Moving Forward Civil Service Reform
John Burns, Chair Professor of Politics and Public Administration at the University of Hong Kong, was the Foundation's guest speaker on 23 February 2005. This is a summary of his remarks.
He had originally thought of titling his speech, Moving forward with Civil Service reform", said Professor Burns. But unfortunately, as civil service reform was not moving forward very much on its own, there was little to move forward with. So he would like today to put forward a few ideas about how civil service reform might be moved forward.
What should be the scope of government?
One fundamental idea, which the government had not addressed as it should, was, what should be the scope of government? Generally, Government was there to regulate, facilitate and rectify market failures. But all of these things did not necessarily have to be done by the government itself. In Hong Kong, the government tried to do too much itself. When he came to Hong Kong in the 1970s, he found that the Government employed tennis coaches and government still employs lifeguards. Providing these services directly was not necessary: Government should be clear as about its scope. A fundamental review of what the government ought to do was needed.
The goal he would set was to establish government agencies that were lean and performance-orientated. This meant government agencies should have a performance-driven work culture, and appropriate personnel policies and practices. The grade structure should also be simplified - at present there were something like 400 grades within the Civil Service. Open competition was needed for places; employment should be based on flexible contracts. There should be effective performance management, with goal-setting, measurement, and especially performance-based compensation in line with market rates.
In his book, Government Capacity and the Hong Kong Civil Service, he explored these issues over the past few decades, said Mr Burns. When he arrived in Hong Kong and worked at the university as a part-time teaching assistant, it was common to find faculty who had the attitude that it was not necessary to publish anything and that one could just teach. Attitudes of this kind were common then. Very uneven performance was tolerated, partly because of Hong Kong's rising wealth. To improve performance a performance-oriented culture is necessary with appropriate incentives.
Statutory agencies
There were areas of commendable performance in the public sector, although not so much in the civil service. Statutory bodies provide good examples, such as the ICAC, the Hong Kong Monetary Authority, the Securities and Futures Commission. Then there were the universities, the Hospital Authority, the statutory corporations the MTRC and KCRC which have adopted more performance-oriented personnel systems. And now that the subvented organizations were getting lump sum grants and being accountable for outcomes, the social welfare NGOs are also undertaking reform. In some respects core government had missed the chance to reform.
One area of missed opportunity in core government was the trading funds. These were set up from 1993 onwards. Although the trading fund concept was far from perfect with the funds generally being monopolies with inputs such as land provided cost-free, they were in some respects similar to commercial organizations. They were relatively small, and it would have been relatively easy to transfer their employees on to contract terms, as statutory agencies had done. But the staff of the trading funds remained civil servants on permanent and pensionable terms. This was the case even in the Electrical and Mechanical Services Department which competed directly with the private sector.
Reforms
There have been reforms of the civil service. The early retirement scheme had resulted in quite a large number of staff leaving the service. At entry level, new staff were hired on short term contracts. However, only the disciplined services were recruiting, and they were exempt from some of the reforms. The government has apparently frozen the recruitment of civil servants in other (non-disciplined services) departments. There had been little change in performance management - increments for example were still mostly automatic. And overall, 90% of government employees continued to be employed on pre-reform arrangements.
New thinking was required. Professor Burns recommended considering cutting the civil service by half. By this he did not mean that headcount should be halved, although it should be cut. Rather, most government departments should be converted into executive agencies and their employees put on non-civil service contracts of various kinds. This could apply to all government departments except the disciplinary services and all grades except Administrative Officers. The staff of the executive agencies would be employed on private sector terms of service.
As for the small remaining core of government, the Administrative Service and the disciplinary services, further reform should be carried out. There should be more open competition for most posts. Staff should be employed on fixed term contracts. And pay should be performance-based. Professor Burns said that he used to reject the idea of performance-based pay, because research has shown that implementing performance-based pay does not result in discernable improved performance. But he now felt that implementing performance-based pay systems sent a signal that performance mattered. And that helped change organization cultures.
Conditions for reform
What was needed to take civil service reform forward was political will. He did not expect the present Chief Executive to do anything more about civil service reform. There is a role, however, for the business sector in pushing for further reform. Economic growth was resuming, and this was the best time to rebuild momentum for reform, since with a buoyant economy civil servants could more easily get jobs outside government. But at the same time the incentive for reform appeared to be diminishing.
Another condition was legitimate and stable political institutions. Further political reform was needed to improve legitimacy. In the end democracy was necessary. Moreover, the countries that had had successful public sector reform tended to have strong political executives or ruling parties. You could not have the civil servants themselves leading the reform process: civil servants naturally sought to maximize their own utility. The problem in Hong Kong was that there was no countervailing force to the civil service. Where could such force come from? Professor Burns asked. Business was one source. Local political parties and groups, although weak, were perhaps another. And perhaps the Chinese Communist Party should have some role pushing for reform in Hong Kong.
Another necessary factor was staff support within the civil service itself, which appeared to be lacking now. Quite naturally civil servants did not support the abolition of their own jobs. But they could support measures that would enable them to work more effectively.
Professor Burns saw two scenarios. Scenario 1 was one of no or modest political reform. The challenge then would be to build a coalition for further public sector reform. This would be the responsibility of the political executive, Mr Tung or his successor. Under Scenario 2, there might be major political reform. Then a ruling party could press for further reform of the civil service. However, political reform had to be accompanied by tax reform. It was only when people felt themselves to be paying for government, and could see what they paid for, that they were likely to evaluate the way their money was spent more critically.
Professor Burns wondered if the Administrative Officer grade could be a starting point for reform. The grade was relatively small. To be sure they were well qualified and occupied the leading positions. But they were perhaps more used to reforming others than reforming themselves. Again, incentives for reform are crucial.
The civil service unions have tended to work with other parties, including some Legco members to delay reform. This would not happen under a democratic system because the legislators from the ruling party or coalition would have to take responsibility for government. It was true that there had been some divergence between the political executive and the civil service since the Ministerial System had been introduced in 2002. But the ministers had no mandate or popular support, and to a large extent depended on the civil service.
The above does not necessarily represent the views of the Foundation.