PUBLIC ADMINISTRATION REFORM VIETNAM PAR 2001-2010

E. CUVILLIER (Ministry of Finance) - May 2002 -

PUBLIC ADMINISTRATION REFORM: WHAT ARE THE KEY ORIENTATIONS ?

1. GENERAL OBJECTIVES Until the recent past, public administrations in most countries were not renowned for their specifically dynamic or innovative management of human resources. In this area, attention had been historically paid to three key topics : - Recruitment, with a concern to avoid complaisant hiring and to assure equality of access for citizens to public employment; - Professional qualifications, with a particular emphasis put on technical competence suitable for different occupations (book-keeping, legal, etc.), but, on the other hand, with little concern for relational qualities; - The standardization of careers and remunerations (promotion by seniority, salary scale) in order to protect the independence of public servants working in areas connected with various types of power. The era when these principles were fully dominant is now over. Things have changed and, even in countries like Vietnam where old rules are still in use, these practices are no longer considered as adapted in the present context and the new stakes of the Public Administration and the need to modernize them is fully recognized. The management of human resources, either in the Public Administration or in the rest of the national economy, is today based on three main objectives. 1.1. CONTROLLING THE WAGE BILL The wage bill - direct (salaries, allowances and miscellaneous contributions) or defered (pension rights) - today represents a significant share of the recurrent budget (sometimes up to 85 percent in Vietnam). A government anxious to control its deficits and to moderate fiscal pressure has the obligation to contain the wage bill. This can be done by adjusting two parameters : The staff of the Public Administration, with a strategy of reduction regarding the public area of intervention (equitization, privatization), increases in productivity (computerization, organization and reviews in procedures) or flexibility (polyvalency of staff, redeployment, temporary freedom from duty);

PAR: What are the Key Orientations?

The amount of remuneration paid to each employee, with strategies of wages deindexation, individualization of remunerations or reform of pension schemes.

1.2. IMPROVING PUBLIC SERVICE DELIVERY The quality of public infrastructure, in particular education infrastructure, the rapidity of administrative and judicial procedures (the rapidity of an action, e.g. in the formation / enactment / implementation of procedures), and the security of the population and goods are today considered as key factors of economic competitivity. This helps to improve the performance of national enterprises and to attract foreign direct investment, thus reinforcing economic growth and employment. To ensure this quality of service, a government has to pay more attention than before to: The professionalization of its staff (with an emphasis on continuing education, the development of a greater level of competence, and transfers of know-how through contracting out); Staff motivation (remuneration based on merit, differentiated promotions, participative management, decentralization of decisions); The orientation of all activities to the full benefit of users (reorganization by category of services or type of users, through the development of onestop counters, and the development of reception rooms, telephone services, Internet websites, etc.). 1.3. TRANSPARENCY Transparency has two meanings: deontology and the prevention of corruption on the one hand, and, on the other hand, the production of clear and measured information, accessible to all and allowing evaluation of the cost and the efficiency of public services. In both cases, we should get important guarantees of the impartial running of the Public Administration. 2. ORGANIZATION In line with the above-mentioned objectives, some general tendencies related to the organization of the Public Administration are now coming out : 2.1. SEPARATING THE MISSIONS Gradually, through the effect of theoretical analyses and practical diagnoses regarding the running of the services of the public agencies, the idea that is widely accepted is to separate specific missions not long ago carried out by the same authority. For example, when the State is a shareholder of a public enterprise, one needs to differentiate between the management of public participation in the capital and the exercising of regulatory State supervision with regard to this enterprise or, in the new context of open competition for the old public monopolies (telecommunications, railways, energy, etc.), to separate the remaining activities of a former monopolistic public enterprise

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and the newly created regulatory public entity. Lastly, strategic functions should be separated (conception of policies, preparation of the legal and regulatory framework) from management functions. The dissociation of missions aims at avoiding conflicts of interests that are detrimental to the efficiency and the deontology, without sacrifacing the long term to the short term, and making managers responsible for performance objectives. 2.2. THE NETWORK ORGANIZATION The complexity of public policy issues that are raised today is such that there is a need to mobilize various levels of competence to elaborate solutions. Facing this situation, any static organization chart will always be inadequate. The emphasis should be put less on the logical hierarchy of obedience and more on the capacity of public servants and agencies to cooperate effectively in the network, according to the tasks to be completed. Two parameters take on a critical importance: 1/ the quality of information systems (meaning network computerization, which allows staff to exchange data and easily communicate) ; and 2/ the propensity of agents to adopt cooperative behavior (relational competencies, system of incentives). 2.3. THE OPENING TOWARDS THE CITIZEN-USER Taking into account the above considerations, it appears obvious that the Public Administration should henceforward favor qualities considered in the past as secondary: The capacity to react rapidly (meaning the necessity to decentralize powers to shorten the decision-making process); The capacity to consider all issues raised by users, which requires the user to multiply the contacts in various administrative agencies (meaning the necessity to develop one-stop counters and to organize activities by type of users); The capacity to involve citizens in the elaboration of decisions concerning themselves (meaning more open consultative procedures and even the involvement of external personalities in the steering committees of the Public Administration). 2.4. THE NECESSARY FLEXIBILITY In order for the Public Administration to adapt to the evolving demand of users, changes in technology and, moreover, to the peaks of activity that can occur now and again, public agencies should today be able to develop various techniques of flexibility: polyvalency, mobility of staff, contracting out, mission-oriented Public Administration in order to face new missions, etc.

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3. QUALIFICATIONS It appears necessary to essentially insist on two main aspects: 3.1. THE GROWING IMPORTANCE OF CONTINUING EDUCATION Competence acquired through initial training is today rapidly becoming obsolete due to the accelerated speed of economic, social and technological evolution. We can observe in many countries that, in achieving increased flexibility, public agencies place more and more importance on the polyvalency and the mobility of staff. Consequently, it appears essential to organize, through continuing education, the actualisation of basic knowledge and the access to additional knowledge. In addition, as human resource management and organization are becoming the main factors in the performance of the Public Administration, it is becoming essential for public servants functioning in key positions to be trained on management, team animation, and leadership, whatever their initial training was when they were initially prepared and chosen according to a technical expertise. 3.2. PRACTICES FOR CONTRACTING OUT AND PARTNERSHIP Instead of training its own staff, the Public Administration can also look outside for any shortfalls in its qualifications. This strategy is particularly appropriate when the requested competence is marginal compared to the usual tasks of the concerned public agency. In such a situation, two approaches can be used: either contracting out the considered activity to an external provider od such services (e.g. contracting out hardware and software activities), or the hiring of staff, based on specific activities, on a fixed-term contract without the possibility of becoming a public servant. To assure the success of contracting out and partnership activities, it is necessary to put a particular emphasis on a few critical points: The capacity of the concerned public agency to keep the strategic control of contracted-out activities. This requires the definition of precise objectives in the requirements and a strict monitoring procedure of realizations. The capacity of the concerned public agency to accumulate the know-how and the record of activities, even outside the execution of projects. This is important in order for the Public Administration to, a posteriori, justify its own choices; it is also crucial for it to make significant progress based on lessons from past experiences. In this respect, a major issue in current management problems is the knowledge management. The capacity of the concerned public agency to organize in a more rigorous manner the working responsibilities and procedures. When

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activities are directly managed, a certain lack of rigour in task programing or definition of objectives can be compensated by the proximity, sometimes even by placing under the same authority those who have conceived a project and those who implement it. However, the situation is totally different when the projects implementation is contracted out. 4. PERFORMANCE MANAGEMENT The challenge, here, is to motivate public servants so that they give the best of themselves to implementing the strategy of the public agency they belong to. 4.1. MANAGEMENT BY OBJECTIVES To this end, the first leverage is to provide to each member of staff a precise definition of his/her responsibilities that he/she must handle and the expected objectives of his/her position. More exactly, the objectives should not be considered as an arbitrary decision imposed by the hierarchy, but rather explained, discussed, eventually negotiated, and at least accepted by all concerned staff. They have to be quantified and measurable in order to verify without major difficulty, a posteriori, if they have been reached. The evaluation of achieved results in comparison to announced objectives is a sensitive subject. The objectives will never be evidently credible if no sanction is ever imposed when they are not reached. On the other hand, if sanctions are systematically imposed in case of failure, independently of the circumstances that are the origin of this failure, there will be a strong disincentive to take risks and pressure to devise more ambitious objectives. The search for the middle ground between these two extremes is not that easy, but finding it takes on crucial importance in order that the device can really become a rallying cause and not be disheartening. The other sensitive point is the nature of the objectives to adopt. The results of public actions cannot be easily quantified, like those of enterprises in terms of sales volumes, in margin rates or in benefit amounts. They are often qualitative, and influenced by numerous variables unrelated to the action (input1) of the Public Administration. Ensuing from this is a doctrinal debate and numerous significant hesitations on this matter, in particular between

/ An INPUT focus is easy and affordable but it does not, in itself, support efficiency and effectiveness. Because of the focus on resources it can be seen as good in situations with low levels of confidence and variable competence for example in developing countries.

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those responsible for measuring the activity (output2) and those measuring the results (outcome3).
Management by Objectives 4

Outcomes Value for money Outputs Process Inputs Costs

Effectiveness Efficiency Economy

4.2. DIFFERENTIATED REMUNERATION The idea here is to shift from uniform remuneration for all staff of the same grade and same seniority to variable remuneration based on performance in order to encourage all staff to work optimally. Two levels of mobilization are conceivable, for which the articulation is again sensitive: individual differentiation, which takes into account separately the performance of each individual agent, and collective differentiation, which takes into consideration the performance of the administrative unit or of a team so as to avoid too individualistic behavior. The key question, once the principle of variable remuneration is accepted, is the scope of variation to be implemented. The larger the variation, the more significant the reward or, conversely, the sanction. On the other hand, the risks of rejection of the system by staff accustomed to uniform wages, takes on increased importance as does the pressure on managers evaluating the staff. 4.3. RECONSIDERING THE CIVIL SERVICE STATUTES? Based on general tendencies, it seems impossible to avoid a discussion concerning the perpetuity of employment statutes traditionally applied for the
/ An OUTPUT focus facilitates efficiency and control of aggregate expenditure and lends itself to enhanced accountability. On the other hand it can result in information overload, there are measurement problems and it can be costly. Because of these challenges some see it as a good approach when levels of confidence are high and the basics of cost accounting can be taken for granted. 3 / An OUTCOME focus facilitates reallocation and supports policy formulation and coordination and can enhance the long-term perspective of public sector activities. On the other hand it suffers the same problems as the output approach in regard to measurement, costs and information overload and in addition this approach has problems with regard to- accountability since outcomes are not always controllable or even attributable to specific public sector actors. The outcome focus can thus generally be seen as good in situations where an output focus is viable but where politicians in addition are dedicated to the management regime. 4 / Refer to the 2002 Medium Term Expenditure Framework (MTEF) in the development and pilot implementation in the educational sector. PAR: What are the Key Orientations? 6
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public sector. Until today, these statutes, in fact if not in law, had the meaning in most countries as lifetime employment and stable remunerations. However, one can easily realize that these principles, even without being totally contradictory, are rather removed from the exigences of flexibility that have been decribed above. There are numerous countries, which have such civil service statutes, that have tried, in their Public Administration Reform strategies aiming at modernizing the State, to suppress these statutes and to align the conditions of employment for public servants with the Common Law for salaried employees. ______________________

PAR: What are the Key Orientations?