By Georges Siotis
Associate Professor of Economics
Universidad Carlos III de Madrid and CEPR
Former member of the TFGR
Administrative reform is the elephant in the room. Greek citizens and creditors alike are aware of the dysfunctional of the Greek public administration. The resulting economic costs are large, be they measured in terms of wasted time, increased monetary costs, or foregone output (activities that are prevented from materializing because of red tape).
The OECD’s (2012) functional review of the Greek administration provided a comprehensive diagnosis of the situation. In addition, some administrative departments are corruption-prone as the system provides opportunities and incentives to collect grease money.
Even before crisis, the Greek civil service was known for its structural weaknesses. By now, it is demoralized and weaker, as many of its better performing staff left. Public servants enjoy very little effective autonomy as they fear being sidelined if they displease their political masters. The latter tend not to trust civil servants and heavily rely on external “advisors”. Lack of motivation and a culture of prescriptive legal formalism lead to administrative stasis, with little attention paid to actual policy outcomes. Yet, it is this weakened civil service that is supposed to design and implement structural reforms.
Creating a Public Administration that functions relatively well is vital to improve the country’s economic prospects. Firms and markets do not operate in a vacuum; the institutional set-up surrounding economic agents is of paramount importance. To give some examples, a competent civil service is necessary to design and implement reform, to plan infrastructure investment, to support a better export performance, to carry out public procurement in a cost effective manner, to exploit the country’s human and innovative potential, to effectively protect property and dispense justice in a timely manner, and to target large pockets of tax evasion.
So far, most administrative reform efforts have either been mis-directed or aborted before they could deliver results. Except in cases of gross malpractice (such as hiring based on non-existent degrees), the creditors’ push to fire civil servants is hard to understand. Such measures are difficult to implement legally without any formal assessment of the work performed, and contributed to alienate the civil service and push people into costly early retirement. The policy of non-replacement of retirees was all that was needed to have a 25% reduction in the number of civil servants over the period 2009-2014.
The first step to successful administrative reform is to recognize that it is bound to be a slow process fraught with difficulties; there are no quick fixes that make headlines. Reform should be based on five pillars. The first is the introduction of modern managerial techniques in the civil service. Inter alia, this should cover candidate selection and matching to a job description, performance-based promotion, staff mobility to adapt to changing circumstances, and internal control. This would contribute to establish standards on how civil servants should behave at work.
The second is that reform should be driven by citizens’ needs. Many red tape problems cut across various parts of the administration. In view of the silo structure of the Greek administration, public servants are rarely aware of what is done in other ministries. By contrast, lay citizens regularly go through an entire Via Crucis for something as simple as closing down a company. It is these people who can accurately describe the practical problems and can help design meaningful solutions. There are many ways to tap this citizens’ knowledge, for instance through civil society’s active involvement.
The third is that, in view of Greece’s weak administrative capability and the nature of the challenges, reforms projects should be implemented on a pilot basis whenever feasible. Pilots are a cost effective way to carry a “proof of concept” for a particular policy, avoiding large scale costly errors. The experience with the embryonic Guaranteed Minimum Income project bears this out. Despite numerous difficulties and teething problems, the GMI pilot was launched in 13 municipalities. The experience identified the bottlenecks and the requirements for a smooth and cost effective nationwide development and confirmed that it was possible to achieve proper targeting of the weakest member of society.
The fourth pillar is the creation of effective mechanisms for systematic evaluation of reform initiatives. Typically, these mechanisms should be designed prior to the launch of a particular initiative and make extensive use of quantitative data.
Last, but not least, administrative reform should be Greek owned. One way to achieve this objective is to provide incentives for civil servants to participate in pilot projects and more generally, grant civil servants more effective autonomy.
*This article is part of a feature regarding the Greek crisis, within the context of a cooperation between “Naftemporiki” and “DIW Berlin”. It is based on the research “The Greek crisis: A Greek tragedy?” and expresses the personal opinion of the author.
