1. Current Situation of the Reform of the Public Servant system in Japan Mr. Yoshiro Ishikawa Director, Planning and Legal Affairs Division, NPA

2. 1. Decision on the policy for the Reform of the Public Servant System in the Government Basic Principle of Reform ・ As a basic principle, efforts will be made to promote an administrative structure that truly focuses on the people, and by fundamentally reforming the public servant system from people's perspective, the goal will be the reform of the modalities of administration. ・ Regarding restrictions on basic labor rights, appropriate measures that can replace them will be ensured and present restrictions will be maintained Dec. 25, 2001

3. (1)Realization of Appropriate Personnel and Organizational Management in the Entire Government ･ Clarifying that the respective ministers have primary responsibility and authority for personnel affairs ･ Strengthening the planning functions and comprehensive adjustment functions of the Cabinet in personnel administration ･ Guaranteeing employee benefits and ensuring neutrality and fairness in personnel administration through the National Personnel Authority The Cabinet, ministries and agencies who are responsible for administrative management carry out appropriate personnel and organizational management.

4. (2) Summary of the New Public Servant System An new ability-based promotion system in which employees are promoted based on ability to conduct jobs. Through the utilization of the new system, as benchmarks for appointments, salaries and assessment, a new personnel system will be established as a total system 1) Formulation of a new personnel system a. Introduction of an ability-based promotion system

5. b. Establishment of a new appointment system built on ability- based promotions A new appointment system will be built on an ability-based promotion system, and realize personnel placements in which the appropriate person is placed in the appropriate position based on ability. Clear standards and procedures will be established and a strict response will be taken regarding dismissals and demotions

6. c. Establishment of a new wage system that reflects ability, work responsibility and work performance A new wage system will be introduced that consists of "basic wages," "work responsibility allowances" and "work performance allowances" in order to realize wages and compensation providing incentives and appropriately reflecting ability, work responsibility and work performance.

7. d. Introduction of a new assessment system that consists of ability assessment and work performance assessment A new assessment system with a high degree of fairness and satisfaction stemming from "ability assessment" and "work performance assessment" will be introduced in place of the current employee assessment system. Prior to the introduction, adequate testing is conducted. The results will be reflected in concrete design of the system

8. 2) Securing diverse human resources The contents of the Type I examination will be improved and the number of people passing the exam will be broadly increased in order to secure a broad range of persons intending to become public servants. a. Review of the recruitment examination system b. Securing human resources from the private sector Regulations rooted in ideas of an excessively rigid separation between the public and private sectors will be reviewed. While reforming the system in the direction that makes it possible for employees to keep their status as private business and public employees even when working in the public sector, procedures for preliminary authorization and consultation by the National Personnel Authority will be reviewed and greater flexibility in assigning wages will be realized.

9. 3) Establishment of appropriate rules for reemployment A reemployment approval system will be introduced under which personnel managers with responsibility will ensure fair administrative management. The Cabinet will determine common approval standards for the ministries by Government ordinance and at the same time, the operation of an approval system will be comprehensively co-ordinated. The National Personnel Authority will submit opinions on approval standards and advice for improvements on the situation of implementation. Regulations will be introduced for restricting instances wherein persons reemployed in profit-oriented businesses approach public servants in ministries and agencies. a. Approval systems and restrictions rules concerning reemployment to profit-oriented businesses

10. b. Rules concerning reemployment into special public corporations The Cabinet will establish rules and strengthen the supervisory system. Retirement benefits will be significantly reduced and salaries for executives will be reduced. c. Rules concerning reemployment into public service corporations Various aspects such as disclosure of information on the employment situation of retired public servants and instruction regarding compensation and retirement benefits for directors will be reviewed, keeping in mind the private status of public service corporations.

11. 2. T he Bill Related to the Reform of the Public Servant System Law to revise the National Public Service Law (Introduction of an ability-based grade system, review of the central personnel administrative organization, review of the restrictions regarding reemployment to profit-making enterprises) Ability-based Grade System Law (Providing the salary schedule based on ability, how to classify government positions. Revising relative provisions of the Remuneration Law by the supplementary provisions) Law to revise the law concerning personnel exchange between the government and the private sector (To continue his/her employment in the case of accepting staff from the private sectors) July, 2003 Administrative Reform Promotion Bureau Bill related to the Reform of the Public Servant System at this time

12. 3. Request regarding the future efforts to reform the public servant system (Summary) Under the total coordination by the Cabinet, advancing a process to formulate the Ability-based Grade System including the establishment of ability standards in close cooperation with the Offices and Ministries. Exchanging opinions with the NPA and labor unions sufficiently and advancing the coordination with them. After having sufficiently through out the idea related to the re-employment, undertaking the study of the necessary matters. July 16, 2003 The Promotion Office of Administrative Reform of the Liberal-Democratic Party We request the Cabinet that the Minister in charge of Administration Reform and others concerned shall further the preparation to propose the Bill under the following policies:

13. 4. Comment on how to treat the Bill for the laws related to the Reform of the Public Servant System by the Minister in charge of the administrative reform (Summary) We cannot help informing that we have to give up to propose the Bills for the laws related to the reform of Public Servant System including the Bill for the revision of the National Public Service Law to the diet in this session, as the result of our consideration about the current situation, argument in the ruling parties (Liberal Democratic Party and Komei Party), and discussion with the parties concerned, the National Personnel Authority and labor unions etc. We will continue to make the greatest effort to progress the reform of the Public Servant System including proposal of the Bills to the Diet, under close cooperation with the Minister of Chief Cabinet Secretary, the Minister for Public Management, Home Affairs and Telecommunications and the Minister for Health, Labor and Welfare. July 25, 2003

14. 5. NPA’s view about the reform of the Public Servant System (Summary) Seriously responding to the criticism from the people to public employees on their sectionalism among the Office and Ministries or their accepting positions with profit-making enterprises Securing impartiality and fairness of the personnel management for national public employees by way of recruitment examinations and trainings etc. Assuring the compensational function under the condition of the restricted fundamental labor right The wide and open arguments among the parties including experts etc. The reform should be advanced while obtaining enough understanding of the Office and Ministries and to the satisfaction of public employees. August 8, 2003 National Personnel Authority (1) Essential matters for the reform of the Public Servant System In undertaking the reform of the public servant system, Followings are necessary:

15. (2) Direction leading the reform of the Public servant System It is very important to promote personnel management based on an employee ’ s ability and work performance. Therefore, it is adequate to accurately evaluate public employee ’ s ability to perform their duties and then administer promotion and replacement etc. 1) Grade system based on employee ’ s ability and work performance 2) Issues on management of retirement and adequate re-employment The Cabinet should exclusively manage the system in its responsibility, including the case of an employee ’ s re-employment to a profit-making enterprise as well as special legal entities and public interest legal entities etc. The measure to correct the custom of executive official ’ s early retirement and to extend their tenure of office should be considered

16. (3) Securing and developing human resources As for the recruitment examinations, it is appropriate to establish a system by which the Cabinet decides the fundamental policies on the recruitment of public employees, as to what sort of human resources are necessary for the public service, and then the National Personnel Authority plans and conducts the recruitment examination in compliance with such policies. As for training, on one hand, it is adequate that the appointing officer (head of an Office or each Ministry), the Prime Minister and the National Personnel Authority respectively conduct training under their jurisdictions.

17. 6. Decision on the Policy for the Reform of the Public Servant System (Summary) Clarifying the basis for personnel management for public employees as follows: ･ For the government position entrusted by the people ･ To appoint the person having the most suitable ability ･ To provide him/her appropriate treatment for his/her performance of duties Improving the evaluation system, and appointing and training public employees based on the result of evaluation of his/her ability and achievement. Furthermore, formulating the framework to practice the distinct treatment of public employees including the remuneration with respect to the result of the evaluation With the introduction of the new evaluation system, preparing sufficiently as conducting trials etc., as well as considering the framework for a grievance procedure March 5,2004 Committee for the Reform of the Public Servant System in Liberal Democratic Party (1) Ability and achievement principle

18. (2) Management of retirement and long-term incumbent Reviewing the personnel management based on the encouraged early retirement Reviewing such a treatment as to constantly increase the remuneration every year considering the re-arrangement of positions for staff

19. (3) Adequate re-employment The Cabinet should establish clear rules for re-employment in the entire organization: profit-making enterprises, Independent Administrative Institutions, public service corporations and so forth, so as to gain the confidence of the people. Simultaneously, considering the scheme that the Cabinet shall check cases under its responsibility. Preparing the qualified framework to secure transparency by legislating the basic matters for re-employment, and disclosing all re-employment cases thoroughly.

20. Thank you very much