REDUNDANCY, BUREAUCRACY AND UNCERTAINTY IN THE PUBLIC SECTOR Submitted by Solesi John Oluwadamilola URP/2007/058

To Dr. A.O AFON Department of Urban and Regional Planning Faculty of Environmental Design and Management Obafemi Awolowo University, Ile-Ife Osun state Nigeria

January 2013

TABLE OF CONTENT INTRODUCTION

1.1 REDUNDANCY 1.2 BUREAUCRACY 1.3 UNCERTAINTY

3-5 6-7 8-12 13-14 14 15

CONCLUSION REFRENCES

INTRODUCTION The public sector, sometimes referred to as the state sector or the government sector, is a part of the state that deals with either the production, ownership, sale, provision, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range from

delivering social security, administering urban planning and organizing national defense. The organization of the public sector (public ownership) can take several forms, including: Direct administration funded through taxation; the delivering organization generally has no specific requirement to meet commercialsuccess criteria, and production decisions are determined by government. Publicly owned corporations (in some contexts, especially manufacturing, "state-owned enterprises"); which differ from direct administration in that they have greater commercial freedoms and are expected to operate according to commercial criteria, and production decisions are not generally taken by government (although goals may be set for them by government). Partial outsourcing (of the scale many businesses do, e.g. for IT services), is considered a public sector model. A borderline form is as follows** Complete outsourcing or contracting out, with a privately owned corporation delivering the entire service on behalf of government. This may be considered a mixture of private sector operations with public ownership of assets, although in some forms the private sector's control

and/or risk is so great that the service may no longer be considered part of the public sector (Barlow et al., 2010). (See the United Kingdom's Private Finance Initiative.) In spite of their name, public companies are not part of the public sector; they are a particular kind of private sector company that can offer their shares for sale to the general public, i.e. to anyone willing to buy them (as opposed to a privately owned company, shares of which can be sold to someone only if the owner of the shares agrees to sell them). The role of public sectors are as follows: The role and scope of the public sector and state sector are often the biggest distinction regarding the economic positions of socialist, liberal and libertarian political philosophy. In general, socialists favor a large state sector consisting of state projects and enterprises, at least in the commanding heights or fundamental sectors of the economy (although some socialists favor a large cooperative sector instead). Social democrats tend to favor a medium-sized public sector that is limited to the provision of universal programs and public services.

Economic libertarians and minarchists favor a larger private sector and small public sector with the state being relegated to protecting property rights, creating and enforcing laws and settling disputes, a "night watchman state". - The Public Sector consists of the Central government,regional administration and local authorities - The Public sector is obliged to promote the economy, by providing an infrastructure for businesses to use. - The Public sector have to finance large capital projects that businesses in the private sector cannot afford by itself. - The Main aim of the Public Sector is to provide a service to the public - They take state finances and put it into businesses in the private sector, that can make a profit
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Even though the public sector in African countries was expected to spearhead socioeconomic development to reduce poverty, it has proved largely ineffective in performing this task. Some of the reasons for this ineffectiveness are excessive politicization, lack of accountability and representation, inability to promote the public interest and authoritarian tendencies. The ineffectiveness has led to the call for a redefinition of the role of the public sector.

1.1 REDUNDANCY A genuine redundancy only arises, for the purposes of redundancy pay, in the following situations (Employment Rights Act 1996 s 136): the employer has ceased, or intends to cease, to carry on the business for the purposes of which, or in the place where, the employee was so employed; or the requirements of the business for the employees to carry out work of a particular kind, in the place where they were so employed (or otherwise), has ceased or diminished or are expected to cease or diminish.

The definition is therefore quite wide. Redundancy can occur when: The workforce is reorganised and there is less work

Changes in conditions mean the old job is quite different from the new one

The business relocates An employer puts work out to contract

The test for redundancy is whether the employer requires fewer (or no) workers to do work of a particular kind, and not just whether the work itself has ceased or diminished. The primary reasons for making redundancies are the reorganisation of working methods and efficiencies. Confusion may arise because making someone redundant can be used as another

way of saying that an employee is being dismissed for some reason other than redundancy. Meaning of Lay-off If an employee is employed on such terms and conditions that his remuneration depends on his being provided by the employer with work of the kind he is employed to do, he shall be taken to be laid off if the total number of days on which no work is provided or no wages is paid exceeds: half of the total number of normal working days in any four

consecutive weeks; or one-third of the total number of normal working days in any 26 consecutive weeks. The days of lock-out, rest days, annual leave and statutory holidays should not be counted as normal working days during the above periods

1.2 BUREAUCRACY A bureaucracy is a group of specifically non-elected officials within a government or other institution that implements the rules, laws, ideas, and functions of their institution In other words, a government administrative unit that carries out the decisions of the legislature or democratically-elected representation of a state. Bureaucracy may also be defined as a form of government: "government by many bureaus, administrators, and petty officials. A government is defined as: "the political direction and control exercised over the actions of the members, citizens, or inhabitants of communities, societies, and states; direction of the affairs of a state, community, etc. On the other hand democracy is defined as: "government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system", thus not by non-elected bureaucrats. Term "bureaucracy" was created from words: fr. bureau desk or office and gr. kratos rule or political power. Relatively complex government organizations that operate according to rules and procedures to implement the programs and policies of political leaders. A bureaucracy is a complex organization that usually contains hundreds or even thousands of employees, each with different duties and responsibilities. Bureaucracies exist in all types of organizations -- private, public, government, business, charities, corporations, even households. The study of public choice indicates that government bureaucracies are one source of government inefficiency. Other sources are politicians, voters, and special interest groups.

Complex bureaucratic organizations assume the task of implementing the policies and programs inacted by governments. Political leaders establish the policies and bureaucracies carry them out. Congress might vote for a change in tax laws, but the Internal Revenue Service is charged with implementing the change. However, it's not "bureaucracies" per se that carry out the policies, but people employed by the bureaucracies, government workers. These people, these government bureaucrats, carry out the policies and programs according to specific rules and procedures. These rules are the good and bad of bureaucracies. The good is that they enable the implementation of policies and programs in an orderly fashion, not guided by the capricious whims of government workers. The bad is that they prevent workers from assuming personal responsibility, preventing the incentives that are essential for an efficient allocation of resources. Following Orders A bureaucracy is a complex organization that, more often than not, contains hundreds or even thousands of employees, each with different duties and responsibilities. Although the word government is usually added to the word bureaucracy (and make no mistake, government is not shy when it comes to complex bureaucracies), bureaucracies exist in all types of organizations -private, public, government, business, charities, corporations, even households. Most major corporations are structured as complex bureaucracies. So too are large, nonprofit charities. However, because the public sector tends to have the largest bureaucracies, government bureaucracies tend to get the most notoriety. Moreover, while bureaucracies are a prime source of public sector inefficiency, they also contribute to inefficiency that exists inprivate sector.
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Inherently Inefficient So, the question arises: Why are bureaucracies inefficient? The answer rests with the nature of complex organizations.

Responsibility: At the top of the list is the assignment of responsibility to those working in a bureaucracy. In a complex organization, whether public or private, individuals can avoid personal responsibility for their actions. They can blame the rules. They can blame others.

Management: As the size and complexity of an organization increases, the ability to exert control decreases. The "head" of a one-person organization has complete control over that "one person." The "one person" carries out the dictates of the "head" without error. However, the head of a one-thousand person organization cannot exert the same degree of control over all members.

Information: Part of the management problems arise due to imperfect information. As the dictates of the head are passed down through the organizational structure, the information is bound to be misunderstood. The head might want 5 copies of a 100 page report and end up with 500 boxes of paper clips.

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Once again, these problems are most pronounced with public sector bureaucracies, but also arise in private sector bureaucracies. While inefficiency is less pronounced in the private sector to the degree that individual responsibility can be assigned and enforced, it does not disappear entirely. Maximizing Utility A key to bureaucratic inefficiency, just like other sources of government inefficiency, is utility maximization. Individual members seek to maximize their own utility. The pursuit of individual satisfaction, however, often conflicts with the pursuit of organizational goals. An individual, for example, might use organization resources to create a more comfortable, but unneeded, work environment (large office, expensive desk, unnecessary travel). Or an individual might maximize utility by minimizing work effort (long lunch breaks, extra time off, sluffing duties onto other employees). Once again, this is a recipe for inefficiency. A Special Interest Another key to bureaucratic inefficiency, especially for the public sector, is that bureaucracies operate as special interest groups. The Department of Defense, for example, has more to gain or lose from government spending on national defense than the rest of society. The Environmental Protection Agency has more to gain or lose from environmental regulations than the rest of society. They are thus motivated to enhance their slice of the government pie, even though such enhancement is not needed not efficient. In particular, the continued existence of a government bureaucracy is dependent on the amount of tax dollars appropriated. A government bureaucracy, as such, is motivated to act just like any private special interest group. Its members are bound to take every action legally allowed (and

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perhaps some that are not) to convince political leaders to support their organization. This is yet another ingredient in the recipe for inefficiency. Other Sources of Government Failure Government bureaucracies are not the only source of government failures. Three other noted sources are politicians, voters, and interest groups.

Politicians: These are members of society who seek elected offices. Problems and inefficiencies arise because politicians, like all human beings, seek to maximize their own utility. This pursuit can and does conflict with doing what's best for the economy.

Voters: People, citizens of a nation, also seek to maximize their own utility. Two rational choices they make in this pursuit are to NOT be informed (rational ignorance) and to NOT participate in the political process (rational abstention). Such "apathy" means that elected leaders can ignore their preferences.

Interest Groups: While some people have little or no involvement in the political process, others have a great deal of involvement. These people, who also seek to maximize utility, have more to gain or lose from particular government actions and are thus motivated to act accordingly, usually by forming special interest groups.

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1.3 UNCERTAINTY Risks and uncertainties frequently have a decisive impact on the course and the outcome of projects. The outcomes of some events possess the continuing feature of con-stricted foreseeability or even entire unpredictability. Recent developments show that due to several features including advanced technology, more sophisticated modelling approaches and in-depth informative sources, the possibilities of accurate predictions within risk anal-ysis have been enhanced. The performance of the accu-racy of these predictions depends on the complexity of the system, in which the risk variable is embedded, as well as on the quality of available input information and the extent of its associated potential errors, most commonly deriving from data, modeling or forecasting. Despite the crucial importance of risks and uncertainties on an investment projects performance, both terms are often used interchangeably in practice. As shown below, the available literature demonstrates that there has been an extensive and controversial debate on the possi-bility and scope to differentiate between these two terms. Risk and uncertainty were initially differentiated in Knights study Risk, Uncertainty and Profit Knight distinguished between the two terms by stating that risks encompass events for which outcomes are known or are quantifiable due to historical evidence and probability distributions. This implies the feature that in a risky situation an insurable outcome is given, which has further been interpreted by Weston and Stigler . Another differentiation, based on Knights theory of profit, is the assumption that in such a risky outcome profit cannot exist. This is underlined by the assumption that if all countermeasures to reduce or even eliminate risks are utilised, then Knight considers all outcomes to be certain and risk free. Furthermore, his differentiation describes uncertain events where it is not possible to specify numerical probabilities, creating
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uninsurable outcomes . Hence, as apposed to a situation of risk, Knight considers uncertainty as a condition in which profit can exist Conclusion Understandably, many public servants have felt under siege. Certainty and order have been replaced by uncertainty. Offices are organized and re-organized, structured and restructured to a bewildering extent. Redundancies have become common in a part of the workforce where jobs were once for a lifetime. In future, the public service may provide an occupation for a very small core of people. Service-delivery agencies, which need not contain government employees, may undertake the bulk of the day-to-day work under contracts with the small policy department. Governments still need a public service, but its size could be very small, confined to contract management and policy advice, even if much of that work could itself be contracted out.

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References Barlow, J. Roehrich, J.K. and Wright, S. (2010).De facto privatisation or a renewed role for the EU? Paying for Europes healthcare infrastructure in a recession. Journal of the Royal Society of Medicine. 103:51-55. Lloyd G. Nigro, Decision Making in the Public Sector (1984), Marcel Dekker Inc . David G. Carnevale, Organizational Development in the Public Sector (2002), Westview Pr. Jan-Erik Lane, The Public Sector: Concepts, Models and Approaches (1995), Sage Pubns. A Primer on Public-Private Partnerships http://blog-pfm.imf.org/pfmblog/2008/02/a-primeron-pub.html#more

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