Why the World Bank Supports Retrenchment Gary J. Reid The World Bank May 4, 2004

Three typical reasons Fiscal soundness imperative “Attract and retain good staff” imperative The Bank’s legal mandate: Productive investment http://www1.worldbank.org/publicsector/civilservice/agency.htm and http://www1.worldbank.org/publicsector/civilservice/downsizing.htm

Fiscal soundness To meet the fiscal soundness imperative, retrenchment needs to be accompanied by institutional capacity to control employment and the wage bill on an ongoing basis. Effective establishment control Post authorization Hiring authorization Effective salary-setting control Salary structure, including all components of remuneration Individual remuneration decisions http://www1.worldbank.org/publicsector/civilservice/establishment.htm

Attract and retain good staff Enhance competitiveness of public sector salaries (http://www1.worldbank.org/publicsector/civilservice/agency.htm and http://www1.worldbank.org/publicsector/civilservice/downsizing.htm )

Attract and retain good staff Improve conditions of public service employment (http://www1.worldbank.org/publicsector/civilservice/career.htm ) Depolitiziced, merit-based personnel management Fairness in exercise of personnel management discretion Reasonable career growth prospects Effective redress mechanisms

Attract and retain good staff Improve intrinsic rewards of public service employment Complementary inputs sufficient to enable public servants to be effective and productive (so that a public servant can “make a difference”) Respected reputation of the civil service or public administration as a body. http://www1.worldbank.org/publicsector/civilservice/individual.htm

Productive investment To meet the legal mandate, retrenchment needs to be part of a reform effort that yields a net improvement in productivity, not just of the public sector, but also of the resources released from the public sector. http://www1.worldbank.org/publicsector/civilservice/downsizing.htm