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The Challenge of Civil Service in MENA

Issues of civil service and administrative reform have been pursued by a large number of MENA countries for decades.  As noted in the introduction, the field is a large one that covers how government is structured and organized; the size and composition of its staff and the wage bill; issues of human resource management and capacity; and a variety of additional “sub-topics” within these broader themes. 

 

This note is intended to briefly summarize some “lessons” that can be drawn from MENA’s experience with public sector reform to date.  It draws upon the Bank’s experience in working with client governments on these issues in a variety of countries stretching from Morocco to Yemen.  It is admittedly more illustrative than comprehensive, and it is intended to spark a broader debate among knowledgeable observers  both within and outside of MENA governments regarding what is working, what isn’t, and why.  In the interests of being provocative, it is laid out not by topic and sub-theme, but by what type of reforms have tended to work across MENA countries; what type have tended to be context specific and may or may not work in various settings; and what types have typically struggled and would be difficult to implement in most countries throughout the region.

The Successes

Turning first to issues of pay and employment, countries throughout the globe have employed a variety of strategies for reducing the fiscal burden of the wage bill, ranging in increasing severity from reducing overtime pay to hiring freezes to furloughs and unpaid vacations to voluntary retirement and eventually targeted redundancies.  With the debatable exception of the West Bank & Gaza, no MENA countries have utilized targeted redundancies, and only Morocco has opted for voluntary retirement (about which more will be said below).  However, several have been able to utilize hiring freezes.  The virtues of such an approach are that they are typically relatively easy and straightforward to implement.  They do not harm the interests of existing employees and, as such are often more palatable politically.  They can create demographic “bulges” within a given agency or department, but these are more of a long-term concern than an immediate problem.  Particularly in countries where the attrition rate is high (such rates are typically around 2 to 3 percent, but can be as high as 7 to 10 percent in agencies that recruited heavily in the 1970s and 1980s), if officials can hold the line for a couple of years, they can witness significant savings.

Another area where a number of MENA countries have witnessed success is in the reform of individual agencies and departments.  Reforms that cut across organizational boundaries, while not impossible, have typically been much more problematic.  Yet there are numerous examples of where dynamic and effective public managers from throughout the MENA region have managed to make a difference within their particular sphere of competence.  Egypt’s Minister of Finance, Youssef Boutros-Ghali, managed to bring over a million new taxpayers into the system while simultaneously restructuring the personal and corporate tax offices and increasing tax revenue from 7 to 9 percent of GDP.  Egypt’s Minister of Investment, Mahmoud Mohieldin, managed to reduce the average registration period for getting a business license from 34 days to 3 days.  Lebanon managed to streamline and reengineer its customs procedures, reducing clearance times while simultaneously increasing excise and VAT revenues.  The list goes on.  Often, such reforms are quite comprehensive, involving changes to organizational structures, business processes and work flow, staffing, recruitment and promotion.

CSR GraphFurthermore, civil service attitudes and orientations are not immutable.  Such reforms have often been accompanied by a fundamental reform and reorientation of employee attitudes from one of policing and lording over the citizens to a service-oriented culture.  Such transformations are not easy to achieve; nor do they take place overnight.  But with committed leadership and the right set of messages and incentives, change is possible at the organizational level if not across the public sector as a whole.

Mixed Success

Other public administration reforms may or may not succeed depending upon a variety of factors, such as the wisdom, clout and tenacity of their champions (as well as their opponents); the skill with which they are implemented; and the broader political milieu in which they are introduced.

Voluntary retirement programs are as of yet relatively rare in the region.  Morocco’s experience, captured in the box by Khalid El-Massnaoui, illustrates well both the potential benefits and complications that typically surround such efforts.  On the positive side, the Morocco Voluntary Retirement Program (VRP) was effective in helping to reduce the fiscal burden of the wage bill.  It improved the skills mix and geographic distribution of the civil service.  However, it was also subject to problems of adverse selection, in that many of the best and the brightest ended up leaving the public sector, and the controls put in place to prevent that were ineffectual.  Furthermore, unless rigorous efforts are sustained to control new recruitment, there is a tendency for public sector employment to drift back up again after a few years.

A second area where reforms have tended to move forward selectively have been efforts to reform payroll and computerize HR management.  Perhaps the most impressive example was Salam Fayyad’s efforts to pay salaries for Palestinian security service directly into Bank accounts, which was resisted by the service heads but quite popular with the rank and file.  Other countries have embarked upon similar reforms as well.  At times, they can be quite sophisticated, such as Kuwait’s efforts to move virtually its entire processes for HR management on-line.  At other times, the functionality can be more limited, such as Yemen’s efforts to implement a biometric system that will help it to remove ghost workers and double dippers from the payroll.  Such efforts should be undertaken with care.  The implementation of large IT systems can be problematic throughout the globe in both the public and private sectors, and MENA is no exception.  Yet with careful planning and implementation, success is possible.

A third area where progress is occurring is the use of contract employment.  In many countries, there has been a proliferation of talented professional staff being brought in as consultants to ministers and other senior officials, whose salaries are paid either by donors or occasionally by the government itself.  Egypt currently has draft civil service legislation under preparation to expand and routinize this practice.  The use of such employment can be a mixed blessing.  It can allow senior officials to tap into valuable expertise that they would not otherwise be able to exploit, and a number of far-reaching administrative reform efforts have relied heavily upon such talent.  Yet such practices can also exacerbate pay discrepancies within the public sector and lead to anger and resentment among traditional agency staff.  While arguing that such staff are essential, some of the more successful reformers in MENA also seek to keep them in the background and utilize them sparingly.

Areas where CSR has Struggled

Finally, there are a number of areas where civil service and administrative reform have struggled in MENA.  In some cases, such reforms have simply not been tried.  As Graph 1 indicates, MENA public sectors are, on average, among the largest in the world.  Yet there is limited political appetite for any retrenchment, targeted or otherwise.  In Egypt, for example, some unofficial estimates indicate that as many as 20 to 30 percent of staff (and possibly more) may be redundant.  In a similar fashion, the productivity of the public sector in several GCC countries is clearly compromised by policies that, in essence, amount to recruiting almost every native-born citizen into the civil service. 

The roots of government over-employment in MENA are many.  In labor surplus economies, the public sector has historically played an important role in soaking up excess employment.  Politicians and senior officials were reluctant to dispense with an important source of legitimacy and patronage, and the public was reluctant to forgo a comfortable and protected sinecure in the civil service.  In oil-rich economies, public employment was viewed as a means of redistributing the national patrimony and “sharing the wealth.”  Yet many countries have reached the point where such strategies are no longer fiscally sustainable, and the transition to private sector led growth as a solution for unemployment and burgeoning youth population is already well advanced in countries such as Egypt.  There is also evidence that the widespread availability of public sector positions in a number of Gulf states can have a pernicious impact upon society as a whole.  Male high school graduation rates have peaked and started to decline in a couple of GCC countries, largely because nationals have limited incentive to finish since they will ultimately be employed anyway.

Another area where reforms have typically struggled are in efforts to reform the “machinery of government” from the center.  Abu Dhabi has a strong Executive Council and was able to successfully streamline and rationalize its government structure.  But such efforts are often the exception rather than the rule.  Far more common are efforts to reform government structures by a given Ministry of Administrative Development or Civil Service that end up producing elaborate restructuring plans that seldom see the light of day.  Efforts to restructure individual line departments that are spearheaded by central agencies for administrative reform almost never work, as they typically lack the necessary ownership and political buy-in for success.  However, as noted above, there are examples of dynamic ministers who have been able to opportunistically align their ministry or agency restructuring with a broader reform effort and achieve some degree of success within their sphere of authority.

In a similar fashion, “comprehensive” reform programs that envision moving forward in an integrated, holistic fashion across a range of dimensions, such as machinery of government, pay and employment, HR reform, etc. are typically not successful.  While there are virtues in thinking of reform in an integrated fashion, the reality is that such approaches are extraordinarily difficult to coordinate and sustain in a consistent, phased approach across time.  Bank experience has indicated that the most effective reforms often have an opportunistic and ad-hoc quality about them.  They start as efforts to fix a specific problem or achieve a given set of results, and then build off of that success.  They also have an organic nature to them, in that some sets of reforms may move rapidly whereas others may struggle in ways that are not entirely predictable beforehand.  The genius of effective reform often relies more in adept tactical implementation than well laid strategic planning, although the latter is not unimportant.

Another area where reforms have typically struggled have been in efforts to confront wasta directly, such as Lebanon’s recent efforts to implement meritocratic recruitment for the top grade of the civil service.  Jordan also experimented with some potentially far-reaching reforms in HR management in its National Agenda that were never implemented.  Some of these efforts are still in play, and it may be too soon to write their obituary.  Yet experience to date has not been positive.  However well-intentioned, such initiatives have typically encountered fierce resistance from traditional constituencies who have feared the loss in jobs and patronage that could result from their implementation.

Finally, success in public sector reform requires consistency and stability in leadership across time.  There are countries such as Jordan that have a history of frequent cabinet turnover.  Between 1999 and 2007, for example, no fewer than eight ministers held the public sector reform portfolio.  Under these circumstances, it was virtually impossible to develop a coherent, sustained program that could be implemented without interruption. 

Towards the Future

AAMENA is hardly unique when it comes to civil service and administrative reform.  As a whole, the region tends to struggle in areas where other lower middle income countries have struggled and succeed where they succeeded.  The reform agenda itself is a difficult and complicated one, as hundreds or in some cases millions of employees can hardly be expected to be indifferent regarding significant changes that affect their livelihood.

Yet issues of service and regulatory quality, public accountability, meritocracy and the fiscal burden of the wage bill are at the core of the “good governance” agenda.  They will not go away.  As Lebanon’s experience with meritocratic reform indicates, such issues tend to keep emerging even when many sophisticated political observers have written them off.  Since the pressure for these reforms is likely to expand and intensify, it is important that reformers throughout the MENA region have a sophisticated and nuanced understanding of how to best pursue them—one that is informed by careful study of the successes and failures of others.  When well-conceived and adeptly carried out, such reforms are both possible and can bring significant political and developmental rewards.

 




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