Controversial plan for modernisation of public sector

In January 2002, the Norwegian government put before parliament a plan to modernise and increase efficiency in the public sector. Several of the measures proposed have been met with scepticism by both public sector trade unions and political parties to the left of the centre-right government.

The Norwegian government's report on the 'modernisation, increased efficiency, and simplification of the public sector' was put before parliament (Stortinget) by the Minister of Labour and Government Administration, Victor D Normann, in January 2002. The report - entitled 'Turning words to action' outlines the government's visions and goals for its proposed restructuring of the public sector. Reform of the public sector has been on the agenda on previous occasions (NO0101120F), but this time it will most probably bring about a more far-reaching transformation. A number of the measures proposed have already caused significant controversy both in parliament as well as in the government's relations with the public sector trade unions. The current government, which came to power in October 2001, is a coalition of the Conservative Party (Høyre), the Christian Democratic Party (Kristelig Folkeparti, KRF) and the Liberal Party (Venstre) (NO0110108F).

The proposal

The basic intention behind the government's reform proposal is to create a simpler administration and provide greater freedom of choice for the users of services provided by public sector institutions. Among the measures proposed are a clearer distinction between public administration and (public) service provision, and a more 'user-sensitive' financial support system allowing greater freedom of choice with regard to the services/providers available. The government also hopes to facilitate greater freedom as to how public service providers organise their activities. In order to preserve satisfactory public services, user surveys will be conducted.

Among the more controversial proposals from the government is that to introduce increased competitive tendering, and the wish to see more private actors entering the areas presently dominated by public services, such as health and education, and in relation to initiatives directed at people with occupational disabilities. As such, the government is directly challenging the employers' organisations in public sector, which by and large are opposed to competitive tendering, as is the opposition Norwegian Labour Party (Det norske Arbeiderpartiet, DnA), which accepts the basic principle of competitive tendering but wants to protect certain sectors such as health and education. The Minister has, however, emphasised that the intention is not to privatise public health and education services as such, only to encourage more private sector activity as a supplement to the public actors.

The government also wants to relax regulations concerning opening hours, working time and the working environment. The working environment and working time issues are being considered by a public committee established in autumn 2001 to re-evaluate the Act relating to Worker Protection and the Working Environment (AML). The committee was established by the previous Labour government, which resigned after the general election in 2001. The committee's mandate was extended just before the end of 2001 also to cover a review of the present regulations on temporary employment. The committee's work has, thus, to some extent shifted away from just looking at the extent to which the present legal framework is able to accommodate working environment challenges in modern working life – as well as proposing new forms of protection – to also considering a relaxation of existing rules and regulations. In addition, the government is soon to issue a proposal for a significant softening of the rules concerning opening hours in the wholesale and retail trade sector.

The government wants to see a more 'accommodating and stimulating personnel policy' in the public sector. The argument is that public employees today are 'locked up in the public sector' through lucrative pensions schemes and strong employment protection, but have relatively low wages. As a consequence, the public sector institutions do not enjoy sufficient freedom to compete with the private sector over key personnel. The implication is that there is too little mobility between the private and public sectors. Thus an express goal is to reduce the differences in employment conditions, among other measures through 'a harmonisation of wage conditions and of public and private pension arrangements'.

This is in many quarters understood as an attempt by the government to trim back many of the advantages enjoyed by public employees through lucrative pensions schemes and strong employment protection in the event of redundancies. Although it is emphasised that employees overall must not stand to lose out from this, the proposals have already met with significant discontent among the various trade unions in the public sector. However, the Minister has guaranteed that the pension issue will not be brought into the 2002 wage negotiations, which will take place in the spring.

Commentary

The government's plan for 'modernisation, increased efficiency, and simplification of the public sector' has already generated considerable political debate in Norway, not least in parliament. Whereas the Norwegian Progress Party (Fremskrittspartiet, FRP), a party to the right of the political continuum, wholeheartedly supports the reform proposal, and labels it 'good Progress Party politics', the parties to the left are more reluctant. The Labour Party claims that the objectives of the reform are to reduce costs and the number of public sector employees, and not, as it advocates, to contribute to a more egalitarian and high-quality service for all citizens.

However, despite the controversies surrounding the government's proposal, there is a general consensus about the challenges facing the Norwegian public sector in the years to come, and that a restructuring is necessary in order to make sure that services are delivered in an efficient and effective manner, as well as to safeguard the proper utilisation of resources. In parliament, the Labour Party has contended that a number of the proposed measures had already been placed on the agenda by the previous Labour government, which also initiated a large-scale effort to reform the public sector (NO0101120F). Critics argue, however, that the Labour Party was unable to carry out any significant changes due to the resistance of the public sector trade unions.

There is little doubt however that the new government – and not least the Minister of Labour and Government Administration himself – wants to go further than previous governments have done in reforming the public sector. The planned reform does not just bear the imprints of the Conservative Party – which is the largest of the three governing coalition parties – but also the personal imprint of the Minister himself, who prior to becoming a Minister was dean at the Norwegian School of Economics and Business Administration (NHH) in Bergen and a professor of economics.

The ambitious reforms proposed by the government will require changes to the legal framework and to collective agreements, as well as in the operation of public sector institutions themselves. Experience tells us that reforms in the public sector take time, not least in Norway where public wealth is considerable, which means that there is little external pressure for this type of reform. Success will also depend on the extent to which the government is able to convey its new ideas to the many local governments - as well as to different state institutions.

Furthermore, many of the measures proposed will be met by significant opposition from the trade unions concerned, the implication of which is that the government most probably will not rush through the most controversial issues. Minister Normann underlines the government's willingness to enter into negotiations with the relevant unions in order to conclude agreements on the modernisation process, but emphasises that such a cooperative effort requires that the unions accept the necessary reform proposals. Finally, the discussions in parliament made it evident that the government enjoys majority support for the reform proposal, as least insofar as there is a consensus within the coalition government itself on the subject. (Kristine Nergaard, FAFO Institute of Applied Social Sciences)