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Prime Minister’s Policy Statement on Public Sector Transformation

PUBLIC SECTOR TRANSFORMATION

POLICY SPEECH

PRIME MINISTER ANDREW HOLNESS, ON, MP

January 5, 2017

 

INTRODUCTORY REMARKS

 

A New Year begins with new possibilities and new opportunities. Indeed, 2017 began with positive news of 2% growth in the third quarter marking the 7th consecutive quarter of growth of the Jamaican economy.

 

Inflation is at historical lows and the current account continues strengthen. Private sector and foreign investment are gathering momentum, and industry is expanding.

 

The government will not allow anything to detract, delay or deter this progress.

 

It is against this background that, today, I want to talk about my government’s vision of, and commitment to, Public Sector Transformation.

 

I TOO WORK IN THE PUBLIC SECTOR

 

All Jamaicans who earn and consume contribute to the collective revenue base of Jamaica. That revenue base is used to hire some of us, including myself, to deliver

administrative,

professional,

regulatory,

policy management,

licensing,

promotion,

maintenance,

transportation and many other services to the public through central government or through a number of state agencies or enterprises. We, who deliver these and other function, comprise the public sector. We are paid by the Jamaican taxpayers to deliver services to the Jamaican people.

 

On a day-to-day basis I work with hard-working men and women in the Jamaican public sector of all ages: Persons who work late evenings, and weekends, to get the job done.  Men and women of integrity,  passion, and commitment to their country. I salute you.

 

I grew up with a mother who financed my education and upbringing from her job as a civil servant, a public sector employee, in the Ministry of Labour and Social Security. I am intimate with the challenges and opportunities, the sensitivities, the needs and concerns, of public sector workers.

 

THE IMPERATIVE OF PUBLIC SECTOR TRANSFORMATION

 

The expansion of output and growth in the economy is a necessity for Jamaica.  Growth creates jobs, provides opportunities, increases revenues for the government and allows for better standards of living for all Jamaicans.

 

Economic growth, however, depends on the ability of small and medium sized businesses to thrive and be competitive. They must be able to provide the best quality goods and services at the lowest possible cost. Government, and in particular the public sector, is a significant part of the cost structure of business. If we are going to make our businesses competitive then government too must be competitive and efficient. For example, businesses depend on government services for licenses, permits, regulatory approval, tax payment, public safety and security, justice, road maintenance, waste disposal, transportation ….if we can become more efficient in the delivery of these services and reduce our costs to businesses then businesses will grow and expand and provide employment.

 

If a manufacturer in Jamaica is competing with a manufacturer in Singapore, for example, and the Singaporean man can submit his application online and get next day permitting whereas the Jamaican has to fill out ten forms go to multiple offices, taking weeks – who will get to market first? Who will have the product at cheaper price? Who has less cost of government in their business?  These are the questions that must be asked.

 

There is an inextricable connection between the efficiency of the public and private sector. They both need each other to thrive. For too long the public sector has believed that their jobs exist in and of themselves and their jobs have no bearing on the rest of the economy. The transformation requires a shift in mindset in how the public sector employee sees him/herself.

 

The process this is achieved is public sector transformation which is an imperative.

 

The problem with the transformation over the years is that it has suffered from political expediency. Governments have not been able to move the economy to create jobs within the private sector. Governments have therefore sought to fulfill the job creation objective through the public sector. The inability of  Governments to stimulate job creation in the private sector have led governments and society to see have the public sector as the only reliable source of jobs. This is an unsustainable political relationship. The outcome has been low standards of work, waste and low productivity.  This has also created a muddled view of the relationship between the public and private sectors.

 

Transformation requires a realignment of this perspective. The process that we are envisioning is that the private sector will become the engine of economic growth and job creation and will absorb jobs from the public sector as many relevant skills lie in the public sector under-utilized and could be better rewarded.

 

It is however critical to note that Public Sector Transformation is not about blaming the civil servant. Too often the conversation is about the lazy civil servant. The nature of the civil service is that it is a rules based organization. It follows form rather than function. They do what they are told. Failure to transform is a leadership and political issue and not a management or administrative shortcoming. This administration will lead public sector transformation.

 

Jamaica’s History of Public Sector Transformation

 

Transformation of the Jamaican public service has had a long history of over 30 years.

 

Let us look at what happened in the past.

 

Under a mid-1990’s version of public sector reform, Executive Agencies and Performance Based Institutions were created to reflect a focus on making the citizen into a customer of the government..

 

In September 2002, Cabinet made a commitment to modernize the public sector. A detailed document entitled: “Government at your Service: Public Sector Modernisation Vision and Strategy: 2002 – 2012” was tabled in parliament and articulated a vision for “   a Public Sector with a performance culture, [that is] client focused and results oriented [and] constantly seeking ways to improve the delivery of public services”.

 

In 2009, the Cabinet agreed to a Strategy for Restructuring the Public Sector aimed at radically restructuring established organisations and systems of Government with the goal of making Government leaner, more efficient, flexible, responsive and accountable. This resulted two years later, in 2011, in the Master Rationalisation Plan (MRP) which sought to integrate and accelerate many of the previously identified strategic initiatives towards the creation of “…a public sector that is performance based, efficient, cost-effective and service oriented”[1].

 

In so doing, the Master Rationalisation Plan provided recommendations for specific actions to be taken in relation to the retention, transfer, merger, contracting out, privatization, divestment and abolition of entities; as well as the identification of system-wide actions for establishing shared corporate services and delegating authority.

 

In 2013, an evaluation of the implementation of the Public Sector Modernisation Vision and Strategy Paper recommended a consolidation of the work of the Public Sector Modernisation Division (responsible for Government at your Service) and the Public Sector Transformation Unit (responsible for the Master Rationalisation Plan) to provide programme management through a single modernisation entity.

 

In 2013 the Government of Jamaica entered into an Extended Fund Facility Agreement with the IMF and the then government agreed with the Fund that, and I quote from Jamaica’s 2013 Letter of Intent to the Managing Director of the IMF:  “Public sector rationalization is to be completed over the program period, (that is by March 2017). The government is committed to improving the efficiency, quality, and cost effectiveness of the public sector. It has adopted a timetable for finalizing its review of the Public Sector Master Rationalisation Plan, and for implementing its adapted plan, which aims at…..

  • the introduction of shared corporate services,
  • the reallocation, merger, abolition and divestment/privatization of units, and
  • the outsourcing of services…… [2]

 

In 2014 the GOJ signed a five year agreement with the Inter-American Development Bank (IDB) to fund the Public Sector Efficiency Programme (PSEP) aimed at

 

  • strengthening capacity in human resource management,
  • information and communication technology management, and
  • control systems and accountability mechanisms.

 

In 2016, the Economic Growth Council, appointed by the GOJ to advise on initiatives that could catalyse broad based economic growth, identified as a growth initiatives the pursuit of, and I quote, “Bureaucratic reform to improve the business environment” .  The EGC noted that  “An environment where businesses find it straightforward, simple and predictable to comply with regulations, fulfill requirements for licenses and obtain approvals for plans is an environment that is likely to induce greater economic activity. That is the kind of bureaucratic environment that we need. As such, all aspects of the interface between Government and business are in need of reform to improve effectiveness, efficiency and customer service

 

The Economic Growth Council identified another initiative as “Stimulate Greater Asset Utilisation” noting further that and I quote: “Implementing mechanisms that promote greater utilization of  assets could generate employment and induce economic growth. Public Sector Transformation holds huge scope for improving the efficiency of government. Several functions provided by the Government of Jamaica could, arguably, be better performed by the private sector thereby improving resource allocation.”

 

Over the course of the last 20 years, therefore, and even longer successive cabinets have endorsed the need for, and embarked upon, public sector reform. In addition growth policy recommendations in 2011 and again in 2016 have independently made the link between efficiency in the public sector and economic growth.

 

Public Sector Transformation is National policy

 

Public Sector Transformation has been ongoing for so long, across  administrations that you can refer to it as national policy.

 

Consistent efforts were made in the 1980s, 1990s, 2000s, 2010s and in the last administration. The requirement for Public Sector Transformation should therefore be of no surprise to anyone:

  • not to the civil service,
  • not to the opposition, who were themselves committed to Public Sector Transformation under the 2013 EFF arrangement with the IMF
  • not to the unions
  • not to the private sector
  • not to society at large.

 

However, it is also fair to say that 20 years on too little of what was set out to be achieved has indeed been achieved. This cannot continue. This time must be different.

 

While a great deal of work has already been done in public sector transformation to identify how functions and assets can be divested or contracted out to the private sector, what organizations can be merged, what areas need to be strengthened, and how business procedures can be improved through the integration of technology – not enough implementation has been finalized.

 

Enough studying.  Enough talking. Now,  is time for implementation.

 

IMPLEMENTATION

 

The Government has identified broad priority areas for transformation.

 

The implementation and coordination of these actions will be done by a Public Sector Transformation Implementation Team led by Mrs. Maria Thompson-Walters and consisting of professionals wholly and totally dedicated to ensuring that the agreed actions are implemented on time. In addition, the Public Sector Implementation team will need the services of specialists in communications, law and industrial relations.

 

The Public Sector Implementation Team will have overall responsibility for coordinating the entire universe of transformation activities, across Ministries,  Departments and Agencies Departments and to escalate to my office any areas where there are obstacles or difficulties.

 

The Executive Director of the Public Sector Implementation Team is empowered and will be acting to coordinate the implementation of agreed government policy and she has my full support. Actions that comprise Public Sector Transformation are high priority for my government and all ministries, all permanent secretaries, all agencies, all heads of agencies will be required to work with the Public Sector Transformation Implementation Team to ensure that agreed actions are implemented on time.

 

MONITORING

 

Public Sector Transformation is so central to the agenda of this Government that we have put in place a public monitoring body  launched in November last year: the Public Sector Transformation Oversight Committee.

 

As mentioned above the current Opposition committed itself to Public Sector Transformation and a similar menu of actions under its Extended Fund Facility Arrangement and had that agreement monitored by EPOC.

 

Though much was achieved on the fiscal front under the EFF by consecutive administrations, Public Sector Transformation lagged, and lagged badly to the point where EPOC didn’t bother to comment on it.

 

This time around we have a monitoring body focused specifically on Public Sector Transformation as what gets measured gets done.

 

This is a sign of our commitment to implementing that this time the agenda will be implemented. There is no choice.

 

PSTOC’s role will be to

 

  • monitor the compliance and progress of the GOJ, through the Implementaion Team, in achieving the Public Sector Transformation Objectives
  • Escalate any lack of progress, delay or concerns to my office and
  • to report directly to the Jamaican people on a quarterly basis on the progress in achieving the Public Sector Transformation Objectives. PSTOC therefore provides an avenue for stakeholders and civil society, over the life of the PSBA, to receive and review information from the GOJ on the progress of implementation

 

So PSTOC is a monitoring body. It is not a policy making body, nor is it an implementing arm. Its job is to monitor and report.

 

IMMEDIATE ACTIONS

 

The Implementation Team has developed a roadmap for transformation and this development is ongoing.

 

Here are some of the actions that will undertaken this year. More actions will be announced in the future as they are finalized and consultations are completed.

 

The immediate actions are follows (and I am quoting from the Memorandum of Economic and Financial Policies agreed between the Government and the IMF in October last year and made public)

 

Shared Corporate Services

 

  • Corporate back-office functions for Clarendon Alumina Production Limited (CAP) Services, Jamaica Bauxite Mining and Jamaica Bauxite Institute will be merged and provided by the JBI.

 

  • Corporate functions in CAP and JBM will therefore cease to exist.

 

  • The Team is to Identify positions that will be affected due to the implementation of shared corporate services in human resources and quantify the implications through the development of a costed transition plan and schedule.

 

  • Implementation of Human Resource shared corporate service is to begin by the end of August 2017

 

  • Positions that will be affected due to the implementation of shared corporate services in Public Relations and Communications, and Internal Audit are to be identitified and the implications are to be quantified through the development of a costed transition plan and schedule.

 

Mergers and Divestments

 

  • The divestment of Caymanas Track Limited is all but complete
  • The team is to ensure that the ongoing merger of the Cocoa Industry Board, the Coconut Industry Board and the Coffee Industry Board into the Jamaica Agricultural Commodities Authority is completed.

 

  • The Agricultural Credit Board and the Department of Cooperatives and Friendly Societies will be merged into the Agricultural Loan Societies and Approved Organization

 

Public Service Reform

 

  • Complete review of the classification of all existing public bodies in a way that is consistent with public financial management rules, including identifying and submitting to cabinet a time-bound plan for reintegration into parent ministries consistent with the principles of the Policy on public bodies.

 

Compensation Review

 

  • Build a comprehensive database—by occupational grouping and that includes all types of allowances paid, their amounts as well as the number of employees receiving each type of allowance in a given fiscal year across ministries, departments, and agencies to ensure adequate control and oversight over this part of thevwage bill.
  • Pilots for the Ministry of Finance and the Public Service, the Ministry of Health (medical professionals), Ministry of Education, Youth, and Information (teaching groups) and the Jamaica Constabulary Force (police groups) are ongoing. The database for all entities in the central government wage bill will be completed by March 2017.

 

  • Informed by the compensation review results from end-March 2017, submit public sector wage negotiation framework to Cabinet for approval.

 

Employee census

 

  • Complete an employee verification exercise. Island-wide pilots at the Ministry of Finance and the Public Service, the civilian population of the police department, the NIS, and the non-teaching personnel at the Ministry of Education are ongoing. The verification for all entities in the central government wage bill will be finalized by March 2017.

 

  • Submit policy options to cabinet for transition plans for employees who are currently outside of approved positions.

 

Recruitment rules

 

  • The creation and application of strict unambiguous rules for the decisions of the Post Operations Committee regarding all types of employment including acting. These rules are to establish replacement caps whilst ensuring that the public sector is properly resourced

 

HCMES

 

  • Complete roll-out of the human resources software (HCMES) for 14 entities of government Dec-18

 

Pensions

 

  • Complete debate and enactment of the Pension (Public Service) Act

 

Early retirement

 

  • We will be pursuing options for early retirement specificallty targeting the eligible populatio

 

 

Plan for Public Sector Transformation

 

Public Sector Transformations will be based on focused reforms with measureable outcomes that will unfold in many phases with the necessary consultation with stakeholders. The phased approach mitigates against “analysis paralysis” if you attempt to develop a plan for everything at once. Also a phased approach will generate lessons at each step along the way that can improve the process of Public Sector Transformation and allow for continuous dialogue with stakeholders.

 

Jamaica finds itself today with a very large number of public bodies – approximately 200 in total, with 200 boards of directors. Many of these public bodies are either overlapping in functions, a few are non-functional or have reached their sunset and some are highly inefficient in their service delivery.

 

By comparison, Singapore with an economy six times as large as Jamaica’s has approximately 50 public bodies.

 

The plan is to phase in mergers, outsourcing, divestment, and closure of public entities:

 

  • Public sector entities will be merged where there are overlaps in the services provided;

 

  • Public sector entities will be closed where the entity has reached its sunset; For instance there are a number of dormant companies owned by the government of Jamaica that absorb resources;

 

  • Public sector entities will be outsourced or divested where is determined that the private sector can deliver the service more effectively. I see members of DBJ here. DBJ will be charged with accelerating the pace of divestment beginning this year

 

Those who have worked in public sector transformation for many years will tell you that many times the civil service is ready for these actions – mergers, divestments, outsourcing but the political directorate: ministers and their appointees maybe reluctant. There are several ministers here today. I know that this will not be said of you.

 

Shared Services

 

With the advances in, and lowering of costs of, telephony different modes of organizing production are possible today that were not possible thirty years ago. Many firms in the private sector have taken advantage of these possibilities in order to remain competitive and the government must do the same.

 

One such mode of organization that is now possible is for support functions and services to be shared. Today you can centralize, for example, the human resource function, the public relations and communication function, the accounting function, the asset management function, the internal audit function, the procurement function, the information technology function and achieve economies of scale.

 

It is a well-documented fact that both in the private and public sectors,  the realignment of these support functions to be delivered through a central focal point has the potential to impact significantly on the efficiency of delivering these services.

 

Job Losses

 

As these mergers and closures occur, and as shared services are implemented there will inevitably be job displacements but also opportunities for growth – a more efficient government that delivers more with less will support growth and users will benefit from a higher quality of service delivery.

 

However the objective of our public sector transformation is not to cut jobs. Public sector employees displaced by transformation activities will have the opportunity to benefit from a program of training and outplacement services. All of this is expected to occur in an environment of private sector led growth.

 

Public Sector Transformation will allow you to either work in a productive and modern public sector or put talents to work in a dynamic private sector.

 

Public Sector Transformation will be implemented in a manner that

  • ensures that due processes are followed;
  • ensures the protection of workers’ rights and
  • abides by the rule of law to ensure not only transparent, but also fair and equitable outcomes.

 

 

Vision of the Transformed Public Sector

 

A transformed public sector is dynamic, innovative and responsive to the needs of citizens and businesses. It is constantly measuring itself, and improving. It sees the citizen as the customer to be served.

 

The transformed public sector embraces technology to improve productivity at the work place:

 

  • Using the advances in telecommunication to share services across the public sector rather than costly replication of these services.
  • Developing a government wide communications network for the seamless transfer of information between government agencies and other stakeholders as well as for the provision of on-line services to the public at minimal cost.
  • Implementing a centrally hosted web site providing a single gateway through which to gain access to all the information, data, systems and processes for enhancing the “Ease of Doing Business” with GoJ

 

The transformed public sector will be characterized by greater devolution of authority from a centralized bureaucracy allowing for quicker, nimbler, more responsive service. However, such managerial autonomy will be twinned with higher levels of accountability for performance.  Transparent performance objectives will be a feature of a renewed Jamaican public sector and rewards will be linked to performance.

 

Merit-based performance system where the best performers are rewarded appropriately and productivity increases are achieved.  These strategies will allow the public sector to not only attract the best talent but also to retain talent.

 

The transformed public sector will have greater uniformity in pay scales with a rationalization of the plethora of pay scales and grades across ministries, departments and agencies. There are approximately 100 grades and scales across the public sector which creates confusion, inequity and opportunities for arbitrage. Transformation will eventually aim to standardize scales across the public sector so that the engineer or the accountant at a particular level receives the same pay whether he or she works in ministry x or  ministry y or in an agency of government. Public sector employees will therefore choose jobs based on what they enjoy doing rather than on the arbitrage of pay. This will lead to greater job satisfaction, greater rates of retention, better service and therefore performance.

 

As we implement measures that deliver efficiency gains this will create the space that allows for improvements in the working environment and in working conditions:

 

  • Transformation will lead to a rationalisation of private sector rented office space, some of which is inappropriate and acts as a drag on productivity.

 

  • Transformation will lead to the developmnet of purpose built structures that, through their design and respective locations enhance collaboration and communication across the public sector thereby improving public sector employee experience and efficiency.

 

 

  • I have spoken before of government square

 

The transformed public sector will be governed by data and transparent rules and will have robust systems of internal controls. Strategic Human Resources will have finger-tip command of exactly who works in the public sector, where they work, their skills and proficiencies, their compensation, their tenure and their performance achievements etcetera.

 

Rules that establish hiring, promotion and exit will be clear and consistent and rules that govern public sector employment must be followed. The Rules will also govern the expansion of government and on what circumstances new agencies can be created. Central government will be so efficient and responsive that the practice of creating structures outside of central government to bypass the rules of will become unnecessary.

 

In most advanced economies the public service is the pride of the country. The best and the brightest vie for spaces in various departments of government. If you make it through the prestigious graduate programs you yearn to work in the public sector.

 

Public Sector Transformation will make the public service the pride of Jamaica. Working in the public sector will become an even greater badge of honor.

 

As we are about to renegotiate I would ask the public sector workers and their unions to bear what I have said in mind.

 

 –30–

 

 

 

 

[1] The Office of the Cabinet, Public Sector Transformation Unit. Public Sector Transformation Unit Strategic Project Plan for the Restructuring of the Public Sector 2009 to 2011. Kingston: Government of Jamaica, December 2009. Page 6

[2] Paragraph 35 and 37 of the Memorandum of Economic and Financial Policies, contained in the Request for Extended Fund Facility May 2013