O'Neil Grant, GUEST COLUMNIST
The Jamaican public sector has long being held up as the indicator of the efficiency of the labour force, and recent articles on the auditor general's reports and from columnists seem to confirm in some people's minds that, indeed, the public sector is inefficient.
There are state entities that are inefficient and whose workers will underperform, but inefficiency also dogs the private sector.
The common feature underlying inefficiency in both sectors is the inability to control and account for expenditure. Controlling expenditure is not about cutting cost. It has to do with ensuring that money that is spent is done for the intended purpose and that any overexpenditure incurred can be justified.
Now, the auditor general, supported by her team (all civil servants), has unearthed evidence that suggests that an excessive amount is being spent on overtime, in breach of the Financial Administration and Audit Act & Instructions, The Staff Orders for the Public Service, and the relevant circulars issued by the finance ministry to support and strengthen the prior-mentioned documents. These are akin to policy and procedure manuals.
The amount being paid is not the breach. The breach apparently lies in the findings of the auditor general that the necessary approvals were not given for the payments. The work done during the overtime may have been quite necessary.
HOW DID iT HAPPEN?
Unauthorised payments in any entity, public or private, are a very serious breach and will undermine the ability of the entity to meet its recurrent obligations. One question that readily comes to my mind is, how did this happen in the first place? Are the managers who authorised these payments keen on the contents of their guiding policies and procedures?
Any worker who takes it on himself to work late is not, or ought not, to be paid overtime. Therefore, by deduction, all overtime work must be approved, and in order to gain that approval, a process of submission and justification must be followed before any work can start and all payments made for overtime must be vetted by internal audit. So, clearly, there must be a breakdown in the system of internal controls for unapproved overtime to be incurred.
As a trained accountant, auditor and financial analyst in the public sector, I was taught that while controls are important, they must not be allowed to proliferate, as a proliferation of controls will compromise the system of controls. So instead of having more individual controls, we strive to have a strong system of checks and balances to support corporate governance. This corporate governance is about accountability and responsibility.
The problems that we are seeing in the Jamaican labour force, which is manifest in the public sector due to its captive customer base, is a lack of good, strong and fearless management. I believe there is no such thing as a poor worker; it is the inability of management to motivate staff and to enforce the systems of controls that allows breaches to occur.
Weak managers will compromise the internal control system because they fail to act on the recommend-ations they have been given. Or could it be that the very structure of the organisation breeds inefficiency? Therefore, a system of checks and balances cannot be implemented and so we have a proliferation of internal controls that are not being followed.
There are very efficient entities in the public sector, and the various reform programmes engaged in since the 1980s were supposed to create more of these and eliminate the 'Efficiency Silos'. We have embarked on another programme to boost the cost-effectiveness of the delivery of public goods and services. This programme seeks to ensure that the administrative arm of government carries out only those functions that it is competent to do, while eliminating waste and duplication and avoiding nugatory expenditure.
However, therein lies the problem. We have been here before. Administrative Reform Programmes I& II in the '80s, The Transformation Programme of the 1990s and early 2000s, and the now rationalisation of the sector. The inherent weakness in all of these programmes was the inability to stick to the path and institutionalise changes.
Now we hear talk of a bloated and inefficient public sector and calls to cut, without proper analysis. This is as a result of the economic crisis and the relative size of the wage bill, but I contend that the size of the wage bill is not the cause of the problem. It's our inability to grow the economy, with various sources citing an average growth rate of less than two per cent since Independence. If we had grown our economy at a rate of, say, three per cent, we would not be talking about the relative size of the wage bill.
The relative size of the wage bill is also seen to be a problem because we spend roughly 60 cents out of every dollar earned on the debt. The issue of the debt was not created by the public sector, but by the decision to absorb the financial crisis meltdown of the 1990s.
The size of the public sector is also said to be a problem at under 10 per cent of the active labour force, or approximately 125,000, with approximately 65 per cent employed in the education, health and security subsectors combined, leaving the other numbers spread across the other ministries, statutory organisations, and state-owned entities.
The Rationalisation Plan has indicated that one of the outcomes of the plan is the reduction of the size of the sector by approximately 10,000 posts through abolitions, contracting out, mergers and privatisation. Also, there should be a reduction in the size by another 15,000-20,000 through natural attrition, coupled with a hiring freeze in the public sector since 2009. So we see the sector about to shrink by about 25,000-30,000. This reduction should translate to a natural reduction in the wage bill of between $29 billion and $35 billion per annum.
So if we see that the rules and regulations are not the problem, the number of workers is not the problem, and the wage bill is not the problem, it must be the allocation and use of resources - which falls squarely at the feet of management in the entire governance machinery.
O'Neil Grant is president of the Jamaica Civil Service Association. Email feedback to email@example.com and firstname.lastname@example.org.