Kenya: Consultative Group Meeting Joint Donor Statement on Public Service Reform. Introduction

Transcription

1 Kenya: Consultative Group Meeting 2003 Joint Donor Statement on Public Service Reform Introduction An effective public service is essential in providing the right kind of enabling environment to support private sector growth, and to efficiently provide key public services that are central to poverty reduction. This statement covers donor views on the challenge of public service reform, on progress that has been made so far and on the main priorities going forward. Recent Developments There have been a number of initiatives in public service reform in recent years. In 1999 in particular the previous Government adopted a Strategic Plan for Public Sector Reform, that was reinforced at the beginning of 2002 with the launching of the Strategy for Performance Improvement in the Public Service. The main focus of both these initiatives was to improve service delivery through carefully designed improvements in productivity. These were based especially on the identification of core functions and ministerial and staff rationalization to both allow a better balance between wage expenditure and operations and maintenance expenditure within a constrained budget, while allowing some room for improvements in staff incentives. These programs recorded some short term improvements. The number of separate Ministries was reduced from 27 to 15 at the end of the 1990s. Civil service retrenchment in 2000/01 reduced the size of the public service by 23,500 staff. Nevertheless fundamental problems remain in the contribution that the public service makes to the Kenyan economy. In practice past reforms did not address the serious difficulties caused by years of political interference in the day to day running of the public service ( including through appointments based on patronage). The share of wages in the resources available for service provision remains extremely high. Development Partners welcome the attention that the Government s Economic Recovery Strategy for Wealth and Employment Creation ( ERSWEC), gives to the problems of the public service. The ERSWEC recognizes that improving public administration is essential to economic recovery. It commits the Government to accelerate public service reform and to create a leaner, efficient, motivated and more productive public service that concentrates public finance and resources on the delivery of core government services. In the May 2003 Letter of Development Policy the Government in this context commits to prepare a strategy for civil service right sizing and pay reform by October An

2 important step in public service reform was taken with the passage into law of the Public Officer Ethics Act on 2 May Key Challenges The Government s public service reform program must quickly address a number of major challenges. The most important include: The bloated size of the public service and the continuing high level of expenditure on wages and salaries. Notwithstanding the reduction in civil service employment in recent years, if civil service employment is expressed as a percentage of the national population, the civil service in Kenya is still about twice the size of that in other Sub-Saharan African countries. The total Government wage bill (including teachers and the police) revealed explicitly in the budget has grown steadily in recent years to now exceed 9% of GDP. This is above 30% of total expenditure and a significantly higher proportion of GDP than the average for Sub-Saharan Africa as a whole (6% approx). In Tanzania and Uganda the equivalent figures (2003) are only 4.1% and 5.7% of GDP respectively. Government wage payments in Kenya are significantly higher than the explicitly budgeted figure if the wages included in subventions to organizations such as the public universities and agricultural corporations are also included. The absence of any clear policy on public service pay and the continuation of major distortions in pay structures. The savings from retrenchment in 2000/01 have been ploughed back into a combination of across the board increases, provided mainly through housing allowances, and significant pay increases for selected groups, including teachers. These adjustments have been largely ad hoc and not based on a clear assessment of labor market considerations including problems in recruitment and retention. Allowances for training and honoria and other personnel costs contribute a disproportionate amount to the wage bill, and have increased significantly over the last year. The legacy of a public service in which recruitment and promotion in the past has not been based on merit, and in which periodic recruitment freezes have created a relatively old work force. A public service culture that focuses on the rewards individuals obtain from being public servants rather than the priority of performance and service provision. Included here is in the continuing problem of corruption. But there are other manifestations such as the apparently large amounts of time middle and senior management in some Ministries devote to travel and workshops.

3 Outdated, labor intensive, working practices and poor information systems. Priority Actions As the Government defines its strategy for public service reform in the context of the objectives of the ERSWEC, development partners would recommend a focus on the following main priorities: An early and clear policy decision on the size of public service that is affordable in the context of the targets set in the ERSWEC to contain public service wages below 8.5% of GDP by 2005/06 and to 7.2% of GDP by 2007/08. This decision should be based on a realistic macroeconomic framework as agreed with the IMF. It will include an explicit choice about the amount of resources (within the affordable envelope) that will be set aside for improved incentives. It will also include an explicit choice about the extent to which other policy commitments, such as the planned expansion of the police force, can be implemented within the period covered by the ERSWEC. Indicators of the success of public service reform should be developed, in addition to the simple wage bill share of GDP, to fully capture the objectives of restructuring overall public expenditure, while providing for some improvement in incentives Urgent review of the program of Ministerial rationalization and the definition of core functions, specifically within the targets set for the overall size of the public service. This review will need to cover the challenge for rationalization that has been created by the recent expansion of the number of Ministries to 23 (reversing the trend at the end of the 1990s). It should focus on identifying areas for rightsizing, including commercialization or external contracting. It should be completed within an tight timetable Design and implementation of a further program of rightsizing that is consistent with the targets set for the overall size of the public service. Importantly this will need to allow scope for fresh recruitment, for example to address the problem of the public service age profile, implying more ambitious cuts in non core areas than suggested just by the headline numbers. Program design should specifically address the issue of public opinion, avoiding the political difficulties that the last retrenchment program in 2000/01 encountered. In this context public relations campaigns should focus on the benefits for service delivery that will follow, within a constrained budget, from a smaller but more productive public service (e.g. as a result of more expenditure on operations and maintenance and on investment).

4 Establishment of a coherent and viable pay policy for the public service focused on both internal and external labor market considerations and on considerations of affordability. Development partners have noted the Government s intention to create a Permanent Public Sector Emoluments Board for the purposes of defining and implementing public sector pay policy. Experience from elsewhere suggests that the framework within which pay review organizations of this type operate is central to their effectiveness. Private sector participation in the Emoluments Board is essential as is the establishment of good analytical capacity to support the Board s work. The Board terms of reference should not give inappropriate weight to pay relativities with the private sector. Urgent establishment of clearly merit based systems of recruitment and promotion based on transparency and on performance appraisal. Effective implementation of the Public Officer Ethics Act and the codes of conduct for which it provides. This is important in establishing a public service culture better focused on performance. This objective will also require the transparent exercise of disciplinary powers and the prosecution of corruption. Investment in improved information and management systems. Central here are improvements in information on employment and pay. The Government s plans to establish a bespoke integrated pay and personnel database for this purpose may require review in the light of the poor performance of this project. Development partners have noted that the Government has commenced service delivery surveys as a means of monitoring and improving performance. It commends the extension of this process, but importantly recommends that this should be based on best practice and the most up to date analytical tools to ensure good results. Development and effective implementation of an efficient training and development policy for the public service. This should involve a review of training needs in the light of the demands of core function delivery and new ways of working. It will be important to ensure efficient, cost effective modes of delivery that offer opportunities fro sustainable continuous performance development.

5 Donor Harmonization Development partners working in the area of public service reform currently meet under the auspices of a technical coordination group to share information and ideas. On a few occasions this group has held joint meetings with Government officials. As the Government articulates its public service reform program to address the issues discussed above there will be scope to develop the coordination group as a focus for dialogue and coordinated financing.