Encouraging Professionalism for Public Sector Personnel

Atsushi SEIKE (Professor, Keio University)

These days a higher skill level is being required of public sector personnel in face of structural change in the economy. "Political leadership" should mean making full use of highly skilled public personnel by politicians, and not suppressing public personnel's power in accordance with politicians' ability. It is up to the public's choice whether costs should be borne to continue employing highly skilled personnel in the government sector.

Responding to Economic and Demographic Changes

An important point about public personnel system reform is how to respond to structural change. First, we need to deal with a higher level of economic activities such as rapid technological progress and changing market conditions due to the IT revolution as well as domestic and international competition. Therefore, public policies and government services should be more responsive to increasing diversity in values and needs, and a higher skill levels are required of public personnel in both policymaking and public administration.

Another thing is to respond to the aging trend in Japan. In order to maintain vitality in Japan's economy and society with a higher speed of aging than any other country, those who have a will and ability to work should be allowed to continue their career as long as they can. Public sector personnel is no exception in this regard.

In light of these points, some of the recent arguments about public personnel system reform seem questionable. One such argument is that recruitment, selection and management of public personnel should be done under a single agency, not by individual ministries as it is now, in order to overcome the problem of vertical division of government organizations.

For any occupational field, a necessary condition for anyone to become a highly skilled professional is one's strong interest and desire to work in that particular field, such as high aspiration to save the nation's finance from bankruptcy for the sake of next generations, or strong desire to participate in social welfare activity to help needy people, for example. Those who choose a field with high motivation can properly be trained and evaluated only by professionals in that particular field. In any occupational field, whether public or private, it should be natural that senior people with more experience train and evaluate their junior colleagues on the job for a higher level of work skills and capabilities. In the case of the public sector, occupational fields can be interpreted as large as administrative fields corresponding to government ministries and agencies, but probably not beyond them.

Nowadays, this kind of personnel management in respective ministries and agencies is being criticized by some politicians as the undesirable vertical division of government, but the role of politicians is rather to prioritize various vertical fields politically through negotiations and adjustments among politicians themselves. Political leadership is a natural aspect of democratic government with elected politicians, but it must be at a "higher equilibrium level," where politicians should be able to make full use of high-skilled administrative personnel. What we need to avoid is a "lower equilibrium level, where the power of public personnel is suppressed in accordance with the low level of politicians' ability. In that case, it would be necessary to make politicians more capable in government.

Lifelong Career System for Public Sector

Another questionable argument is about management of retiring public employees. If "amakudari" (descent from heaven) is prohibited and public pension benefits are reduced, it would be more difficult to keep high-skilled personnel in the public sector for a long time. We need to develop a "lifelong career society," where those who have a will and ability to work should be able to continue their career as long as they can, and this applies to both the private and the public sectors. In this context, "amakudari" is problematic, because those who are employed and trained in the public sector can make use of their expertise in the type of work that is not suitable for the private sector and, therefore, they should remain to be working effectively in their specialized or related fields in the public sector, rather than finding a job opportunity after the current retirement age for the benefit of themselves as well as the economy and society as a whole.

In the terminology of labor economics, this amounts to acquiring "specific human capital," which means the type of work skills that cannot be effectively utilized in the fields other than where they are acquired. For example, high skill levels of policymaking and administrative work in the central government may not be transferable to and from the private sector too easily and, therefore, the extent of public-private personnel exchange should naturally be limited. It is generally risky to acquire such specific human capital in the public sector, since it would make it difficult for a public employee to find a good employment opportunity in various private-sector fields later in his or her life. Therefore, employers must offer favorable terms of employment to prospective applicants, including such terms as assurance for long-term employment and benefits for retirement.

Better Pension Benefits Instead of Seniority Wages

In order to attract human resources with good potential to the public sector, it is imperative that at least the same level of lifetime income as in the private sector be assured. Otherwise, the public sector might well be written off among young people to seek employment, due to a low income level compared to a high risk of acquiring specific human capital in a specialized public-sector field. Here, the important role is to be played by the retirement pension system.

In the past, the public sector with the "amakudari" system has been competitive vis-à-vis the private sector in the job market in terms of its lifetime income level including portions of compensation after retirement. However, "amakudari" has been criticized and is being abolished now. Then, what should be done for individuals as well as for social efficiency is to make public employees continue to work fully until their mid-sixties and ensure them of satisfactory retirement life afterward. Needless to say, full pension benefits would be assured only if employees work fully and effectively until retirement without any wrongdoings on the job, whenever discovered, even after retirement.

Unfortunately, the current situation surrounding the public pension system in Japan seems to be moving in the opposite direction. Even today, the average level of pension benefits for public employees is only 30-50 percent of the salary level at the time of retirement even when temporary retirement bonuses are included in the benefit calculation. If these benefits are cut further, the lifetime income level for public employees would be much less than their counterparts in the private sector, especially compared to large companies with good corporate pension arrangements. In most of the advanced countries, pension benefits for public employees are about 70 percent of the final salary level before retirement.

As taxpayers we must think about bearing sufficient costs to make it possible for our public sector to hire and train human resources with high potential ability and utilize such high-skilled professionals until retirement to the fullest extent. That would not be possible in the competitive labor market, if we are not willing to pay enough. Of course, there should be a trade-off in this area, given the severe fiscal condition in Japan. Salary levels could be suppressed in exchange for strong employment assurance in the public sector, and the seniority wage system should be replaced with the ability and performance-oriented reward system, inevitably resulting in a reduction in the salary level for senior employees.

Once this kind of adjustment is done, we should be more thankful to public employees who would be willing to serve their employers, namely, tax-paying citizens, under severe fiscal conditions. As employers who cannot pay more, we must try to make our employees work happily and comfortably by expressing our gratitude to them. This is a common sense for personnel management in general, regardless of the direction of institutional reform in the public sector.

(The original Japanese article appeared in the April 3, 2008 issue of Nihon Keizai Shimbun)