Keen Eyes for Economic Trends: The Start of Public Sector Work Style Reform

SATO Motohiro
Faculty Fellow, RIETI

The wave of work style reform is rushing toward the public sector, including local governments. In fiscal 2020, local governments will adopt a "fiscal year-appointed personnel system" as a new employment system.

Local government personnel can be roughly divided into regular personnel and non-regular personnel, such as part-time personnel. However, the differences in work content between the two were not very clear, with part-time personnel performing the same duties (work) as regular personnel (for example). Treatment, including regular compensation and wage increases, on the other hand, was vastly different. In other words, there was no "equal pay for equal work."

The newly established "fiscal year-appointed personnel system" will succeed the former "general, non-regular personnel system." Furthermore, there will be new requirements regarding personnel hired under the new system, including: (1) separation of duties from those of regular personnel, and (2) payment of a term-end allowance (i.e., bonuses), which were not done before.

During the author's local government-related work it has been observed that consigning work to the private sector ends up increasing administrative costs. A reason for the increase was the fact that non-regular personnel could be hired relatively cheaply. This is why the public sector is said to be turning into a "sweatshop."

Indeed, while local governments have been reducing the number of regular personnel, they have been assigning a lot of non-regular personnel to short-handed fields such as welfare and parenting support. With the new appointed personnel system, which comes with a term-end allowance, however, payroll costs will increase. Nevertheless, if local governments reduce appointed personnel, workloads of regular personnel would increase, significantly increasing the pressure on many local governments.

Moreover, the decrease in population in rural areas is serious. This fact suggests that local governments should be concerned about securing personnel, including non-regular personnel. A research group at the Ministry of Internal Affairs and Communications (MIC) has projected that population decrease will result in the need for governments to handle their administrative work with half the current number of civil servants in 2040.

In terms of people, things, and money, local governments have total funds of 21 trillion yen. With generous support from the national government through tax allocations to local governments and other measures, it is not the case that there is always a lack of money (= finances). Things (= public facilities and social infrastructure) are well developed and, if anything, need to be restructured and consolidated. What there will be a lack of in the future are people (= human resources). Population decline in rural areas is creating the need for the "work style reform" of civil servants.

Well then, what is there to do? There is a limit to the ability of local governments to provide all administrative services on their own, such as by assigning non-regular personnel (appointed personnel from fiscal 2020) as in the past. It is therefore conceivable, then, to consign service counter work (such as issuance of residence certificates) and operation of public facilities to private sector operators after clearly separating the duties of regular personnel from non-regular personnel.

Local governments with a shortage of highly specialized human resources, such as engineers, who handle infrastructure management, and that would have difficulty consigning the work to the private sector because of a small population size, could cooperate with neighboring local governments to share specialized human resources and/or undertake joint work consignment. MIC too has been promoting wide-area cooperation, such as the Cooperative Central Urban Area Plan. Where there is a shortage of people to handle work, including service counter services, it would also be possible to replace those jobs with machines (using information and communication technology [ICT]).

If the appointed personnel system is taken in this way as the "entrance" to solving these problems, then private sector consignment, wide-area cooperation, and a shift to ICT could be the "exit." Controlling the amount of work done by civil servants could contribute to their work-life balance and also lead to reconstruction of public finances by improving administrative efficiency.

>> Original text in Japanese

* Translated by RIETI.

October 27, 2018 Weekly Toyo Keizai

January 22, 2019

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