Measuring Public Sector Productivity: Lessons from International Experience

Abstract

This is a study of international experience in measuring\npublic service productivity. The research informs possible\napproaches to public sector productivity measurement for\nthe Irish public service. The study focuses on three main\naspects of productivity measurement: attempts to develop\ncomparative, cross-national assessments of public sector\nefficiency and performance; national and sectoral public\nsector productivity measurement initiatives; and a more\nmicro-level examination of productivity measurement,\nlooking at organisation-based and bottom up initiatives to\nmeasure public sector productivity.\nComparative cross-national assessments of public\nsector productivity and performance\nThere has been a growth in recent years in international\ncomparative studies of public sector performance. Some of\nthese explicitly include productivity measurements; others\nfocus more generally on broad performance issues. These\ninternational studies provide scope for a comparative\nassessment of how Ireland is performing, particularly if\nstudies are repeated over time, allowing trends to be\nestablished.\nHowever, the studies themselves warn of the danger of\nputting too much faith in drawing comparisons, given\nqualifications about the type and reliability of data used to\ngenerate the indicators in the studies. It is clear that\nfindings are of a tentative nature, and that improvements\nare needed if such studies are to provide a sound evidence\nbase. In the context of improving the evidence base, the\nOECD’s Management in Government: Comparative Country\nData project, started in 2006, is a significant initiative.\nNational and sectoral public sector productivity\nmeasurement initiatives\nIn recent years, various countries at both national and\nsectoral levels have engaged in productivity measurement\ninitiatives. Brief reviews of progress in the UK, Finland,\nSweden and Australia are examined here. This is followed\nby illustrative examples of productivity measurement in\nthree sectors: health, education and local government.\nThe evidence from national and sectoral studies of\npublic sector productivity measurement is that despite\nefforts going back to the 1980s, the productivity measures\nbeing produced need to be interpreted cautiously. There is\nalso the danger that over-simplistic use of the measures\ncan lead to perverse consequences. Supporting evidence is\nneeded to corroborate the findings of productivity\nmeasures.\nA further general point emerging from the cases\nexamined is the lead role being taken by national statistics\noffices in public sector productivity measurement\ninitiatives. The involvement of the national statistics offices\nis required because of a Eurostat directive on developing\noutput measures for the national accounts. National\nstatistics offices also play a lead role in providing quality\nassurance and guarantees about data reliability and\nvalidity.\nWhere similar institutions are providing similar\nservices, it is possible to develop comparative productivity\nmeasurements, as examples from the Australian states and\nfrom local government show. Using techniques such as\nfrontier analysis it is possible to identify relatively efficient\nand relatively inefficient organisations. The same cautions\nas to data reliability and interpretations as raised above,\nhowever, still apply.\nOrganisation-based and bottom up initiatives on public\nsector performance measurement\nOrganisation level productivity measurement is likely to be\na feasible and useful tool for those organisations that have\nclear, identifiable outputs that can be linked to inputs used.\nThese measures do not necessarily need to cover the whole\norganisation, and may be indicators of productivity for\ndiscrete parts of the organisation.\nBottom up/service user measurements of performance,\nsuch as the time and cost associated with setting up a new\nbusiness, are being developed in a number of places. While\nthey are not productivity measurements in the strict sense\n(as they focus on the outputs and broad performance of\npublic sector organisations rather than linking this data to\ninputs in a direct manner) they do help provide a picture of\nwhat value is being delivered by public services in return for\nthe expenditure supports provided. As such, they have a\npotentially important role to play in productivity\nmeasurement when interpreted in a broad sense. Bottom\nup measures can also be a helpful source of information to\nprovide triangulation data for more conventional\nproductivity studies.\nDeveloping a framework for public sector productivity\nmeasurement in Ireland\nInformation on public sector productivity in Ireland is\nlimited. So as to develop a broad range of measures of\nproductivity and not rely on single data sources, a\nframework for the development of productivity\nmeasurement is outlined in the table below. This\nframework proposes that action be taken at a number of\nlevels - cross-national, national and sectoral, and\norganisation-based and bottom up - to develop information\non public sector productivity in Ireland. In this way, a\ndiversity of approaches to productivity measurement can be\nused to provide a broad picture of productivity\ndevelopments. The framework draws from lessons learned\nfrom the international experience outlined in this study.

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