Doubts over Finland’s state productivity programme

Finland’s audit office recently announced that a programme to improve public sector productivity had failed. The programme’s basic aim was to cut down on the replacement of retiring employees, gradually reducing the number of public sector workers. In view of the audit office finding, the parliamentary audit committee and trade unions have called for the programme to be scrapped. But the Finance Ministry has defended it, saying it can only be evaluated in the long term.

The National Audit Office (VTV) has published its evaluation (in Finnish, 618Kb PDF) of the state programme aimed at improving public sector productivity, which suggests that the programme has failed. Trade unions and the Finnish parliament’s audit committee are therefore calling for an end to the programme.

Programme aims and achievements

The Finnish state productivity programme began in 2003. Its aims were to improve the productivity of public administration and to ensure sustainability of the economy because the retirement of the baby-boom generation and increased future expenditure will pose considerable challenges to the productivity of the public sector. Finland’s Finance Ministry has also argued that the programme is needed to help avoid a shortage of qualified employees in the private sector.

During the programme, the number of jobs in the central government sector fell by 8,000, and another 5,000 jobs are expected to be cut by 2015 in the framework of the programme. Most of the reduction will be achieved by not replacing retirees.

Auditors and unions hit out at programme

VTV has stated that the public sector productivity programme has failed, even though it has cut back on 8,000 jobs. According to VTV’s report, when the programme began in 2003 the improvement of productivity seemed to be one of its major goals, but since 2005 the focus seems to have switched to simply cutting the number of staff in the central government sector. The audit office did not find that this downsizing policy had improved productivity.

Following the evaluation, the parliamentary audit committee called for the programme to be halted. The Chair of the committee, Matti Ahde, stated: ‘It’s not even a productivity programme, only a programme to reduce the number of person-hours. We want to scrap this mechanistic model.’

Heikki Taulu, adviser on labour policy for Finland’s Confederation of Unions for Academic Professionals (AKAVA), says the timing of the programme has been bad. The private sector has reduced recruitment during the recession at the same time as the productivity programme weakened employment prospects in the state sector. Mr Taulu suggested: ‘It would be good to just freeze the productivity programme for the time being, until unemployment falls.’

The Chair of the Federation of Salaried Employees (Pardia), Antti Palola, agreed with the critics, saying that Pardia feels the programme is a purely mechanical downsizing exercise that has in fact reduced the productivity of the central government sector.

Finance Ministry defends the programme

The Finance Ministry official in charge of the programme, Tomi Hytönen, denies that the programme is ineffective. According to him, VTV used incorrect evaluation criteria when it found that productivity in the state sector declined in 2009. He argues that the impact of the programme should be assessed in view of long-term trends. MrHytönen insisted: ‘The productivity programme has worked. The state is using a smaller workforce and I have not heard that the level of services has somehow collapsed.’

Commentary

According to the latest Quality of Work Life Surveys conducted by Statistics Finland (Tilastokeskus), the increased monitoring of productivity has affected the central government sector in particular. The 2008 survey shows that this sector has also been affected by time pressure, a shortage of personnel, insecurity about the future, a lack of access to information and a lack of openness (FI0911019D).

Pertti Jokivuori, University of Jyväskylä

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