Downsizing in government departments

Social and economic cost of Tanneries Reducing the trade deficit Downsizing in government departments Well done PIA The role of Small and Medium enterprises

The restructuring exercise is aimed at introducing austerity and economy

From Shamim Ahmed Rizvi, Islamabad
Oct 23 - 29, 2000

About 25000 employees of the Federal Ministries and attached departments may loose their jobs under the downsizing exercise which is in the final stages these days. The report of the committee on administrative restructuring is being given final touches and will be presented to the Chief Executive by the end of this month.

The restructuring committee on rightsizing/downsizing is headed by Deputy Chairman Planning Commission Shahid Amjad Chaudhry. While formulating its recommendations, the restructuring committee is also taking into account the reports of Pasha Commission and the Fakhr Imam committee which were assigned the task of rightsizing/ downsizing during the previous government of Nawaz Sharif.

According to the government sources the restructuring exercise is aimed at introducing austerity and economy. The report has been prepared on the bases of recommendation received from different government departments who were asked to propose at least the percentage downsizing of their employees. It is learnt that 26 ministries and divisions have shown their willingness to surrender their 24,599 posts — 845 posts of BPS - 16 to 22 and 23,754 posts of BPS 1 to 15. The quest for economy in public expenditure and raising quality of governance starts with downsizing which needs a number of steps, like abolition, winding up, privatization, mergers, transfers and downsizing". The sources added that once the restructuring report is finalized, it will translate into reality the Chief Executive's desire for downsizing as well as rightsizing in different government departments.

Sources in the Cabinet Secretariat revealed that there are 31 divisions with 11,909 employees and the wage bill of Rs. 2.821 billion. The number of attached departments is 422 with 374,030 employees and salary bill of Rs. 17,456 billion, and 105 corporations with 549,004 employees and the wage bill of Rs. 42.553 billion.

The sources were of the view that the downsizing will not only reduce establishment cost but will also lead to other benefits like reduction in wastage, corruption and inefficiency.

The World Bank and other international financial institutions (IFIs) have been demanding such exercise since long. However, re-source constraints and political considerations never allowed any government to move ahead on this path.

The World Bank and the Asian Development Bank are expected to finance this process, provided the government successfully negotiates a programme with the International Monetary Fund. IFIs often blame that assets held by Pakistani civil and military bureaucrats are not compatible with their take-home incomes. In the late 1990s, the World Bank conducted a survey of companies which revealed that a vast majority of government officers took bribes, known as speed money, for moving the files even in genuine cases. This was one of the prime tasks assigned to the National Accountability Bureau (NAB). However, outcome of some moves in this direction are far from satisfactory. Now it is expected that the government would attempt to clean up the system by sacking such officials through the downsizing process.

To reduce the size of government and to cut costs incurred for running it, the present setup is using the standard recipe of downsizing. Signals are unmistakable that the country's new economic managers will trim and prune extra fat in the public sector. Some public sector autonomous organizations, including banks, have already undergone the downsizing exercise; others, in the provinces and in various public sectors, have been selected.

The economic and management logic behind downsizing is strong. It is doubtless that in these resource-crunch times a penny saved is a pound gained. Besides, the public sector organizations are unwieldy, inefficient and overstaffed. Reducing their size can result in better productivity. In any case, the present downsizing effort is a continuation of the attempts made by earlier government in this respect. Comprehensive roadmaps for downsizing were proposed by two committees, one headed by Syed Fakhr Imam and the other by Dr. Hafeez Pasha.

But the whole process of downsizing, which is slowly beginning to take shape, ought to have a human face. Slashing down nonproductive public expenditure and improving government's performance by laying off the extra burden of needless staff have to be weighed against the risk of losing skills and expertise. More importantly, it must not be forgotten that government and public sector corporations have been the largest employers in Pakistan. The 'load' they will shed will not be picked up by the private sector, because the later is yet to create enough job opportunities for the unemployed. It is unlikely, therefore, that it will absorb the additional workforce laid off in the public sector. Downsizing would also require paying money under the golden handshake schemes, which might in the short run level off the perceived benefits of the exercise.

This does not mean that downsizing should be shelved. There is a certain inevitability about the process which cannot be escaped. What is being suggested is that downsizing should ideally be a measure of last resort. Savings can be made by strictly controlling wasteful expenditure on other heads in the ministries, government departments and autonomous organizations. Enforcement of rules and institutional discipline can increase performance. Restructuring can help deploy the currently misapplied talent to its most productive use. These are better and less unpleasant alternatives to the pressing need of making employees efficient and of justifying the massive resources that are spent on government. Only after these options have been exhausted that downsizing should be used as means to lighten the economy's weight of nondevelopment expenditure. We should also keep in mind that people in Pakistan are already faced with a horrifying spectre of unemployment. Tens of thousand of educated youngmen are unemployed. For years now the avenues of employment veneration are drawing up rather than growing. This is a horrifying spectre both for the country and its youth who wait in despair and frustration for some kind of future but who neither have counsel nor hope. The proposed large retrenchment would certainly add the dimensions of already horryfying situation.