Decentralization, Resource Availability, and Coordination Among OECD Countries

DC was measured by one item indicating the extent of the delegation of HRM practices to line ministries in the central government. Such a process is indicative of decentralization processes in other aspects as well, because the control over HR is a main tool for central authorities or headquarter ministries to exert power and advance their policies. The delegation of authority in this area often occurs after other decentralization processes have taken place (Pollitt and Bouckaert 2010). Therefore, the delegation of HRM practices to line ministries in the central government can be a good measure of decentralization.

Data were collected through the 2010 OECD Survey on Strategic Human Resources Management (OECD 2011). Respondents were senior officials in the central government’s HRM departments, and the information referred to HRM practices in the central government. The index is composed of the following variables: the existence of a central HRM body and the role of line ministries in determining the number and types of posts within organizations; the allocation of the budget between payroll and other expenses; staff compensation levels; position classification, recruitment, and dismissals; and conditions of employment. The values of this variable are on a percentage scale. The OECD report (2011) indicates that most OECD member countries have increased the role of line ministries in HRM decision making. However, the extent of their involvement varies across countries, and sometimes even across government bodies within the same country. Thus, in Sweden (0.83), Australia (0.8), and New Zealand (0.78), which scored the highest, ministries have more flexibility to identify their staffing needs, recruit staff, and determine compensation levels and other conditions of employment. In comparison, Ireland (0.45), Turkey (0.47), and Israel (0.49) tend to have more centralized HRM models. There are also variations between time periods. While in 2005 the average index for 26 OECD countries was 0.45, in 2010 it grew to 0.65 among 33 OECD countries. Furthermore, in Italy and France this index increased from 0.33 and 0.31, respectively, in 2005 to 0.62 and 0.67 in 2010, respectively. These are clearly significant changes that reflect decentralization reforms.

RA was measured using the production costs in the general government as a percentage of GDP in 2009. We suggest that this measure is a good indication of the resources that were available to the government at that time. The concept and methodology of production costs build on the existing classification of public expenditures in the SNA (OECD 2011). The OECD report (2011) indicates that in 2009, the proportion of the economy devoted to producing government services and goods represented on average almost a quarter of the GDP, varying significantly among OECD member countries. For example, production costs of government services and goods as a percentage of GDP in Denmark are roughly three times higher than in Mexico, reflecting, in part, the different roles of government in these countries. Total production costs as a share of GDP increased in all but five OECD member countries (Israel, Austria, the Slovak Republic, Australia, and Poland) between 2000 and 2009. This increase was primarily driven by increases in the costs of goods and services produced by corporations and nonprofit providers (+1.5 percentage points) and to a lesser extent by increases in compensation costs for government employees (+0.8 percentage points). These increases might indicate that governments were providing more goods and services and/or that input costs increased.

Governments used a mix of their own employees, capital, and outside contractors (nonprofit institutions or private sector entities) to produce goods and services. On average among member countries, production by the governments’ own employees was still somewhat more prevalent than outsourcing in 2009: compensation of employees accounted for 49% of the cost of producing goods and services, compared to 43% paid to nongovernmental actors for intermediate goods and services or to deliver services directly to households. Consumption of fixed capital represented the remaining 9% of total production costs.

COOR was measured by the extent to which governments use simplification strategies, based on the responses of OECD delegates and central government officials to the OECD Regulatory Management Systems’ Indicators Survey conducted in 2008. The composite index examines the relative emphasis by central governments on strategies designed to reduce administrative burdens at the highest levels (OECD 2009). Simplification strategies increase the coordination between the different sectors and players operating in the economic field. Nevertheless, to be successful they must also engage in significant coordination between government ministries and public organizations. Therefore, when a country invests efforts in simplification strategies, it is actually investing in increasing the coordination between organizations and the units within the public sector, and between the public sector and other sectors and players.

The OECD report (2009) indicates that many countries have set targets for the reduction of administrative burdens to drive the reform of business processes within government, with performance monitored by an independent oversight body. Among the most common strategies used to meet these goals are the use of information and communication technologies and electronic recordkeeping and reporting, such as allowing businesses and citizens to file and pay taxes online. In 2008, many countries as well as the European Union were heavily engaged in trying to simplify their administrative programs. Most countries scored very high on that index, with 12 countries out of 30 achieving the maximum value (1). Furthermore, for most countries there has been a significant increase from 1998 to 2005 and 2008 in their efforts to simplify regulations and procedures. The average value of that index for 30 OECD countries increased from 0.5 in 1998 to 0.68 in 2005 and 0.82 in 2008.

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