China will soon conduct an overall and intricate reform of its
public service units (PSUs), which constitutes a milestone in its
task of transforming government functions from economic
construction to public service.
According to Li Shenglin, Vice Minister in charge of the
National Development and Reform Commission (NDRC), the aim of the
reform of China's PSUs is to develop a streamlined, highly
efficient public service system that fits into the market economy
and satisfies the needs of the public. It will enable the Chinese
Government to gradually shift its focus from the concept of
economic construction to "working for the interest of people" and
to establishing a "public service system."
China's PSUs are social service organizations set up by
government departments or other organizations using government
funding, which are mainly engaged in activities in the fields of
education, science and technology, culture and public health. The
PSUs are a major source of jobs and share a large part of the
social service functions of the government and other
enterprises.
Over the past 25 years, the Chinese Government has conducted a
series of reforms focusing on streamlining government institutions
and changing the government functions. The reform of PSUs is yet
another major task that China will face following the reform of
state-owned enterprises and a streamline of government
departments.
Because the reform of PSUs involves the interest of nearly 30
million staff members working in more than 1.3 million institutions
in the fields of education, medical care, research and development,
cultural activities, entertainment and sports, it will be a very
complicated process, far more challenging than the reform of
state-owned enterprises.
Overall Reform of PSUs
The Chinese Government is considering and studying an overall
reform of its PSUs, NDRC Vice Minister Li Shenglin disclosed on
March 23 at the International Seminar on International Experience
with Public Service Reform and China's PSU Reform, jointly held in
Beijing by NDRC, OECD and the World Bank.
As the move may affect nearly 30 million employees on the
government payroll, it has aroused the emotions of people
nationwide, soon after the information was announced. How to reform
PSUs is the topic on everyone's lips.
Though trial reforms have been made on a small scale in PSUs
over the past decade, little progress has been made. This time the
Chinese Government is very cautious about the overall reform of
PSUs. Li's speech at the international seminar was regarded as
China's official attitude toward the overall implementation of PSU
reform.
Why the Reform?
PSUs can be divided into three categories in terms of their
duties:
First, government administration, mainly engaging in supervision
and management, qualification authentication and other
activities;
Second, social development, mainly engaging in science,
education, culture, public health and public infrastructure
construction; and
Third, market intermediary, mainly engaging in consultation and
coordination activities for enterprises.
Most of these PSUs are affiliated to government organs, and
provide public service. Statistics show that China now has more
than 1.3 million PSUs, employing nearly 30 million staff members
and managing nearly 300 billion yuan ($36 billion) worth of
state-owned assets. Over 70 percent of scientific research
personnel and over 95 percent of teachers and doctors work for
various PSUs. The government spends more than 30 percent of its
budget on this sector.
The frame of China's market economic system has been formed
through 25 years of reform and practice. However, PSUs that
developed under the planned economic system no longer fit into the
growing market economy, due to heavy overstaffing and inefficiency.
Since a lot of PSUs exert the power of government, they mix
government jurisdictions and thus incur poor administration, low
efficiency and bloated budget expenditures.
In addition, various PSUs are subordinate to different
government departments, thus exacerbating government monopolies in
certain public service sectors and leading to market segment and
waste of resources. With the constant improvement of China's market
economic system, various malpractices existed in PSUs over the past
years and contradictions that are not suitable for a market
economic system are appearing daily.
"Heavy overstaffing and low efficiency of PSUs formed under the
traditional planned economic system no longer fit into the growing
market economy, which seriously restrained the coordinated
development of economy and society," said Li.
Professor Xu Guangjian, Vice President of the School of Public
Administration at Renmin University of China, said that there are
three disadvantages in PSUs. First, most of them have not yet
completely got rid of the operational mode of the planned economy
and lack reasonable distribution of human resources, technologies
and funds. Some of them offer poor services. Second, due to state
financial support, most of them have a lazy and dependent nature,
and thus lack vitality and market competitiveness. Because of poor
management, the situation often arises where "there is work but
nobody will do it" and "there are so many people but they have
nothing to do." Third, many PSUs are increasingly short of funds,
due to their rapid increase of staff members and limited government
financial input.
"To ensure the efficiency and effectiveness offered by public
service sectors, it is imperative to redefine the role of
government. This is the reason of the reform of PSUs," Xu told
Beijing Review.
How to Reform
China should reduce the total number of PSUs and readjust their
structure. This is the first and crucial step to propel PSU reform,
said Fan Hengshan, Director of the Economic Restructuring Office of
the NDRC, who believes the concept of the reform in this case is to
dismantle those units which can be done away with, while those that
can't should be transformed into government departments or
enterprises. He said the number of PSUs that totally depend on
state financial support must be reduced and those that require
state funding should be transferred to other investors through
auction.
As the NDRC is one of the main organizations to coordinate the
reform of PSUs, Fan's reform concept is regarded by the media as a
sound guiding concept.
Professor Xu Guangjian stressed that the key to public service
reform is to raise efficiency, improve mechanisms and separate
administrative management from social undertakings. As the PSUs
feature Chinese characteristics, the reform has no available model
to follow. Also, "as China's national conditions are different from
that of other countries, we cannot copy Western models to reform
our public service sectors," Xu said.
"The reform of public service sectors is a system overhaul,
which involves many aspects and has high risks. Therefore,
experiments must be made in some units, which if successful, can
then be gradually spread throughout the country," Xu added.
Starting in 2000, China carried out trial reforms of both
enterprise restructuring and personnel restructuring in some public
service sectors engaged in scientific and hi-tech research and
other operational undertakings. This means the PSUs were changed
into enterprises and their staff members became employees of the
enterprises, thus breaking the "iron bowl" mentality (lifelong
dependence on the government) of the civil servants in public
service sectors. This trial reform has proved successful. Currently
China has more than 8 million civil servants in 300,000 or so PSUs
working under the new system. This has provided experience and
reference for the overall implementation of PSU reform.
"The reformed PSUs should be non-profit organizations mainly
engaged in social undertakings and public welfare undertakings, and
should be independent from government and other enterprises," he
said.
Vice Minister Li Shenglin said that the NDRC is working on the
blueprint for the reform of PSUs, which is expected to be put into
practice in the second half of this year.
Tough Challenges
Liu Baoying, Director of the Specialized Technological Talents
Administration Department with the Ministry of Personnel, said
there are five tough issues that need to be resolved to deepen the
reform of public service sectors.
First, systems and institutions. The reform of PSUs must
coordinate and combine systems with institutions.
Second, personnel system restructuring. This is a difficult
point and also a prerequisite of PSU reform. The reform of public
service sectors requires that posts be set up according to needs
and employ people according to posts. As to how many posts should
be set up and how to set up in terms of the number of posts,
conclusions must be made after conducting overall studies and
analysis of the posts in different PSUs.
Third, distribution mechanism. This is the key to PSU reform.
Studies should be stepped up to improve the distribution system of
"to each according to his/her work," which is based on the
principle of distribution according to contributions. A failure to
establish such a system is very likely to dampen workers'
enthusiasm, which may lead to failure of the PSU reform.
Fourth, arrangement of those made redundant. Some people will
definitely lose jobs during PSU reform. The solution of this
problem will be the biggest challenge.
Fifth, social security system. Only by establishing a unified
and efficient social security system can the allocation of human
resources through social channels be realized, thus stimulating the
vitality of public service sectors.
At present, what the PSU staff members are mostly concerned
about is personnel reform, distribution system and social security
system.
PSU workers have varied opinions when talking about reform. Some
of them with a stable income have no sense of crisis.
Others worry about a future without financial guarantees, so
they resist reform.
Fan Hengshan pointed out that the reform of PSUs is a
complicated operation with high stakes and cannot be completed
overnight.
He said the reform process should proceed in tandem with other
complementary reform measures such as social security.
(Beijing Review May 3,
2004)