at the centre of any effort. The people who are at the center of this change can either be its architects and beneficiaries or its losers and therefore opponents of change. Design and implementation of reforms must, therefore, be sensitive to this important fact. It is essential that the reform is led by individuals at the organisation level who understand the vision as well as process of change. Governments must empower such leadership to guide, initiate, innovate, and manage change.

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    Paper provided by Pakistan Institute of Development Economics in its series PIDE-Working Papers with number 2007:24.

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    Length: 32 pages
    Date of creation: 2007
    Handle: RePEc:pid:wpaper:2007:24
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    1. Nadeem U. Haque & Se-Jik Kim, 1995. "“Human Capital Flight”: Impact of Migration on Income and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 577-607, September.
    2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    3. Ul Haque, Nadeem & Aziz, Jahangir, 1999. "The Quality of Governance: 'Second-Generation' Civil Service Reform in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(0), pages 68-106, December.
    4. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-715, September.
    5. Acemoglu, Daron, 1995. "Reward structures and the allocation of talent," European Economic Review, Elsevier, vol. 39(1), pages 17-33, January.
    6. A. Premchand, 1996. "Erosion of Expenditure Management System; An Unintended Consequence of Donor Approaches," IMF Working Papers 96/102, International Monetary Fund.
    7. Nadeem Ul Haque & Mahmood Hasan Khan, 1998. "The Economics Profession in Pakistan: A Historical Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 431-452.
    8. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    9. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 199-217.
    10. International Monetary Fund, 1998. "Public Sector Efficiency and Fiscal Austerity," IMF Working Papers 98/56, International Monetary Fund.
    11. Robert J. Flanagan, 1995. "Wage Structure in the Transition of the Czech Economy," IMF Working Papers 95/36, International Monetary Fund.
    12. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
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