Insourcing to competent officials, not wage cuts, is cure for state’s ills
Bureaucrats have been reduced to managers of tenders and contracts
One of the most controversial measures in the 2020 budget was the proposed dramatic cut in the public wage bill. Aside from the politics involved, and the macroeconomics — both of which are likely to be counterproductive — this is a bad idea because of the way the SA state works.
The bureaucracy simply doesn’t do enough of its own work as it is. The Public Affairs Research Institute (Pari) found in 2014 that “one of the largest tasks, arguably the single largest function” of most government departments had become the procurement and management of outsourced functions.
The government relies heavily on consultants and service providers for everything from drawing up routine plans and policy documents to hospital laundry services. Most bureaucrats in the institutions of state have been reduced to managers of tenders and contracts.
This isn’t because government employees can’t be bothered to do their jobs. Greater use of outsourcing has been the explicit policy of the SA state since the mid-1990s, driven by international trends and a desire to break the incestuous relationship between the apartheid state and monopolistic capital. The reforms of the 1990s were aimed at diverting government business to black-owned small and medium enterprises, and subsequent reforms were aimed at increasing the probity of what soon became an enormously expanded government procurement system.
As I was told when I was young, ambitious, and looking to join the public service: all the interesting work goes to consultants anyway, so why become a public servant?
When the private sector covers all the functions hitherto performed by the bureaucracy, albeit at a higher price, where does that leave the government? It leaves it largely not doing the work of the government. It pays other people a premium to do it instead: in 2012/2013 procurement consumed 42% (R372.9bn) of national, provincial and local government expenditure (excluding state-owned enterprises). It had grown by 10% annually over the previous four years.
This reduces many government employees to contract managers. For a bureaucrat, managing an important consulting contract is often difficult, risky and thankless. Difficult because to do it properly you have to be nearly as skilled and knowledgeable as the consultant, to make sure they’re doing a good job. And you have to constantly keep profit-conscious providers from cutting corners.
It’s risky because you’re responsible for the administration of what might be a large amount of public money, and you’re liable for non-delivery and any potential malfeasance in the contract administration, in a way that wouldn’t be the same if you were just doing the work yourself.
And it is thankless because despite demanding the skills and intellect to closely manage the process you don’t get to do the work yourself — for someone who went into government because they’re interested in policy, or implementation, this can be incredibly frustrating. As I was told when I was young, ambitious, and looking to join the public service: all the interesting work goes to consultants anyway, so why become a public servant?
This creates a situation in which skills, commitment and passion — all essential components of a good bureaucracy — are drained out of the public service and into the consultancies, where they are sold back to the government at a higher price. The higher prices these skills command — and the dependency of many consultancies, large and small, on government work — make securing government contracts imperative for many of these firms. It is therefore no surprise that so many of the largest public sector consultancies have been implicated in state capture.
In the half-century of apartheid the imperatives of the state were supporting a small set of monopolistic companies and their owners, and maintaining the living standards of working-class Afrikaners. The postapartheid state’s vision has been clear, but it has also had an explicit mission of channelling state resources into the private sector, on (at best) misguided principles of efficiency and equity.
Corruption is therefore a procedural, not a substantive, aberration. This is the great contradiction of the anticorruption agenda. The taps of public money can’t be turned off — even when the state could conceivably spend the money better internally.
If the finance minister really wanted to save money while pursuing growth and development, public sector wages is the last place he should be cutting. He should lead a campaign to insource all the functions of the state that used to be core to its business — from writing policy documents to fixing potholes — and aggressively hire good people to do the work.
This might increase the public wage bill but would nonetheless save the government money. And it would start the long, slow, but essential work of rebuilding state capacity.
• Harber, a political economist, is a researcher at the Gauteng City-Region Observatory. He writes in his personal capacity.
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