Johnzx:
Whilst I understand fully what you say, if a country continues to have unproductive ’workers’ employed in an inefficient system, then how can it ever hope to have a ‘new workforce’ available to take up productive employment, when it becomes available ?
Spain has 25%+ unemplyoment, 50% amongst the youth. Even if a new industry sprung up to take on a "new workforce" it it still would struggle to make even a minor dent in the current number of unemployed. There is hardly a shortgage. Rather the opposite is true, there is a chronic and desperate shortage of jobs that is slowly destroying a generation and is the biggest single thing that will frustrate any government effort to reduce the deficit, no matter how many cuts are made.
You cannot fire people as a means of creating growth for several reasons:
* Inuefficiencies will be exacerbated not resolved. The civil service will beome less responsive as investment is drained, as absoltuely no effort is being put into actually investing into the serice to imrpove efficiency. This is exactly the same thinking that was employed by the British government in dealing with British Rail during the Beeching era, which achieved absolutely nothing. BR only started to improve when effort and resources were invested in modernisation rather than downsizing.
* Increasing unemployment will deepen the recession and the deficit. Firstly, thd odds of the newly unemployed finding work is minimal, so they will just go onto benefits, increasing the costs on the welfare system. At the same time their spoending power will have diminished drawing money out of the consumer eocnomy, deepening the recession and leading to more businesses closing and thus higher unemployment and so on in a vicious downward spiral.
* Tax revenues dcrease. Not only from the loss of tax revenue paid by the employese who are now drawing welfare, but from reduced IVA receipts, and the loss of tax revenue and increase in welfare costs associated with the drop in the consumer economy resulting from their spending power being removed from the equation. This drop in the soncumser economy makes it far less likely that any new industry is going to emerge as there is a cycle fo reducing demand for their product.
* Law and order, health and social services costs increse considerably, as long-term unemployment leads to deteriorating health, substance abuse and crime, patiularly when support is inadequate and medium-term prospects are minimal. his adds hugely to the strain on budgets in all these areas - as the experience of the UK in the 1980s clearly shows.
The Spanish civil service has several productivity issues, but these are related less to over-staffing than with the archaic way the beureacracy is oganised. Indeed, the Spanish civil service is actually less than half the size of that of the UK (2.6m, compared to ~6m which excludes Northern Ireland).
A way to increase this efficiency whilst encouraging growth is entirely possible, and has been advocated by many opposition parties.
* Shift to paperless working. By digitising a lot of cowkr currently done on paper, latency in the work flow can be reduced, speeding up decision making time. Digitisation also allows multiple workers to have access to the same information simultaneously, improving workflow. It also means that archiing and retreival of past records is quciker and more secure, and that physcial office space consumed can be reduced - allowing for redesigning of office space to improve workgroup interaction as well as a reduction in estate costs.
* Analyse work-flows. Spanish beureacracy has a large number of duplications and un-needed tasks. In some cases computerisation will smooth these but in others analysis of the whole process can render significant savings of workers time, freeing them to tackle other tasks which can make the organisation as a whole more responsive and efficient.
* Encourage telecommuting. Telecommuniting allows for savings in costs of running offices, as utilities consumption is reduced, and allows for the introduction of hot-desking. It also leads to generally higher productivity amongst workers and reduces absenteeism.
* Encourage job-sharing and part-time working. This can reduce unemployment and associated costs whilst maintaining are more resilient workforce better able to cover gaps in both short term absence (sickness, holiday leave) as well as longer disruptions such as maternity leave. This means less reliance on temporary workers which have higher per unit costs and lower productivity.
* Encourage early-retirement. Total social retirement costs are a fraction of those of redundancy costs even where headline costs appear higher, and leads to increased producitivity as older workers are replaced with younger workers with more up to date skills, faster rate of skill aquisition, lower absenteeism and greater career motivation. removal of them from welfare dependency also leads to a siginificant reduction in total social costs, and numerous social benefits both to themselves and also a larger number of dependents than workers aged 50+. This move is perhaps hte most imprtant as it brings benefit accross the spectrum of increased productivity, reduces total costs *and* reduces youth unemployment, even if replacement of retired workers is at a ratio below 1:1. A ratio of 1:2.5 is suggested.
* Cut fringe costs: I.e. eliminate "company" cars except in jobs where they are essential to the work directly performed. Where rail or air travel costs are payed, only pay for 2nd/economy class travel. Insteaf of meeting child care costs for individual employees, operate a creche instead. Not only are unit costs often actually lower, but it results in higher productivity as less time is lost due to absenteeism, when employees own child care arrangements fail - and makes it far easier for employees to pick up children for medical appointsments etc. It also bossts workplace satisfaction which likewise increases productivity and reduces staff turnover.
* Eliminate time based promotions: Replace promotion based on time served with merit based promotion. Employees who display exceptional compotence and are respected by their peers make more productive and positive management staff than time-servers. This also eliminates the problem in the Spanish civil service of "too many cheifs, not enough Indians". However rather than obediance to the company line, respect amongst ones peers and compotence rather than obidiance need to be fostered. Obediance soon becomes obstinance and conservatism, leading the organisation back into a rut. Again, the bringing in of fresh blood caused by voluntary retirement will also help tackle this issue.
* Tackle corruption. Huge amounts of revenue and productive effort are los tto low-level corruption. Having a strong external monitoring agency will recover more costs than it consumes, and it's work will be greatly aided by the ease of auditing introduced into the system by digitisation. However it will need full support from the top as well as from the police in order to be effective - and a policy of zero tolerence will be essential. One reccomendation is that in a confirmed case of corruption there is an automatic termination of current employment and a lifetime prohibition on the person found guilty of engaging in ANY public sector employment - as well as full loss of pension benefits. By maintaining the public sector as a good career path, an incentive is created to remain clean. Undermining and humiliating the public sector creates no incentive to remain in it - merely to grab as much loot as possible before one is downsized.
With these reforms a civil service could be created which would be more responsive and actually be an engine for growth by both demanding new products and services such as IT systems and office refurbishments to take advantage of new workplace spaces, but also by making lfie easier and more transparent. Businesses would no longer need to know who to bribe and hwo to speak too at the golf course, but would have a responsive, fast and transprent organisation to deal with. Business also would no longer be able to get away with so much violation of rules such as employing illegal migrants, evading taxes etc, which would also lead to growth as taxes are paid and legitimate jobs created, and smaller business without connections are more able to expand.
The civil service would not be under-staffed and un-motivated, but would be cheaper to be run - yet also more motivated, younger and more dynamic. In terms of total cost to the economy, far more money would be saved, and with a far better social and economic outcome.
From the perspective of a former HR administrator, these changes are obvious - yet politicians are simply not interested because cuts are viewed primarily in ideological rather than practical terms, and econominally in only the most simplistic terms which lack both economic and sociological literacy.