New Public Management and Israel

Short Essay
What are the main principles of New Public Management reforms and to what extent were they implemented in Israel?
Comparative Politics and Israel

New Public Management (NPM) emerged in the early 1980s as an answer to growing concerns over governmental financing problems with respect to many programs for social growth. As part of the initial argument for change in public and political affairs, politicians made the points that the blame for the problems rested upon the mid-level public bureaucracy and its supposed ineptitude, inefficiencies, and even corruption. In contrast to this inefficiency, the politicians held up the strengths and efficiencies reached in the private sector. The NPM answer was to actively pursue private sector type change within the public sector to reduce inefficiency and waste.

This answer was pursued in reforms that were essentially aimed at rearranging the public model of bureaucracy along lines similar to that of the private sector. This was based firmly in the assumption that to bring the best results possible the public sector, or government bureaucracy, should be managed in the same manner and following the same guidelines of private businesses. The private sector was seen as being very effective because of successful competition and strict adherence to profits as the “bottom line” and most important goal. The challenge was to simply adapt private business practices to the policy sector.

The heart of the NPM reforms lay in the restructuring of governmental bureaucratic offices along these lines. Instead of profit being the bottom line, each governmental office or ministry was required to develop strict definitions of the “core activity” of that ministry and to overhaul their current activities by determining how each action, expenditure or task was related to the core directing principle of their activity. Activities directly relating to the stated mission of the ministry were to be separated from indirectly related activities, which were relegated to a secondary status. Tertiary activities, or activities completely outside the stated area of the core activity were effectively terminated (or sold and privatized) in the name of efficiency or budgetary saving.

The principle behind this restructuring was a distinct divide or separation between policy formation and policy implementation. The intent was to keep policy formation, the core activity of the ministry, within the ministry itself. This was meant to insure that the formation of policy was still influenced and controlled by political processes, meaning that the people who were in charge of the policy were directly accountable to the voters. On the other hand, policy implementation was shifted outside of this political arena. It was to be decentralized and removed from possible intervention for political purposes (i.e. corruption, etc) and shifted to apolitical organizations or agencies that were under contract solely to fulfill obligations of policy implementation while still being under government oversight.

Thus, any secondary responsibilities of ministries would be contracted out to executive agencies or not-for-profit organizations via private business like contracts. These contracts became the basis for governmental control over policy implementation and exemplify how the public sector came to be so heavily influenced by all aspects of private sector business interaction. Contracts would be officially signed and entered into between all parties of the system- the ministry, the executive agencies, private sector business, and even individual employees.

NPM reforms generally fall into or overlap between three different dimensions. The first is disaggregation. This refers to the separating and delineation of priority activities of the ministry from more secondary activities and how these differing levels of priority are to be handled. Disaggregation is the process by which the directly and indirectly related activities of the ministry were separated and how they were to be addressed. First level activities would be directly contracted from the government to executive agencies or organizations while secondary indirectly related activities would be shifted to those agencies to further contract to other organizations or parties. This turned the management of policy implementation over to private companies to be overseen and monitored by the ministry. However, the key point was to retain a certain managerial flexibility on the part of the executive agencies to accomplish whatever was deemed necessary to complete their assigned and contracted tasks.

The second dimension is competition. The intent of this dimension was to separate demand from supply. The government would reward a given contract to the organization that could provide the goods or services at the cheapest via a system of bidding. This competition between companies would help drive prices down. To ensure quality, regulators would be put in place to ensure that companies adhered to certain standards across the sector.

The third dimension of the reform is that of incentivization, or the adding of incentives as a major element in bureaucracy. This made its appearance mainly through the introduction of contracts for employment with individual employees. Vis-à-vis these contracts, the principle of performance related pay was introduced to the public sector, meaning that advancement and pay increases, benefits, etc would be related to job performance. Incentives were introduced to prompt greater employee efforts in their jobs. Employees were thus no longer guaranteed careers once they found a position within the public sphere.

The NPM reforms resulted in many new aspects and avenues of interaction between the public and private sectors. One of the most prevalent of these is the use of Public-Private Partnership (PPP) to build off of the strengths of both the private and public sectors to accomplish a goal or building project. Another large contribution was the emergence of citizen charters or government declarations of public expectations from bureaucratic services to guide the procedure and operation of their contracted agencies and organizations.

In Israel, NPM has not been implemented on as large a scale as in other western democracies. In most western nations, the Prime Minister or other executive placed large amounts of support behind the measures to ensure high approval ratings and good public reactions. In Israel, the PM was more focused on other social concerns, notably security issues, which were considered of higher priority than lower-level bureaucratic organization and services. Thus, NPM reform was not implemented in a general sense among all governmental organizations. However, individual organizations in some cases have undertaken to introduce NPM reforms within their own spheres of influence. Most notable among them is the Israeli Defense Force (IDF) with its use of civilian employees of the IDF who have a much different system of remuneration and benefits than that of full IDF employees. The police organizations within Israel have followed suit. Similarly, within Israel, many PPPs can be observed, such as the construction of the new Route 6 highway.