Debt crunch will force governments to improve efficiency, OECD predicts

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22/10/2009 - Amid rising public debt burdens that will force governments to improve efficiency, a new OECD study highlights best practices and identifies where and how national administrations can provide improved services at lower cost to the public.

“Governments can learn from each other’s experience in order to provide the most cost-efficient services possible for their citizens”, OECD Secretary-General Angel Gurría said.

In their response to the crisis, many governments have been forced to increase spending to levels which may prove unsustainable, posing an urgent need for rationalisation. However, governments will need to balance rationalisation strategies against the need to underpin a still fragile process of economic recovery.

“Government at a Glance” offers for the first time a comparative analysis of the government “machinery”, financing arrangements and public management policies and practices, in order to signpost opportunities for reform. The report also notes that an ageing public sector workforce in most OECD countries provides challenges, but also potential for renewal.

4.1 General government expenditures as a percentage of GDP (2006)

Source: OECD National Accounts Statistics - Download the corresponding Excel file

In a bird’s eye snapshot of governments’ role in national economies, “Government at a Glance” reveals that:

Government expenditures as a percentage of GDP were shrinking in most OECD countries before the onset of the economic crisis. Between 1995 and 2006, increases were recorded only in Korea (from 21% to 30%) and Portugal (43% to 46%).
Employment by government, calculated as a percentage of the total workforce, remained in contrast relatively stable. The proportion of the labour force employed in government varies from approximately 5% in Japan to 29% in Norway.
The size of government, calculated in terms of revenues as a percentage of GDP, varies greatly across OECD countries. Norway (59%), Denmark (57%), Sweden (56%) and Finland (53%) took the highest proportion of GDP in revenues, while Mexico collected the least (20%).
Outsourcing of public services and levels of investment in public-private partnerships are rising. In 2007, 43% of government expenditures on goods and services were channelled through the private sector, compared with 39% in 1995.
Female participation in government employment is increasing. Women account for between 40% and 50% of central government workforces in most OECD countries, in many cases exceeding their participation rates in the overall national labour force. Poland had the highest proportion of women in the central government workforce at 69% in 2005, followed by Portugal and Iceland (both 61%). At the other end of the scale, Japan (20%) and Turkey (12%) had the lowest proportions of women in central government employment, although female participation has increased in both countries since 1995.
The average age of central government workforces is higher than the overall average in many OECD countries. Belgium has the oldest central government workforce, with 44% of central government workers due to retire in the next 15 years, followed by Iceland with 42%. For country comparisons, download the Excel file.
Governments are becoming more sophisticated in human resource management. Central governments have reformed practices to delegate more decision to line ministries, open recruitment to external candidates, introduce performance assessments and performance-related pay, and cultivate a separate senior management group.
All but two OECD countries require elected officials to disclose private interests, although in many countries this information is not yet publicly available.
E-government services are used by 62% of citizens in Norway but only 10% in Greece (see Excel file).
Evidence-based policy making is on the rise. Today, central governments in 29 member countries are required by law to analyse the impact of regulations, compared to 10 countries a decade ago.

11.1 Percentage of central government employees who are female (1995 and 2005)

Source: OECD Strategic Human Resource Management in Government Survey (2006)
Download the corresponding excel file

Country findings are available for: Australia, Austria, Canada, Finland, France, Germany, Italy, Japan, Netherlands, Norway and Sweden.

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For comment or further information, journalists should contact Zsuzsanna Lonti, Senior Project Manager, Public Sector Management and Performance Division (tel.:+33 1 45 24 16 39) or Jordan Holt, (tel.: +33 1 45 24 78 91).

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