Window for public sector reform will not last forever (Irish News)

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If the rumours are to be believed, a voluntary redundancy scheme is on its way for the Northern Ireland Public Service as part of an urgent cost reduction exercise.  This follows the recent well-publicised layoffs of contract staff. It’s a familiar story, and very much in keeping with the trend across Europe since 2007 when public budget deficits began to grow out of control as a result of banking and financial crises.  Experience from elsewhere suggests that early cutback measures tend to err on the side of optimism. For public servants weighing up their options, it may be a case of jump now or be pushed later.

 

When faced with the prospect of protracted industrial relations disputes arising from pay cuts, most executives will seek to reduce the public sector paybill by means of a reduction in headcount.  In times of crisis this is usually effected by means of incentivised retirement, voluntary redundancy, career-break and hiring freeze schemes. But if a redundancy scheme is to be implemented, important choices will have to be made about who is to be given the opportunity to leave – those closest to retirement age are often first to go but they take with them invaluable experience – not least as to how similar crises have been managed in the past.  As the pace of departures quickens general morale can dip, resulting in disproportionate reductions in standards and levels of service. Will the process be centrally managed and open to all, or targeted at certain sectors? And will local public service managers be given discretion in deciding who can and cannot apply, taking the opportunity to shed the underperformers?

 

Some lessons from across the border are worth recounting. The first (of three) root-and-branch expenditure review commissioned by the Irish government in 2008 in the immediate aftermath of the banking crisis decreed that €5.3 billion in cuts needed to be made, including reductions in public service numbers of about 17,000 or 5%.  These recommendations by economist Colm McCarthy’s ‘Bord Snip Nua’ (he had also been involved in the first ‘Bord Snip’ 1987) were considered alarmist when published in 2009. Five years on and the accumulated budgetary reductions to date in the South are over €30 billion, and public service numbers reduced by over 10%. To the amazement of outside observers, this has been achieved without the compulsory layoffs seen elsewhere (though take-home pay has been cut by over 20% for some grades) or mass industrial unrest.

 

The reductions have been achieved by means of a recruitment embargo (in place since 2008), ‘natural wastage’ arising from those leaving at retirement age, and over 9,000 staff who left the public service in the weeks approaching the end of February 2012 (when new and inferior pension and retirement arrangements came into effect).  This has created an unusual public service demographic, with few public servants under 30 years of age or over 60, and the average age of Irish civil servants now standing at 48.  Mounting concerns over unfilled positions in key state organisations have been allayed somewhat by the announcement in this week’s budget that recruitment to the Irish civil service is to start again in 2015.

 

But reducing numbers alone is not enough. Creating a more productive public service requires calls for a reform plan that is understood by all in the service and which has clear objectives and timelines. The other major lesson from across the border is that reform dictated from the centre, and without cost targets attached, is likely to be doomed from the outset. In the course the last twenty years a succession of triennial agreements were struck with public service unions seeking to reform various elements of the Irish public service. These have been largely unsuccessful as it proved impossible to establish what reforms and savings had actually occurred, and the gap between reform ideals and the experience of public servants dealing with the public was too great. Serious reform calls for frontline leadership in each public sector organization – someone to take ownership of the process. An existing reform network across the senior levels of the Northern Ireland Civil Service should provide a good platform for this, but it alone is insufficient. The history of civil service-led reforms internationally does not breed confidence.  There must be a mechanism at senior political level to consistently drive reform, to have enough clout to overcome blockages anywhere in the system and, vitally, to engage with unions on the way forward.

 

Addressing public service performance is in everybody’s interest. The alternative is a series of ad hoc and counter-productive budgetary cuts that will create uncertainty, undermine public service morale, damage industrial relations, and ultimately reduce the quality of public services.  There is a strong rationale for ‘not letting a good crisis go to waste’ and using the opportunity to do things that were previously impossible, but the path of sustainable reform is longer than the 3-5 year cycle of government. Tangible benefits in how citizens experience public services are on a different trajectory to the pressures of the ballot box.  The current financial difficulties at Stormont combined with wider questions about the current model of devolution suggest that the window of opportunity for taking control of the future shape and size of the public service will not last indefinitely.