Challenges in Coordinating and Governing Public Services in Times of Crisis and Reform'

Commission européenne

Maroš Šefčovič

Vice-President of the European Commission responsible for inter-institutional relations and administration

‘Challenges in coordinating and governing public services in times of crisis and reform'

COCOPS (Coordinating for Cohesion in the Public Sector of the Future) conference /Brussels, 9 December 2013

Ladies and gentlemen

As US President Woodrow Wilson once said: "If you want to make enemies, try to change something".

This, I suspect, is a sentiment that many of us here can understand.

The last few years have forced us to change as never before. The economic crisis has ushered in austerity measures, restructuring and reform on a Europe-wide scale, obliging public administrations to rethink the way they work and adapt to what has now become the 'new normal' of doing more with less.

Change in times of crisis is inevitable.

But it need not be disastrous.

As you've heard today, there are many examples of how public servants across Europe have chosen to react positively to the changes imposed on them, adapting them to their own needs and ultimately making them changes for the better.

Selling the positive aspect of change – whether it is imposed upon us or not – is of course one of the biggest challenges that any public administration faces.

And yet reform of public administration is seen as one of the five main priorities for the creation of smart, sustainable and inclusive growth across the EU – the core of the Europe 2020 strategy and the European Semester that supports its implementation.

Each year, the European Semester economic policy coordination exercise gives us a very clear snapshot of the state of play of reforms in each EU Member State, including with regards to public administration.

The Semester is designed to help Member States better coordinate their economic and structural reform programmes and their budgeting procedures to ensure that the measures they take not only help create jobs and growth at home but, just as importantly, do not impact on the economic well-being of other Member States.

The process starts with the Annual Growth Survey published by the Commission in or around November. Then the March European Council issues EU guidance for national policies on the basis of the AGS. On the basis of these, Member States submit their national plans for growth and reforms or for sound public finances in April.

Then the Commission assesses these programmes and provides country-specific recommendations as appropriate, usually in May or June, which are then endorsed by the European Council usually at the end of June or in early July.

As far as public administration is concerned, the Country Specific Recommendations are often revealing, as they show where the Commission believes individual Member States need to do more to modernise and reform to help generate growth.

This year's CSRs, published in May, highlighted issues in a number of Member States:

In Italy, for example, major reforms of the labour market are undermined by the fact that the administration of public employment services are not integrated with those responsible for unemployment benefit, making it almost impossible to develop effective strategies for helping unemployed people back to work.

In Bulgaria, meanwhile, there are significant inefficiencies in the tax collection administration, which leads to high compliance costs and significant tax evasion.

In Estonia, there are issues regarding local public administrations, which are responsible for providing services such as long-term care, family-support, health care, education and transport but have neither the administrative capacity nor the resources to so effectively.

France, on the other hand, needs to streamline its various administrative layers and competences to generate efficiency savings and gains, notably through greater decentralisation.

I won’t go through the recommendations for every country, and the four I've mentioned are by no means the only countries concerned, but I think you can see that there are still many aspects of public administration where Europe can do better.

The problem is, of course, that 'doing better' in these terms – producing a more efficient and cost-effective service that contributes to economic growth – more often than not translates in the public perception into job losses and budget cuts.

And that is perhaps why public sector reforms can sometimes be so slow to come about.

Public administrations are political organisations. It may be civil servants that actually do the work, regardless of which party is in power, but it is ultimately the politicians who hold the purse strings and make the decisions.

And as we all know, politicians are extremely sensitive to public reaction, and how they manage change can be a matter of political life or death for them.

Selling public sector reform as a positive long-term benefit to everyone – even to those people whose jobs are affected by the changes – is an extremely difficult task, as any politician who has tried to introduce new taxes, merge services or downsize administrations can easily testify.

So why does the European Commission continue to call for reform of public administrations across Europe? There are plenty of people who might think that the Commission is unpopular enough without going down that route as well!

Well, the answer is simple enough: because it works!

But let's be quite clear about this: reform and change does not necessarily have to mean jobs cuts, it does not necessarily have to mean slashed budgets. It is possible to square the circle, to cut costs at the same time as fostering growth and competitiveness.

There are many, many examples from across Europe of how public administrations have managed this change effectively; how they have seen the challenge as an opportunity to do things better.

You've seen several examples today, but there are plenty more to choose from.

Earlier this year I had the privilege to take part in the European Public Service Awards ceremony here in Brussels, where I saw just how creative many of our public administrations have been.

It's interesting I think to see that some of the most innovative and creative solutions are coming from the countries highlighted in the CSRs as needing to reform more effectively.

One of this year's winners at the EPSA award ceremony was the Italian public administration, whose 'Compass of Transparency' project, which gives citizens the chance to check online in real time how effectively laws are being implemented across the country.

The compass has already led to significant efficiency gains, helped reduce corruption and cut costs, through the simple use of 'people power': as there are more than 20,000 different public administrations across Italy, checking their progress by a more traditional verification system would have been cumbersome and costly; making their progress open for everyone to see not only keeps the pressure on the administrations to do their jobs more effectively but also does so at a very low cost!

Perhaps part of the problem with 'selling' the necessary changes that have to be made to our public administrations across Europe is in fact the word 'reform'. As I said before, it is certainly a term that has almost entirely negative connotations, which in the public perception at least tend to overshadow the potential benefits that reform may also bring.

So why don't we use a different word, a more positive word?

How about 'innovation'?

It is perhaps ironic that while we live in a society that is resistant to change, it is also happy to welcome innovation with open arms! Innovation is seen as finding new ways to do things better – which is essentially the same as the reform process, but without those negative connotations!

And there is plenty of public sector innovation to be found across Europe, as the Commission's new European Public Sector Innovation Scoreboard clearly shows.

The Commission launched the scoreboard earlier this year to try to improve our ability to benchmark the innovation performance of the public sector in Europe. It is based roughly on the same principle as the well-established Innovation Union Scoreboard which focuses on national innovation performances, with the ultimate ambition to encourage and facilitate innovation activity across the public sector.

This first EPSIS report does not provide a ranking of countries’ performance, since the availability of data is still limited and does not fully capture all parts of the public sector or all aspects of innovation. However, it is sufficient to give a sense of the strengths and weaknesses across countries.

The initial results show that:

European public administrations are highly innovative, with two out of three public administration organisations having introduced at least one service innovation.

The involvement of managers and employees makes it more likely that a public administration develops process innovations.

The presence of internal barriers to innovation (such as a lack of management support, staff resistance or a risk-averse culture) not only has a negative effect on innovation but also on the government’s effectiveness in general.

The introduction of new and improved public services has a significant impact on business performance. For example, by investing in advanced ICT infrastructure, governments have managed to considerably increase the online availability of public services for businesses.

Companies that report benefits from using improved public administration procedures (such as online completion of government forms or access to online information on government services) are more likely to be an innovator in their own right, and to have increasing sales.

Even from the small sample of public administrations questioned in this first EPSIS report, I think it's abundantly clear that innovative and high quality public services act as a driver of business performance.

In countries where governments manage to provide improved public services for innovation and create a more business-friendly environment, companies show improved economic and innovative performance.

This is precisely why the Commission continues to place so much emphasis on the need to modernise public administrations as part of the Europe 2020 strategy and the European Semester.

The public sector plays a key economic role as regulator, service provider and employer, and accounts for around 25% of total employment and a significant share of economic activity in the Member States. If we want to build an economic recovery in the EU, then the public sector needs to play a major part.

Feedback from public officials interviewed as part of the pilot EPSIS report suggests that further efforts to develop the measurement and benchmarking of public sector innovation would be of interest to most if not all Member States and that this is an area where European policy should continue to show leadership.

And the EU is doing just this in other areas as well.

Many European countries already use electronic procurement to make tendering of public sector contracts simpler and more efficient, but most of these solutions are implemented solely on a national or regional level. PEPPOL (Pan-European Public Procurement Online), a pilot project run by the European Commisison and 17 partners in 11 different EU countries from 2008-2012, was designed to develop and implement technology standards that would effectively bridge the gap between the various national eProcurement systems.
Let me give you an example of how it works: A French hospital issues a call for tender in the field of specialised microscopes. A small Danish supplier wishes to take part in this tender.

Using PEPPOL, the Danish company can send all the necessary documentation safely and correctly to the hospital, meeting the necessary legal and technical requirements. And, if the Danish company is successful in its bid, the French hospital would be able to send orders and receive invoices in terms of a common set of defined business rules and processes.

This system not only makes it easier for companies and public authorities alike to benefit more effectively from the single market, it also has significant impact on costs. In fact, if such a system was in use across the entire EU, European countries would save about €50bn per year in the procurement of goods. Small and medium enterprises would make an additional saving of approximately €40bn in transaction costs! In times of crisis, when budgets are under pressure, this is a highly compelling argument in favour of change!

The Single Market is arguably the greatest single achievement in the history of the EU – a market of more than 500m consumers, with the freedom to choose what they want where they want.

And yet 20 years after it was first agreed in the Treaty of Maastricht, there are still plenty of barriers to a truly single market.

Efficient exchange of information across borders is one of them.

Moving countries for work, study or retirement brings about certain administrative requirements. When moving across borders, individuals or businesses have to provide information and documentation – often issued by their home country’s administration – to public administrations, both national and local, in their new place of residence.

But this exchange of information poses a challenge. European public administrations are not yet geared up to transfer information electronically in an efficient manner. National eGovernment systems differ in style and function and primarily tend to address internal needs. But as more and more people and goods move within the EU, public administrations must start to provide efficient cross-border electronic public services.

This is where the Commission's ISA programme (Interoperability Solutions for European Public Administrations) comes in.

ISA has been designed to help public administrations meet this challenge by enabling the availability, interoperability, re-use and sharing of common solutions between public administrations.

For example, one of the projects within the ISA programme is called ePrior, an e-Invoicing system developed by the Commission. ePrior is a free open-source solution and available to any interested public administration, that is designed to save money for both businesses and governments.

The Belgian Federal Government is the latest to start using ePrior, and predicts that it could save companies as much as €2m a year and government as much as €7.5m! And the Belgians have also taken the innovative approach to allow the public services that use ePrior to invest half of the savings that they make in improving their services – a real win-win situation!

ePrior, and the wider ISA programme as a whole, are good examples of how a little smart thinking at EU level can have a major impact on the everyday life of citizens the length and breadth of the Union. And how the innovative use of modern technology can help public administrations do more with less.

EU level support for public administrations is not solely in terms of infrastructure and advice, however. There is also financial support, primarily through the European Social Fund.

As I am sure you all know, EU cohesion funding, of which the ESF is a part, is designed to help reduce the gaps between the various regions of Europe.

These gaps are often economic and social, but can also be in terms of administrative capacity, which is where the ESF comes in.

In less-developed Member States and regions, the public services responsible for developing employment-related strategies and their implementation may lack the capacities to do so in the right way and cost-effectively.

For this reason, ESF-funded projects are helping strengthen the efficiency of public administration in delivering public services in all sectors.

There are projects in a wide range of areas, from skills training for civil servants in both ‘back office’ and customer-facing roles to promoting the use of IT to facilitate information sharing

ESF support to better public services also includes modernising labour market institutions such as employment offices and services as well as health sector institutions and others.

So as you can see, the EU has a raft of policies aimed at helping public administrations through the difficult times, and that in turn have a highly beneficial effect on the EU 's efforts to boost economic growth and jobs.

And yet the wider perception is that EU laws stifle growth and make life harder for citizens and businesses. In fact, 74% of Europeans believe that the EU generates too much red tape; tackling this issue will not only improve the EU's image among citizens but, more importantly, help to create the kind of innovative and job-creating environment I've been talking about.

As President Barroso said in his State of the Union address on 11 September "the EU needs to be big on big things and smaller on small things– something we may occasionally have neglected in the past".

Let me give you a few examples of how we are trying to do this, in particular to help SMEs. More than 99% of all European businesses are SMEs, and they provide two out of three of the private sector jobs and contribute to more than half of the total value-added created by businesses in the EU. Being smarter in the way we regulate is a major factor in helping SMEs to operate more successfully.