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OECD Review of the
Irish Public Service
The case of agencies
September 2008
Public Governance and Territorial
Development Directorate
Top of the class in economic
growth over the past decade
Real average annual growth of GDP and of government expenditure, 1995-2005
8
7
6
real average GDP growth
real average public expenditure
growth
5
4
3
2
1
0
-1
a: 1998-2003; b: 2002-2004; c: 1996-2005
Source: OECD
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But growth has created its own
pressures
• More foreign-born: 15 % of the Irish were foreign-born,
compared to the OECD average of around 8 %. This places
Ireland in the top third of OECD countries with foreign-born
populations.
• Infrastructure is insufficient: Ireland ranks 4th to last
among OECD countries in terms of motorway per 1000 m2 of
area Only Norway, Poland and Finland fare poorer, but mostly
due to their large surface area.
• The population expects more efficient services: The WEF
2006-07 Global Competitiveness report ranks Ireland 55/125 in
terms of wastefulness of government spending; the report also
lists “Inefficient government bureaucracy” as the second most
problematic factor for doing business in Ireland (though this is
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only cited by 14% of respondents to the WEF survey).
Economic growth has outpaced
public expenditure growth
Ireland: GDP, GNI and Public Expenditure - Evolution 1995-2005
200000
GDP (a)
150000
GNI (b)
100000
Government Expenditure (c)
50000
0
1995
1996
1997
1998
GDP (a)
1999
GNI (b)
2000
2001
2002
Government Expenditure (c)
2003
2004
2005
Overall spending on public services
remains relatively low
Indicative production costs in the public domain as a percentage of GDP,
excluding cash transfers, debt and investment
35%
30%
25%
20%
15%
10%
5%
BLG
compensation of employees [A+B]
Source: National Accounts
NOR
CZ
GER
AUT
USA
intermediate consumption [E]
ESP
ITA
LUX
IRL
SWT KOR
social transfers in kind via market producers [C]
5
1995
2004
1995
2004
1995
2004
1995
2004
SK
1995
2004
PL
1995
2004
1995
2004
1995
2004
1995
2004
1995
2004
1995
2004
1995
2004
UK
1995
2004
FRA
1995
2004
FIN
1995
2004
NL
1995
2004
DK
1995
2004
1995
2004
SWE
1995
2004
1995
2004
0%
As does total Public Service employment
Employment in the General Government Sector and for Ireland in voluntary schools,
hospitals and universities, as a % of total labour force, in 2005 (or 2004)
35%
30%
25%
20%
15%
10%
5%
0%
NOR
SWE
FRA
FIN
BLG
SK
USA
PL
ESP
NL
IRL
GER
AUT
SWT
KOR
employment in voluntary schools, hospitals and universities, financed mainly by public funding
Sources: CEPD Survey, OECD
employment in the General Government Sector as a percentage of the total labour force, in 2005 (or 2004)
Source: CEPD survey, Labour Force Survey, OECD
Note: Data are in number of employees (and not in full time equivalents) except for Austria, the Netherlands, Sweden, and Switzerland (those
6 countries would
have higher numbers in number of employees)
At current taxation and debt levels,
service improvements require
increased Public Service efficiency
• Growth is slowing: over the period 2000-2005, real GDP
growth has declined from almost 10 percent to around 5 percent
annually; OECD forecasts GNP growth over the long term to
decline from an average of 7.1 percent for the period 1995-2005
to 4.6 percent for 2005-2010 and to further decline over the next
20 years to an average growth rate of 3.4 percent.
• Slowdown in economic growth means that a slower
growth of public expenditure is required post-2007:
After having grown by 8 percent from 2000-2006, total
government receipts are estimated to drop in 2006 by 1 percent
and to remain stable in 2007.
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OECD assessment
• Overall progress is on track: many mechanisms
are now in place
• Keep focus on whole of Public Service in order to
avoid fragmentation of interests and vision
• Performance orientation: embedding change
requires ownership and not just direction
• Remaining challenges:
– Taking a whole of Public Service view of capacity
needs, especially in decentralisation context
– Developing a common language and understanding of
performance
– Consolidating successes, learning from them, and
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extending reforms throughout the Public Service
Overall recommendations
• Focus on delivering societal goals
– Continue move from input control to performance management
– Develop clear vision of the type of Public Service that matches objectives
and aspirations
– Strengthen oversight and performance dialogue between departments
and agencies
– Build up reform skills for robust implementation
• Improve Public Service coherence
– Link up and streamline reforms to reflect overall vision
– Focus on leadership development and create a Senior Executive Service
– Promote mobility within and across the Public Service
• Strengthen citizen-focus
– Communicate reform goals; consult on means
– Build up capacity to bring services closer to citizens
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Agencies in Ireland:
CONTEXT
Agencies have been used as
• A means to increase public sector capacity
• In a centralised government
• With local government of limited jurisdictions
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Agencies in Ireland:
POLICY GOALS
The creation of agencies has corresponded to the
need to:
• Signal and embody new policy priorities
• Involve stakeholders
• Provide bodies with managerial flexibility and
allow more performance focus
• Coordinate policies at the local level
• Respond to EU requirements related to the
independence of regulators
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Agencies in Ireland:
GOVERNANCE (1)
A mismatch between the organisational forms
and the reasons for agency creation?
• Performance focus and representativity
• Differentiated top governance structure and
management autonomy
Agencies are meant to achieve too much
An organisational zoo?
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Agencies in Ireland:
GOVERNANCE (2)
Difficulties with focus on performance:
• Limited managerial autonomy
• But managerial capacity is not fully developed
• Difficulties with performance dialogue
What is the point?
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Agencies:
Overall conclusions
• Opacity and ambiguity : i) tight managerial
control and representative boards; ii) policy
independence and little management
autonomy
• Inefficient coordination at the local level
• Participates in the difficulties with integration
of the public service
• Strengthening of agency system is a two way
process between departments and agencies
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Agencies:
Specific recommendations
1) Review the governance system of agencies
• Rethink organisational form of service
delivery
• Match governance structure with agency
objectives
• Establish guidelines and criteria for agency
creation
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Agencies:
Specific recommendations
2) Improve performance focus
• Strengthen performance dialogue
• Increase managerial flexibility
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Agencies:
Specific recommendations
3) Improve HRM and strategic capacity in HRM
• Increase agencies capacity in strategic
management, financial management,
auditing and accounting
• Enhance capacity for developing
performance measures
• Strengthen departments’ capacity to carry
out a long term dialogue on performance
management
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• Improve board capacity
Agencies:
Specific recommendations
4) Wider reforms in the public service should
help strengthen the agency system
• An integrated public service
• An open public service
• A strengthened centre
• A focus on performance
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