The Shrinking Public Service

The Parliamentary Library has released a research note titled; The incredible shrinking public sector [PDF Warning] . It charts the decline in numbers of the public sector. The change in absolute numbers has mainly been in federal government, with the states and local council's number of public sector employees remaining about the same.

From the research note;

The share of total employment taken up by the public sector fell from 26 per cent in 1984 to 16 per cent in 2005. That amounts to 940,000 fewer jobs in the public sector than would have been the case had the public sector retained its share of total employment.

This can be seen in the graph;

The reason for this shrinking number of public sector employees is increased out-sourcing as well as the privatisation of many industries that were once government operated. Public sector employees are now concentrated in education and defence.
Permalink, The Shrinking Public Service, Apr 2006, cam
Guy: One wonders what the implications of this are...: Certainly both the NSW State Government and the Opposition have also flagged further public sector job losses as a likelihood in the lead-up to the next state election.

It\'s great to minimise waste, but I wonder if anyone is bothering to check what the implications of all these job losses are for the effectiveness of government service delivery and the satisfaction of the customers of government departments?
cam: The pdf mentions the concern about: apprenticeships as the government was one of the largest apprentice employers. There are other benefits though, having a work force that is contractor based means you can avoid the worst aspects of bureacracy where a department and its staff exist solely because they exist. However, an issue with out-sourcing is that government prefers dealing with a single entity and usually smaller companies end up as sub-contractors to an exceptionally large company.

cam
adam: Privatisation: Point taken, but it\'s worth noting that a lot of these weren\'t job losses as such, but rather a transfer of employees to the private sector as a result of privatisation and outsourcing. For instance the Commonwealth Bank was privatised over this time period, and the Tax Department (mistakenly, I suspect) outsourced all of its IT. Telstra employees might have been reclassified too. 1980 was probably close to a high watermark in the size of the civil service.
cam: Telecommunications went from: the public sector being 89% of the industry to 39%. Elec/Gas/water went from 95% to 54%. They are probably the two industries which mostly went from public to private in the last twenty years.

Health is interesting, 51% to 35%. It suggests that in 1980 half of the health industry was already private. I guess it is a teeth/tail issue. When I think of health I think of doctors and nurses (teeth), though with such a complex system of medicines, services, technology etc etc there is probably a massive tail supporting it.

cam
Guy: Fair point but...: This is true enough, but does it necessarily make sense to move jobs from the public to the private sector for the sake of it? Surely someone must have studied the overall price+quality of the service provided by public sector employees as opposed to the price_+uality of the service provided by the private sector when they win this sort of work?

From what I have seen, govt departments often end up with very expensive and not necessarily better results when outsourcing companies are brought in to backfill traditionally full-time public sector positions.
adam: The sake: When it comes to privatisation, yes. I honestly believe having the government as both a player and an umpire is not only less efficient, but a recipe for corruption and nepotism.

As for government outsourcing, I think it\'s purely a matter of value for money and fair enough that they\'re following industry trends. Personally I think that some corporatons have been overzealous in outsourcing functions that are effectively core business. Eg I suspect outsourcing every IT person in a building is fairly doomed to failure. When that happens I think the organisations involved will either fail or reinvent the outsourced competence inhouse. But unless there\'s rentseeking or backscratching in the awarding of the contracts, it\'s not a philosophical issue for me.

The PPP approach of immensely complicated agreements for very long term agreements seems fairly brittle and fragile, though.

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