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4.5 Improving the performance of public services and formal sector enterprises: Working Out of Poverty

Written by: International Labour Organization

Article Overview: In many developing countries, pay and conditions in the public services have deteriorated badly over the long years of austerity associated with structural adjustment and the debt crises. This has seriously damaged morale and performance, led to the loss of some of the most talented public servants to the private sector, increased the risk of public servants resorting to “charging” citizens for services by demanding under-the-counter payments, and weakened confidence in the function of government.

4.5 Improving the performance of public services and formal sector enterprises: Working Out of Poverty

In many developing countries, pay and conditions in the public services
have deteriorated badly over the long years of austerity associated with
structural adjustment and the debt crises. This has seriously damaged morale
and performance, led to the loss of some of the most talented public servants
to the private sector, increased the risk of public servants resorting to “charging”
citizens for services by demanding under-the-counter payments, and
weakened confidence in the function of government. The pendulum of opinion
is slowly swinging back to a concern about improving public services after
many years of a mantra of “private good, public bad”. Whatever balance
between the role of the public and private sector a country chooses, it is essential
that employment relations for public servants are well organized.

Public service unions, grouped globally in Public Services International
(PSI), have launched a major new campaign to improve the quality of the
services provided by governments and public agencies and the quality of employment
of workers in these vital sectors.

The broad objectives of the
campaign are to:
●
ensure that public services are adequately funded so that well-trained
and properly resourced workers can deliver quality services to all
people who need them;
●
develop the ability of public services to meet social objectives, especially
poverty eradication and people’s empowerment;
●
ensure that public services meet quality objectives, including high
standards of ethical behaviour, which enable national and global economies
to operate effectively and equitably; and
●
ensure that all public sector workers enjoy all fundamental workers’
rights and can achieve quality working conditions.

Although a high proportion of most government budgets is devoted to
salaries, addressing the backlog of problems in the public services will likely
require increased resources. Managing a steady year-by-year progress
through negotiation and consultation with public service unions is therefore
essential and will require coordination with the budget-making process. Dialogue
about proposals to privatize essential public services is particularly important,
given their importance to poverty-reduction strategies. A stable,
honest and efficient public service is a major national asset made up of
people who rightly expect fair treatment.

In the context of strategies for poverty reduction, more and better education
and health services are a high priority in most countries. Yet the unions
representing teachers and health-care workers who deliver services to
poor communities are rarely consulted about the plans for their sectors.
Given that poor working conditions and often persistent delays in the payment
of wages due are endemic in many countries, it is vital that such problems
are addressed if policies are to be effective. In many cases, training of
staff is the key to reforms aimed at raising the quality of public services.

Improving the performance of state-owned enterprises, privatization
and the preparation of previously protected industries for competition on
global markets have major implications for workers. Preparing for these
changes through early consultations and negotiations helps to identify both problems and opportunities posed by restructuring in time for solutions to
be agreed. Often units of such larger enterprises are the heart of local economies,
and restructuring plans should take account of the social impact on
the surrounding communities. Enterprises, unions, local authorities and
community organizations, if appropriate in concert with central government,
should jointly develop plans to address the issues posed by either expansion
or contraction of employment.

For governments, social dialogue is a valuable vehicle for constructing
a broad measure of agreement over the modernization of labour laws and
the policies needed to improve the performance of the public sector and formal
private enterprises. A recurring theme in discussions about reform is the
balance between the issues covered in statutory labour codes and those most
appropriately dealt with by collective agreements. The larger the numbers of
workers covered by collective agreements, the greater the scope for more
detailed aspects of rule-making to be devolved to the social partners. Collective
bargaining is a valuable mechanism in the adaptation of working arrangements
to changes needed to maintain competitiveness in a fast-moving
global market.

Investing in the foundations of a sound industrial relations system is an
important part of designing labour market institutions that favour broadbased
employment growth and the reduction of poverty. As argued in Chapter
5, developing countries need to move up the value chain out of dependence
on unprocessed commodities into manufacturing and services.
Collective bargaining and social dialogue are a means of encouraging change
through discussion and negotiation so that the benefits of dynamic efficiency
are realized and fairly shared. Where employers are operating in a competitive
environment, improved conditions achieved through collective bargaining
must be matched by enhanced productivity or the firm risks losing
market share and the workers their jobs.
Furthermore, as Professor Stiglitz
has argued, information and power asymmetries bedevil the efficient allocation
of resources in most markets, and especially labour markets. Collective
bargaining and indeed the whole process of social dialogue, where they function
well, help to resolve market failures by promoting the sharing of information
and collective action for common objectives.

As well as being a flexible mechanism for making the rules workers and
employers need to manage their relations fairly and efficiently, collective
bargaining fulfils an important balancing role in society. For many groups of
low-paid workers it represents the most effective and readily available
method of improving working conditions. In many developing countries,
years of frustration over slow or stagnant social and economic development
have fuelled social tensions. Collective bargaining underpins progress in
building democracy by resolving disputes that, if allowed to broaden and escalate,
can undermine national stability.

Labour laws that protect the right to organize and promote the practice
of collective bargaining are essential to the functioning of sound industrial relations systems. In many countries, tripartite institutions offering advisory,
conciliation and mediation services to employers and unions can play an important
role in shaping the collective bargaining system. The efficiency of
systems of labour administration and labour courts is also important for the
application of labour laws. For both workers and employers, speedy and lowcost
legal remedies are vital. While recourse to the mainstream court system
is sometimes necessary, in many cases more informal and quick methods of
resolving conflicting interpretations of laws are acceptable to the parties.
The ILO, drawing on the principles in its Conventions and Recommendations,
has in many cases assisted its constituents in preparing laws and designing
institutions to support the development of industrial relations
systems that promote labour/management cooperation and ease the resolution
of conflicts.

Related Articles
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  3.1.2 Training for the formal sector: Training priorities, resources and reorientation
  IV. Principle III: Reinforce Microfinance to Advance the African Private Sector
  4.2.1 The challenges and barriers of growth: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
  4.0 The state of women’s enterprises in Tanzania: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

Article Tags: austerity, backlog, crises, employment relations, empowerment, ethical behaviour, global economies, government budgets, mantra, pendulum, poverty eradication, public sector workers, public servants, public service unions, quality objectives, quality services, social objectives, structural adjustment, vital sectors, working conditions



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